Question: The comparative balance sheets for Gale Company

> The Moto Hotel opened for business on May 1, 2017. Here is its trial balance before adjustment on May 31. Other data: 1. Insurance expires at the rate of $450 per month. 2. A count of supplies shows $1,050 of unused supplies on May 31. 3. Annual depreci

> On January 1, 2015, Picard Corporation issued $3,000,000, 5-year, 8% bonds at 97. The bonds pay interest annually on January 1. By January 1, 2017, the market rate of interest for bonds of risk similar to those of Picard Corporation had risen. As a resul

> Larry Dundee is the chief executive officer of Palmer Electronics. Dundee is an expert engineer but a novice in accounting. Dundee asks you, as an accounting student, to explain (a) the bases for comparison in analyzing Palmer’s financial statements and

> Walt Jax, the owner-president of Computer Services Company, is unfamiliar with the statement of cash flows that you, as his accountant, prepared. He asks for further explanation. Instructions Write him a brief memo explaining the form and content of the

> Vertical analysis (common-size) percentages for Palau Company’s sales revenue, cost of goods sold, and expenses are listed here. Did Palau’s net income as a percent of sales increase, decrease, or remain unchanged ove

> (a) Why is net cash provided by operating activities likely to be lower than reported net income during the growth phase? (b) Why is net cash from investing activities often positive during the late maturity phase and during the decline phase?

> Bylie Company has an old factory machine that cost $50,000. The machine has accumulated depreciation of $28,000. Bylie has decided to sell the machine. (a) What entry would Bylie make to record the sale of the machine for $25,000 cash? (b) What entry wou

> Hudson Corporation’s balance sheet at December 31, 2016, is presented below. During January 2017, the following transactions occurred. Hudson uses the perpetual inventory method. Jan. 1 Hudson accepted a 4-month, 8% note from Betheny C

> Brady Furniture Corp. is nationally recognized for making high-quality products. Management is concerned that it is not fully exploiting its brand power. Brady’s production managers are also concerned because their plants are not operat

> Identify the liabilities classified by Apple as current.

> The corporate charter of Gage Corporation allows the issuance of a maximum of 100,000 shares of common stock. During its first 2 years of operation, Gage sold 70,000 shares to shareholders and reacquired 4,000 of these shares. After these transactions, h

> Two popular methods of financial statement analysis are horizontal analysis and vertical analysis. Explain the difference between these two methods.

> Why is it necessary to use comparative balance sheets, a current income statement, and certain transaction data in preparing a statement of cash flows?

> The financial statements of Louis Vuitton are presented in Appendix F. Instructions for accessing and using the company’s complete annual report, including the notes to its financial statements, are also provided in Appendix F. Instructions Using the not

> Blythe Corporation and Jacke Corporation, two companies of roughly the same size, are both involved in the manufacture of shoe-tracing devices. Each company depreciates its plant assets using the straight-line approach. An investigation of their financia

> Presented below are the financial statements of Warner Company. Additional data: 1. Depreciation expense was $17,500. 2. Dividends declared and paid were $20,000. 3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 origina

> Spahn Company manufactures backpacks. During 2017, Spahn issued bonds at 10% interest and used the cash proceeds to purchase treasury stock. The following financial information is available for Spahn Company for the years 2017 and 2016. Instructions (a)

> The following information is taken from Lassen Corp.’s balance sheet at December 31, 2016. Interest is payable annually on January 1. The bonds are callable on any annual interest date. Lassen uses straight-line amortization for any bo

> What are the essential features of the allowance method of accounting for bad debts?

> Cassini Company Ltd. publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $28 per year. During November 2017, Cassini sells 6,300 subscriptions for cash, beginning with the December issue. Cassini prepares financial st

> Nordstrom, Inc. operates department stores in numerous states. Suppose selected financial statement data (in millions) for 2017 are presented below. For the year, net credit sales were $8,258 million, cost of goods sold was $5,328 million, and net cash

> The following are comparative balance sheets for Mitch Company. Additional information: 1. Net income for 2017 was $93,000. 2. Depreciation expense was $34,000. 3. Cash dividends of $39,000 were declared and paid. 4. Bonds payable amounting to $50,000 w

> On October 31, the stockholders’ equity section of Manolo Company’s balance sheet consists of common stock $648,000 and retained earnings $400,000. Manolo is considering the following two courses of action: (1) declaring a 5% stock dividend on the 81,000

> You are a loan officer for White Sands Bank of Taos. Paul Jason, president of P. Jason Corporation, has just left your office. He is interested in an 8-year loan to expand the company’s operations. The borrowed funds would be used to pu

> Pete Kent and Maria Robles are examining the following statement of cash flows for Sullivan Company for the year ended January 31, 2017. Pete claims that Sullivan’s statement of cash flows is an excellent portrayal of a superb first ye

> What is just-in-time inventory management? What are its potential advantages?

> The notes that accompany a company’s financial statements provide informative details that would clutter the amounts and descriptions presented in the statements. Refer to the financial statements of Apple Inc. in Appendix A. Instructions for accessing a

> Earl Kent, your uncle, is an inventor who has decided to incorporate. Uncle Earl knows that you are an accounting major at U.N.O. In a recent letter to you, he ends with the question, “I’m filling out a state incorporation application. Can you tell me th

> The September 1, 2009, edition of CFO.com contains an article by Marie Leone and Tim Reason entitled “Dirty Secrets.” You can access this article at www.cfo.com/article.cfm/14292477?f=singlepage. Instructions Read the article and answer the following qu

> Presented below is an aging schedule for Bryan Company. At December 31, 2016, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $8,000. Instructions (a) Journalize and post the adjusting entry for bad debts at December 31, 2016. (

> The stockholders’ equity section of Mabry Corporation’s balance sheet consists of common stock ($8 par) $1,000,000 and retained earnings $300,000. A 10% stock dividend (12,500 shares) is declared when the market price per share is $19. Show the before-an

> What are the two principal components of stock- holders’ equity?

> Helen Powell and Paul Tang were discussing the format of the statement of cash flows of Baumgarten Co. At the bottom of Baumgarten’s statement of cash flows was a separate section entitled “Noncash investing and financing activities.” Give three examples

> (a) Identify three taxes commonly paid by employers on employees’ salaries and wages. (b) Where in the financial statements does the employer report taxes withheld from employees’ pay?

> Explain how the choice of one of the following accounting methods over the other raises or lowers a company’s net income during a period of continuing inflation. (a) Use of FIFO instead of LIFO for inventory costing. (b) Use of a 6-year life for machiner

> Suppose you have been presented with selected information taken from the financial statements of Southwest Airlines Co., shown on the next page. Instructions (a) Calculate each of the following ratios for 2017 and 2016. (1) Current ratio. (2) Free cash f

> Data for Rewe Company are presented in P12-5A(given below). Instructions Prepare the operating activities section of the statement of cash flows using the direct method. REWE COMPANY Income Statement For the Year Ended December 31, 2017 Service reve

> On January 1, 2017, Kimbel Inc. had these stockholders’ equity balances. Common Stock, $1 par (2,000,000 shares authorized, 600,000 shares issued and outstanding) $ 600,000 Paid-in Capital in Excess of Par Value 1,500,000 Retained Earnings

> Gato Inc. had the following inventory situations to consider at January 31, its year-end. (a) Goods held on consignment for Steele Corp. since December 12. (b) Goods shipped on consignment to Logan Holdings Inc. on January 5. (c) Goods shipped to a custo

> Season tickets for the Dingos are priced at $320 and include 16 home games. An equal amount of revenue is recognized after each game is played. When the season began, the amount credited to Unearned Ticket Revenue was $1,728,000. By the end of October, $

> The following information is available for Nguoi Corporation. (a) Compute earnings per share for 2017 and 2016 for Nguoi, and comment on the change. Nguoi’s primary competitor, Matisse Corporation, had earnings per share of $1 per shar

> Here are the comparative income statements of Delaney Corporation. Instructions (a) Prepare a horizontal analysis of the income statement data for Delaney Corporation, using 2016 as a base. (Show the amounts of increase or decrease.) (b) Prepare a verti

> The following three accounts appear in the general ledger of Beiber Corp. during 2017. Instructions From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method. The loss on disposal

> On January 1, Graves Corporation had 60,000 shares of no-par common stock issued and outstanding. The stock has a stated value of $4 per share. During the year, the following transactions occurred. Apr. 1 Issued 9,000 additional shares of common stock fo

> The November 16, 2011, edition of the Wall Street Journal Online contains an article by Maxwell Murphy entitled “The Big Number: 51.” Instructions Read the article and answer the following questions. (a) What do the 51 companies referred to in the title

> Bond or debt securities pay a stated rate of interest. This rate of interest is dependent on the risk associated with the investment. Also, bond prices change when the risks associated with those bonds change. Standard & Poor’s provides ratings for compa

> The April 25, 2012, edition of the Wall Street Journal contains an article by Spencer Jakab entitled “Amazon’s Valuation Is Hard to Justify.” Instructions Read the article and answer the following questions. (a) Explain what is meant by the statement tha

> The November 23, 2011, edition of the Wall Street Journal Online contains an article by John Jannarone entitled “Backlash from Netflix Buybacks.” Instructions Read the article and answer the following questions. (a) What was the stock price for the share

> During a recent period, the fast-food chain Wendy’s International purchased many treasury shares. This caused the number of shares outstanding to fall from 124 million to 105 million. The following information was drawn from the company

> a. Jeri Company sells three different categories of tools (small, medium and large). The cost and market value of its inventory of tools are as follows. Determine the value of the company’s inventory under the lower-of-cost-or-market ap

> At the beginning of the current period, Rose Corp. had balances in Accounts Receivable of $200,000 and in Allowance for Doubtful Accounts of $9,000 (credit). During the period, it had net credit sales of $800,000 and collections of $763,000. It wrote off

> The net income for Mongan Co. for 2017 was $280,000. For 2017, depreciation on plant assets was $70,000, and the company incurred a loss on disposal of plant assets of $28,000. Compute net cash provided by operating activities under the indirect method,

> Identify three taxes commonly withheld by the employer from an employee’s gross pay.

> A corporation has been defined as an entity separate and distinct from its owners. In what ways is a corporation a separate legal entity?

> Identify and explain factors that affect quality of earnings.

> Why is it important to disclose certain noncash transactions? How should they be disclosed?

> The intangible assets section of Amato Corporation’s balance sheet at December 31, 2017, is presented here. Patents ($60,000 cost less $6,000 amortization) $54,000 Copyrights ($36,000 cost less $25,200 amortization) 10,800 Total $64,800

> Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions). Instructions (a) For each company, compute the following ratios. (1) Current ratio. (2) Accounts receivable turnover. (3) Average collection period. (4) In

> Rewe Company’s income statement contained the condensed information below. Rewe’s balance sheets contained the following comparative data at December 31. Accounts payable pertain to operating expenses. Instructions P

> Layes Corporation has been authorized to issue 20,000 shares of $100 par value, 7%, noncumulative preferred stock and 1,000,000 shares of no-par common stock. The corporation assigned a $5 stated value to the common stock. At December 31, 2017, the ledge

> Malcolm Company sold $6,000,000, 7%, 15-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on December 31. The bonds were sold at 98. Instructions (a) Prepare the journal entry to record the issuance of the bonds on Jan

> Buffet Wholesalers accepts from Gates Stores a $6,200, 4-month, 9% note dated May 31 in settlement of Gates’ overdue account. The maturity date of the note is September 30. What entry does Buffet make at the maturity date, assuming Gates pays the note an

> Maria Lopez, CEO of Sales Bin Stores, is considering a recommendation made by both the company’s purchasing manager and director of finance that the company should invest in a sophisticated new perpetual inventory system to replace its periodic system. E

> During the month of March, Munster Company’s employees earned wages of $64,000. Withholdings related to these wages were $4,896 for Social Security (FICA), $7,500 for federal income tax, $3,100 for state income tax, and $400 for union dues. The company i

> The following information is available for Stamos Corporation for the year ended December 31, 2017. Beginning cash balance $ 45,000 Accounts payable decrease 3,700 Depreciation expense 162,000 Accounts receivable increase

> Mesa Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the fi

> Suppose the comparative balance sheets of Nike, Inc. are presented here. Instructions (a) Prepare a horizontal analysis of the balance sheet data for Nike, using 2016 as a base. (Show the amount of increase or decrease as well.) (b) Prepare a vertical a

> For many years, Borders Group and Barnes and Noble were the dominant booksellers in the United States. They experienced rapid growth, and in the process they forced many small, independent bookstores out of business. Recently, Borders filed for bankruptc

> The March 4, 2010, edition of the Wall Street Journal Online contains an article by Jeffrey McCracken and Tom McGinty entitled “With Fistfuls of Cash, Firms on Hunt.” Instructions Read the article and answer the following questions. (a) How much cash did

> Miguel, Inc. reported net income of $2.5 million in 2017. Depreciation for the year was $160,000, accounts receivable decreased $350,000, and accounts payable decreased $280,000. Compute net cash provided by operating activities using the indirect approa

> The Coca-Cola Company and PepsiCo, Inc. provide refreshments to every corner of the world. Suppose selected data from recent consolidated financial statements for The Coca-Cola Company and for PepsiCo, Inc. are presented here (in millions). Instructions

> What are the basic ownership rights of common stockholders in the absence of restrictive provisions?

> The financial statements of Amazon.com, Inc. are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions (a) Based on the information contained in these fi nancial statements, compute the following

> (a) What are the sources (inflows) of cash in a statement of cash flows? (b) What are the uses (outflows) of cash?

> The following information (in millions of dollars) is available for Limited Brands for a recent year: sales revenue $9,043, net income $220, preferred dividend $0, and weighted-average shares outstanding 333 million. Compute the earnings per share for Li

> At January 1, 2017, Youngstown Company reported the following property, plant, and equipment accounts: Accumulated depreciation—buildings $ 62,200,000 Accumulated depreciation—equipment 54,000,000 Buildings 97,400,000 Equipment 15

> The following financial information is for Priscoll Company. Additional information: 1. Inventory at the beginning of 2016 was $115,000. 2. Accounts receivable (net) at the beginning of 2016 were $86,000. 3. Total assets at the beginning of 2016 were $6

> Data for Munsun Company are presented in P12-3A(given below): Instructions Prepare the operating activities section of the statement of cash flows using the direct method. MUNSUN COMPANY Income Statement For the Year Ended November 30, 2017 Sales re

> The ledger of Waite Corporation at December 31, 2017, after the books have been closed, contains the following stockholders’ equity accounts. Preferred Stock (10,000 shares issued) $1,000,000 Common Stock (300,000 shares issued) 1,500,000 Paid-

> On October 1, 2016, Kristal Corp. issued $700,000, 5%, 10-year bonds at face value. The bonds were dated October 1, 2016, and pay interest annually on October 1. Financial statements are prepared annually on December 31. Instructions (a) Prepare the jour

> The financial statements of Louis Vuitton are presented in Appendix F. Instructions for accessing and using the company’s complete annual report, including the notes to its financial statements, are also provided in Appendix F. Instructions Use the compa

> The financial statements of Louis Vuitton are presented in Appendix F. Instructions for accessing and using the company’s complete annual report, including the notes to its financial statements, are also provided in Appendix F. Instructions Use the compa

> The financial statements of Louis Vuitton are presented in Appendix F. Instructions for accessing and using the company’s complete annual report, including the notes to its financial statements, are also provided in Appendix F. Instructions Use the compa

> A On July 31, 2017, Keeds Company had a cash balance per books of $6,140. The statement from Dakota State Bank on that date showed a balance of $7,690.80. A comparison of the bank statement with the Cash account revealed the following facts. 1. The bank

> The stockholders’ equity section of Lachlin Corporation’s balance sheet at December 31 is presented here. Instructions From a review of the stockholders’ equity section, answer the following question

> Operating data for Joshua Corporation are presented below. Instructions Prepare a schedule showing a vertical analysis for 2017 and 2016. 2017 2016 Sales revenue Cost of goods sold Selling expenses Administrative expenses $800,000 $600,000 520,000 4

> Distinguish between long-term investments and property, plant, and equipment.

> The current sections of Sunn Inc.’s balance sheets at December 31, 2016 and 2017, are presented here. Sunn’s net income for 2017 was $153,000. Depreciation expense was $27,000. Instructions Prepare the net cash provided by operatin

> Grouper Company provides you with the following balance sheet information as of December 31, 2017. In addition, Grouper reported net income for 2017 of $16,000, income tax expense of $3,200, and interest expense of $1,300. (a) Compute the current ratio

> Hoyle Corporation has issued 100,000 shares of $5 par value common stock. It was authorized 500,000 shares. The paid-in capital in excess of par value on the common stock is $263,000.The corporation has reacquired 7,000 shares at a cost of $46,000 and is

> The March 29, 2012, edition of the Wall Street Journal Online contains an article by Miguel Bustillo entitled, “Best Buy Forced to Rethink Big Box.” The article explains how the 1,100 giant stores, which enabled Best B

> Marriott Corporation split into two companies: Host Marriott Corporation and Marriott International. Host Marriott retained ownership of the corporation’s vast hotel and other properties, while Marriott International, rather than owning

> Hechinger Co. and Home Depot are two home improvement retailers. Compared to Hechinger, founded in the early 1900s, Home Depot is a relative newcomer. But in recent years, while Home Depot was reporting large increases in net income, Hechinger was report

> On January 1, 2017, Bryce Inc. changed from the LIFO method of inventory pricing to the FIFO method. Explain how this change in accounting principle should be treated in the company’s financial statements.

> The following control procedures are used in Keaton Company for over-the-counter cash receipts. 1. Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy. 2. All over-the-counter

> (a) Your roommate says, “Sales taxes are reported as an expense in the income statement.” Do you agree? Explain. (b) Leiana’s Cafe has cash proceeds from sales of $8,550. This amount includes $550 of sales taxes. Give the entry to record the proceeds.

> Moosier Inc. has been in operation for 3 years and uses the FIFO method of pricing inventory. During the fourth year, Moosier changes to the average-cost method for all its inventory. How will Moosier report this change?

> Distinguish among the three activities reported in the statement of cash flows.

> You are provided with the following information for Lazuris Enterprises, effective as of its April 30, 2017, year-end. Accounts payable……………………………………………………$ 834 Accounts receivable……………………………………………………810 Accumulated depreciation—equipment………….….…......…

> Nona Jaymes believes a corporation must be incorporated in the state in which its headquarters office is located. Is Nona correct? Explain.