Ethan Allen Interiors Inc. is a leading interior design company and manufacturer and retailer of home furnishings in the United States and abroad. The following is adapted from Ethan Allen’s recent annual financial statements for fiscal year ending on June 30. Dollar amounts are in thousands. /Assume that the following events occurred in the first quarter ended September 30 of the next fiscal year: a. Issued 1,600 additional shares of stock for $1,020 in cash. b. Purchased $3,400 in additional intangibles for cash. c. Ordered $43,500 in wood and other raw materials for the manufacturing plants. d. Sold equipment at its cost for $4,020 cash. e. Purchased $2,980 in long-term investments for cash. f. Purchased property, plant, and equipment; paid $1,830 in cash and signed additional long-term notes for $9,400. g. Sold at cost other assets for $310 cash. h. Declared $300 in dividends. Required: 1. Create T-accounts for each of the accounts listed above, including a new account Dividends Payable. Enter the balances at June 30 as the beginning balances for the quarter (in thousands of dollars). The account Treasury Stock reduces stockholders’ equity; its balance is on the debit side of the T-account. 2. Record each of the transactions for the first quarter ended September 30 in the T-accounts (including referencing) and determine the ending balances. 3. Explain your response to event (c). 4. Prepare a trial balance at September 30. 5. Prepare a classified balance sheet at September 30. 6. Compute the current ratio for the quarter ended September 30. Round your answer to three decimal places. What does this suggest about Ethan Allen Interiors Inc.?
> Lisa Knight owns and operates Lisa’s Day Spa and Salon, Inc. She has decided to sell the business and retire, and is in discussions with Helen Bailey, the owner of a regional chain of day spas. The discussions are at the complex stage o
> Using Financial Reports: Analyzing the Balance Sheet Recent balance sheets are provided for Twitter, Inc., a global platform for real-time public self-expression and conversation. Show your answers in thousands of dollars. Required: 1. Is Twitter a corpo
> Using Financial Reports: Evaluating the Reliability of a Balance Sheet Frances Sabatier asked a local bank for a $50,000 loan to expand her small company. The bank asked Frances to submit a financial statement of the business to supplement the loan appli
> The financial statements for Lainey’s Famous Pizza are below. Lainey’s operates more than 250 locations in 30 states and 11 countries. Required 1. Compute the following ratios for Year 3 using information from the comp
> Wolf Company uses the LIFO method to account for inventory and Tiger Company uses the FIFO method. The two companies are exactly alike except for the difference in inventory cost flow assumptions. Costs of inventory items for both companies have been ris
> Tabor Company has just prepared the following comparative annual financial statements for the current year: Required: 1. Using average balances for balance sheet accounts and year-end balances for all income statement accounts, compute the following rati
> Coca-Cola and PepsiCo are well-known international beverage and snack companies. Compare the two companies as a potential investment based on the following ratios:
> Murray Company is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: Additi
> Refer to the information regarding Hannah Company in AP4-2. Required: 1. Indicate whether each transaction relates to a deferred revenue, deferred expense, accrued revenue, or accrued expense. 2. Using the following headings, indicate the effect of each
> Golden Deer Company is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below: Additi
> Athena Company’s accountants have just completed the income statement and balance sheet for the year and have provided the following information (dollars in thousands): The company issued $50,000, 9 percent bonds payable at par during t
> Alonzo and Mika, two students in a financial statement analysis class, were reviewing financial statements for Facebook, one of the world’s largest social-media companies. Alonzo noted that the company did not report any dividends in the financing activi
> Kainen Company reported the following information at the end of the year: The board of directors is considering the distribution of a cash dividend to the two groups of stockholders. No dividends were declared during the previous two years. Assume the th
> The following was in the financial press pertaining to Zoom Video Communications: Zoom’s (ZM) stock was sold for $65 per share during its opening day of trading. Zoom sold 21 million shares at its IPO. Required: 1. Record the issuance of stock, assuming
> Salish Corporation received its charter during January of this year. The charter authorized the following stock: Preferred stock: 10 percent, $10 par value, 31,000 shares authorized Common stock: $8 par value, 60,000 shares authorized During the year, th
> Assume for each of the following independent cases that the annual accounting period ends on December 31. Revenues for the year were $288,000. Expenses for the year were $328,000. Case A: Assume that Weather Company is a sole proprietorship owned by Mrs.
> Chukanut Company completed the following transactions during Year 1. Chukanut’s fiscal year ends on December 31. Jan. 20 Paid cash for office supplies (held as office supplies inventory). The invoice amount was $17,900. Apr. 1 Borrowed $458,000 from Roya
> Sabre Company has just completed a physical inventory count at year-end, December 31 of the current year. Only the items on the shelves, in storage, and in the receiving area were counted and costed on a FIFO basis. The inventory amounted to $96,000. Dur
> Required: Using the events (a) through (h) in AP2-3, indicate whether each transaction is an investing (I) or financing (F) activity for the quarter and the direction and amount of the effect on cash flows (+ for increase and − for decrease). If there is
> Assume that Witz and Steenhoven, Inc. uses the aging approach to estimate bad debt expense at the end of each accounting year. Credit sales occur frequently on terms n/45. The balance of each account receivable is aged on the basis of four time periods a
> V.F. Corporation is a global leader in the design, production, procurement, marketing and distribution of branded lifestyle apparel, footwear and related products. Their largest brands are Vans®, The North Face®, TimberlandÂ&r
> The following data were selected from the records of Sharkim Company for the year ended December 31, current year. In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 2/10, n/30 (assume a unit
> What do liquidity ratios focus on? What is an example of a liquidity ratio and how is it computed?
> What do turnover ratios focus on? What is an example of a turnover ratio and how is it computed?
> What is ratio analysis? Why is it useful?
> Complete the following:
> Just prior to the end of the fiscal year, Climate Corporation reported the following information: Required: Complete the table below for each of the three following independent cases: Case 1: The board of directors declared a cash dividend of $0.04 per s
> How does product differentiation differ from cost differentiation?
> When considering an investment in stock, investors should evaluate the company’s future income and growth potential on the basis of what three factors?
> What do market ratios focus on? What is an example of a market ratio and how is it computed?
> What do solvency ratios focus on? What is an example of a solvency ratio and how is it computed?
> Who are the primary users of a company’s financial statements?
> Tungsten Company, Inc., sells heavy construction equipment. There are 10,000 shares of capital stock outstanding. The annual fiscal period ends on December 31. The following condensed trial balance was taken from the general ledger on December 31, curren
> Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end of each accounting year. Credit sales occur frequently on terms n/60. The balance of each account receivable is aged on the basis of three time periods as follow
> Use the data presented in P6-1, which were selected from the records of Sykes Company for the year ended December 31, current year. Required: 1. Give the journal entries for these transactions, including the write-off of the uncollectible account and the
> General Mills, Inc., is a leading global manufacturer and marketer of branded consumer foods sold through retail stores. It recently disclosed the following information concerning the Allowance for Doubtful Accounts on its Form 10-K Annual Report submitt
> Jordan Sales Company (organized as a corporation on April 1, 2021) has completed the accounting cycle for the second year, ended March 31, 2023. Jordan also has completed a correct trial balance as follows: Required: Complete the financial statements as
> The following information was extracted from the records of Olympic Company at the end of the fiscal year after all adjusting entries were completed: Required: 1. Prepare the stockholders’ equity section of the balance sheet at the end
> Identifying Effects of Transactions on the Statement of Cash Flows (AP2-4) Refer to P2-3. Required: Using events (a) through (i) in P2-3, indicate whether each is an investing (I) or financing (F) activity for the year and the direction of the effect on
> Mellor Towing Company provides hauling and delivery services for other businesses. It is at the end of its accounting year ending December 31. The following data that must be considered were developed from the company’s records and related documents: a.
> All of the current year’s entries for Zimmerman Company have been made, except the following adjusting entries. The company’s annual accounting year ends on December 31. a. On September 1 of the current year, Zimmerman collected six months’ rent of $9,60
> The price/earnings ratio provides important information concerning the stock market’s assessment of the growth potential of a business. The following are price/earnings ratios for selected companies. Match the company with its ratio and
> Assume for each of the following independent cases that the annual accounting period ends on December 31. Revenues for the year were $144,000. Expenses for the year were $164,000. Case A: Assume that RiseUp Company is a sole proprietorship owned by Mrs.
> Use the data from Problem P9-4 to complete this problem. Required: For each transaction (including adjusting entries) listed in Problem P9-4, indicate the effects (e.g., Cash + or −) using the format below. You do not need to include am
> Use the data from Problem P9-2 to complete this problem. Required: For each transaction (including adjusting entries) listed in Problem P9-2, indicate the effects (e.g., Cash + or −) using the format below. You do not need to include am
> For each transaction in M2-6 (including the sample), write the journal entry in the proper form. M2-6: For each of the following transactions of JonesSpa Corporation for the month of January, indicate the accounts, the amounts, and the direction of the
> Using the following categories, indicate the effects of the following transactions. Use + for increase and − for decrease and indicate the accounts affected and the amounts. a. At the end of the period, bad debt expense is estimated to
> For each of the transactions in M4-6, indicate the amounts and the direction of effects of the adjusting entry on the elements of the balance sheet and income statement. Using the following format, indicate + for increase, − for decreas
> Makani Corporation is planning to issue bonds with a face value of $800,000 and a coupon rate of 4 percent. The bonds mature in two years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. M
> Prepare journal entries for each transaction listed. a. During the period, bad debts are written off in the amount of $14,500. b. At the end of the period, bad debt expense is estimated to be $16,000.
> Matching Definitions with Terms Match each definition with its related term by entering the appropriate letter in the space provided.
> Preparing a Trial Balance Nash Company has the following adjusted accounts and balances at year-end (June 30): Prepare an adjusted trial balance in good form for the Nash Company at June 30.
> Zion Company earned $6.50 per share and paid dividends of $3.50 per share. The company reported a dividend yield of 5 percent. What was the price of the stock?
> For each of the following events, which ones result in an exchange transaction for Dittman Company (Y for yes and N for no)? (1) Six investors in Dittman Company sold their stock to another investor. (2) The founding owner, Megan Dittman, purchased addit
> In the current year, Salmon Company reported sales of $1,420,000, interest expense of $12,000, income tax expense of $13,000, and net income of $52,000. What is Salmon’s times interest earned ratio?
> Compute the return on asset ratio for Year 2 given the following data:
> Skykomish Corporation purchased 20,000 shares of its own stock from investors for $45 per share. The next year, the company resold 5,000 of the repurchased shares for $50 per share, and the following year it resold 10,000 of the repurchased shares for $3
> Wapato Company sold bonds with a face value of $850,000 for $909,701. The bonds have a coupon rate of 8 percent, mature in 10 years, and pay interest annually every December 31. All of the bonds were sold on January 1 of this year. Using a premium accoun
> Oak Corporation’s financial statements for the current year showed the following: Compute Oak’s times interest earned ratio.
> Zues Corporation is planning to issue bonds with a face value of $800,000 and a coupon rate of 4 percent. The bonds mature in two years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Zue
> Alana Company sold bonds with a face value of $600,000 for $580,000. The bonds have a coupon rate of 10 percent, mature in 10 years, and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Record
> Alana Company sold bonds with a face value of $600,000 for $580,000. The bonds have a coupon rate of 10 percent, mature in 10 years, and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Using
> Wapato Company sold bonds with a face value of $850,000 for $909,701. The bonds have a coupon rate of 8 percent, mature in 10 years, and pay interest annually every December 31. All of the bonds were sold on January 1 of this year. Record the sale of the
> What is the present value of $500,000 to be paid in 10 years? The annual interest rate is 8 percent.
> Danali Corporation borrowed $290,000 on October 1. The note carried a 10 percent interest rate with the principal and interest payable on May 1 of next year. Prepare the journal entry to record the note on October 1. Prepare the adjusting entry to record
> Match each definition with its related term by entering the appropriate letter in the space provided. There should be only one definition per term (that is, there are more definitions than terms).
> Rainier Company borrowed $600,000 for three months. The annual interest rate on the loan was 11 percent. Rainiers fiscal year ends on December 31. Rainier borrowed the $600,000 one month prior to the end of its current fiscal year and paid back the $600,
> The following information was reported by Young’s Air Cargo Service for 2020: Compute the company’s fixed asset turnover ratio (rounded to two decimal places) for the year. What can you say about Youngâ€
> JCPenney Company, Inc., is a major department store chain. The dominant portion of the company’s business consists of providing merchandise and services to consumers through department stores and online. In a prior annual report, JCPenney reported cost o
> Refer to M4-8. Prepare a statement of stockholders’ equity in good form for the current year. Beginning balances for stockholders’ equity accounts are: Common stock, $30; Additional paid-in capital, $670; and Retained
> Enchantment Corporation is planning to issue bonds with a face value of $400,000 and a coupon rate of 4 percent. The bonds mature in four years and pay interest semiannually every June 30 and December 31. All of the bonds will be sold on January 1 of thi
> Refer to M4-4 and M4-6. Explain how the year-end adjustments affect the operating, investing, and financing activities on the statement of cash flows for Catena’s Marketing Company.
> For the transactions in M2-6 (including the sample), identify each as an investing (I) activity or financing (F) activity on the statement of cash flows for January. M2-6: For each of the following transactions of JonesSpa Corporation for the month of J
> Refer to the adjusted trial balance for Catena’s Marketing Company in M4-8. Prepare the closing entry at the end of the current year. M4-8:
> Refer to M4-8. Prepare a classified balance sheet in good form for the end of the current year. M4-8:
> Complete M2-10 and then prepare a trial balance for JonesSpa Corporation as of January 31. M2-10:
> For each transaction in M2-6 (including the sample), post the effects to the appropriate T-accounts and determine ending account balances. Beginning balances are provided. M2-6: For each of the following transactions of JonesSpa Corporation for the mont
> Match each definition with its related term by entering the appropriate letter in the space provided. There should be only one definition per term (that is, there are more definitions than terms).
> At the end of a recent year, The Gap, Inc., reported total assets of $13,679 million, current assets of $4,516 million, total liabilities of $10,363 million, current liabilities of $3,209 million, and stockholders’ equity of $3,316 million. What is its c
> 4. The two components of the return on asset ratio are a. Gross profit margin ratio and return on equity ratio. b. Net profit margin ratio and earnings per share ratio. c. Net profit margin ratio and total asset turnover ratio. d. Return on equity ratio
> 4. Brad & Kelly Company has borrowed $100,000 from the bank to be repaid over the next five years, with payments beginning next month. Which of the following best describes the presentation of this debt in the balance sheet as of today (the date of borro
> On January 1 of this year, Phoebe Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Phoebe uses the effective-interest amortization method. The partially completed amortization schedule b
> Which of the following is false regarding a perpetual inventory system? a. Physical counts are not needed because records are maintained on a transaction-by-transaction basis. b. The balance in the inventory account is updated with each inventory purchas
> 3. On October 1, 2023, the $12,000 premium on a one-year insurance policy for the building was paid and recorded as Prepaid Insurance Expense. On December 31, 2023 (end of the accounting period), what adjusting entry is needed? 4. On June 1, 2022, Oakcre
> Refer to E4-3 and E4-5. Required: For each of the transactions in E4-3 and E4-5, indicate the amount and the direction of effects of the adjusting entry on the elements of the balance sheet and income statement. Using the following format, indicate + for
> Trotman’s Variety Store is completing the accounting process for the current year just ended, December 31. The transactions during the year have been journalized and posted. The following data with respect to adjusting entries are available: a. Wages ear
> Preparing an Income Statement Sysco Corp. is one of the nation’s leading distributors of food and related products to restaurants, universities, hotels, and other customers. A simplified version of its recent income statement contained
> Analyzing Revenues and Expenses and Preparing an Income Statement Assume that you are the owner of Campus Connection, which specializes in items that interest students. At the end of January of the current year, you find (for January only) this informati
> Nittany Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1: Required: Compute ending inventory and cost of goods s
> Procter & Gamble is a multinational corporation that manufactures and markets many household products. In a recent year, sales for the company were $83,062 (all amounts in millions). The annual report did not disclose the amount of credit sales, so w
> Compute the component percentages for Trixy Magic’s income statement below. Discuss any trends you observe.
> Cintas designs and manufactures uniforms for corporations throughout the United States and Canada. The company’s stock is traded on the NASDAQ. Selected information from the company’s financial statements follows. Requ
> Last year, Spruce Company reported the following: This year, Spruce is considering whether to issue more debt to fund a $200,000 project or to issue additional shares of common stock. Both options will bring in exactly $200,000. Spruce’
> Caterpillar is the world’s leading manufacturer of construction and mining equipment. For each of the following transactions, indicate whether net cash inflows (outflows) from operating activities (NCFO), investing activities (NCFI), or financing activit
> Dell Technologies Inc. is a global technology provider that brings together hardware, software, and services. Some of the items included in its recent annual consolidated statement of cash flows presented using the indirect method are listed here. Indica
> As described in a recent annual report, Verizon Communications provides wireless voice and data services across one of the most extensive wireless networks in the United States. Verizon now serves more than 100 million customers, making it the largest wi
> A recent statement of cash flows for Apple contained the following information (dollars in millions): Required: For each of the asset and liability accounts listed on the statement of cash flows, determine whether the account balances increased or decrea
> Adidas AG is a global company that designs and markets sports and fitness products, including footwear, apparel, and accessories. Some of the items included in its recent annual consolidated statement of cash flows presented using the indirect method are
> Procter & Gamble (P&G) brands touch the lives of people around the world. Assume that in the current year the company had 10 billion shares of common stock authorized, 4 billion shares issued, and 3 billion shares outstanding. Par value is $1 per share.
> Assume General Motors Corporation is planning to issue bonds with a face value of $250,000 and a coupon rate of 6 percent. The bonds mature in five years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1
