Question: The management of Uhuru Inc. is trying

> The following information is taken from the 2017 general ledger of Preminger company. Instructions In each case, compute the amount that should be reported in the operating activities section of the statement of cash flows under the direct method. R

> Selected data taken from a recent year’s financial statements of trading card company Topps Company, Inc. are as follows (in millions). Net sales $326.7 Current liabilities, beginning of year 41.1 Current liabilities, end of year

> Suppose the 2017 adidas financial statements contain the following selected data (in millions). Compute the following values and provide a brief interpretation of each. (a) Working capital. (b) Current ratio (c) Debt to assets ratio. (d) Times interest

> Match the statement with the term most directly associated with it. Goodwill Amortization Intangible assets Franchise Research and development costs 1. _______ Rights, privileges, and competitive advantages that result from the ownership of long-l

> What three conditions must be met before a cash dividend is paid?

> What is the difference between the current ratio and working capital?

> Why and how is depreciation expense reported in a statement of cash flows prepared using the indirect method?

> Lee and Jay are discussing how the market price of a bond is determined. Lee believes that the market price of a bond is solely a function of the amount of the principal payment at the end of the term of a bond. Is he right? Discuss.

> Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions (a) For each company, calculate the following values for 2014. (1) Working capital. (2) Current r

> The situations presented here are independent of each other. Instructions For each situation, prepare the appropriate journal entry for the redemption of the bonds. (a) Mikhail Corporation redeemed $140,000 face value, 9% bonds on April 30, 2017, at 101.

> The following information is available for Balboa Corp. for 2017. Cash used to purchase treasury stock $ 48,100 Cash dividends paid 21,800 Cash paid for interest 22,400 Net income 464,300 Sales revenue 802,000 Cash paid

> Baja Airlines is considering these two alternatives for financing the purchase of a fleet of airplanes: 1. Issue 50,000 shares of common stock at $40 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2. Issue 12%, 10-

> The December 10, 2011, edition of The Economist contains an article entitled “Helping the Poor to Save: Small Wonder.” This article discusses how many of the world’s poorest people benefit from borrowing small amounts of money. Instructions Read the arti

> Hollie Company has stockholders’ equity of $400,000 and net income of $72,000. It has a payout ratio of 18% and a return on assets of 20%. How much did Hollie pay in cash dividends, and what were its average total assets?

> Here is information related to Morgane Company for 2017. Total credit sales $1,500,000 Accounts receivable at December 31 840,000 Bad debts written off 37,000 Instructions (a) What amount of bad debt expense will Morgane Company

> Refer to the financial statements of Apple Inc. in Appendix A. Instructions (a) Calculate the accounts receivable turnover and average collection period for 2014. (Assume all sales were credit sales.) (b) Did Apple have any potentially signifi cant credi

> Presented here are liability items for O’Brian Inc. at December 31, 2017. Prepare the liabilities section of O’Brian’s balance sheet. $ 7,800 Accounts payable Notes payable (due May 1, 2018) Bonds

> Assume that Acorn Inc. sold bonds with a face value of $100,000 for $104,000. Was the market interest rate equal to, less than, or greater than the bonds’ contractual interest rate? Explain.

> Identify five items that are adjustments to convert net income to net cash provided by operating activities under the indirect method.

> Indicate how each of these accounts should be classified in the stockholders’ equity section of the balance sheet. (a) Common Stock. (b) Paid-in Capital in Excess of Par Value. (c) Retained Earnings. (d) Treasury Stock. (e) Paid-in Capital in Excess of S

> What does each type of ratio measure? (a) Liquidity ratios. (b) Solvency ratios. (c) Profitability ratios.

> The internal control procedures in Dayton Company result in the following provisions. Identify the principles of internal control that are being followed in each case. (a) Employees who have physical custody of assets do not have access to the accounting

> Umatilla Bank and Trust is considering giving Pohl Company a loan. Before doing so, it decides that further discussions with Pohl’s accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $275

> Hetty Grey has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2016, Hetty was loaned $150,000 at an annual interest rate of 7%. The loan is repayable over 5 years in annual

> Kojak Corporation decided to issue common stock and used the $300,000 proceeds to redeem all of its outstanding bonds on January 1, 2017. The following information is available for the company for 2017 and 2016. Instructions (a) Compute the return on co

> The condensed financial statements of Ness Company for the years 2016 and 2017 are presented below. Compute the following ratios for 2017 and 2016. (a) Current ratio. (b) Inventory turnover. (Inventory on December 31, 2015, was $340.) (c) Profit margin.

> The ledger of Macarty Company at the end of the current year shows Accounts Receivable $78,000, Credit Sales $810,000, and Sales Returns and Allowances $40,000. Instructions (a) If Macarty uses the direct write-off method to account for uncollectible acc

> The 2017 accounting records of Megan Transport reveal these transactions and events. Instructions Prepare the cash flows from operating activities section using the direct method. $ 10,000 Payment of salaries and wages 48,000 Depreciation expense 18

> If your school has a subscription to the FASB Codification, go to http://aaahq.org/asclogin.cfm to log in and prepare responses to the following. (a) What is the definition of current liabilities? (b) What is the definition of long-term obligations? (c)

> Staples, Inc. is one of the largest suppliers of office products in the United States. Suppose it had net income of $738.7 million and sales of $24,275.5 million in 2017. Its total assets were $13,073.1 million at the beginning of the year and $13,717.3

> Stossel Corporation has 200,000 shares of $10 par value common stock out-standing. It declares a 12% stock dividend on December 1 when the market price per share is $17. The dividend shares are issued on December 31. Prepare the entries for the declarati

> The following data were taken from the income statements of Mydorf Company. Compute for each year (a) the inventory turnover and (b) days in inventory. What conclusions concerning the management of the inventory can be drawn from these data? 2017 20

> Describe the two major obligations incurred by a company when bonds are issued.

> Identify the events that result in credits and debits to retained earnings.

> The following characteristics, assumptions, principles, and constraint guide the FASB when it creates accounting standards. Relevance Periodicity assumption Faithful representation Going concern assumption Comparability Historical cost principle Consiste

> The president of Murquery Company is puzzled. During the last year, the company experienced a net loss of $800,000, yet its cash increased $300,000 during the same period of time. Explain to the president how this could occur.

> Vern Thoms is puzzled. His company had a profit margin of 10% in 2017. He feels that this is an indication that the company is doing well. Tina Amos, his accountant, says that more information is needed to determine the company’s financial well-being. Wh

> The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements for VF Corporation are presented in Appendix C. Instructions (a) Based on the information in the financial statements, compute these 2014 values for

> Laverne purchased a new piece of equipment to be used in its new facility. The $370,000 piece of equipment was purchased with a $50,000 down payment and with cash received through the issuance of a $320,000, 8%, 5-year mortgage payable issued on January

> You are provided with the following transactions that took place during the year. Instructions For each transaction listed, indicate whether it will increase (I), decrease (D), or have no effect (NE) on free cash flow. Free Cash Transactions Flow ($

> Assume that the following are independent situations recently reported in the Wall Street Journal. 1. General Electric (GE) 7% bonds, maturing January 28, 2018, were issued at 111.12. 2. Boeing 7% bonds, maturing September 24, 2032, were issued at 99.08.

> Panza Corporation experienced a fi re on December 31, 2017, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances. Additional information: 1. The inventory tur

> Suppose the 2017 income statement for McDonald’s Corporation shows cost of goods sold $5,178.0 million and operating expenses (including depreciation expense of $1,216.2 million) $10,725.7 million. The comparative balance sheets for the year show that in

> Suppose the following financial information is available for Walgreen Company. Instructions Calculate the payout ratio and return on common stockholders’ equity for 2017 and 2016. Comment on your findings. (in millions) 2017 2016 A

> The March 6, 2012, edition of the Wall Street Journal Online contains an article by David Kesmodel entitled “Air War: ‘Winglet’ Versus ‘Sharklet’.” This article demonstrates how a company focused on green technology has also been profitable. Instructions

> For most U.S. families, medical costs are substantial and rising. But will medical costs be your most substantial expense over your lifetime? Not likely. Will it be housing or food? Again, not likely. The answer: Taxes are likely to be your biggest expen

> The statement of financial position for Sundell Company includes the following accounts (in British pounds): Accounts Receivable £12,500, Prepaid Insurance £3,600, Cash £15,400, Supplies £5,200, and Debt Investments (short-term) £6,700. Prepare the curre

> The January 19, 2012, edition of the Wall Street Journal contains an article by Angus Loten entitled “With New Law, Profits Take a Back Seat.” Instructions Read the article and answer the following questions. (a) Summarize the nature of the new law that

> Suppose the information below is from the 2017 fi nancial statements and accompanying notes of The Scotts Company, a major manufacturer of lawn-care products. Instructions Answer each of the following questions. (a) Calculate the accounts receivable turn

> Emron Inc. is considering these two alternatives to finance its construction of a new $2 million plant: 1. Issuance of 200,000 shares of common stock at the market price of $10 per share. 2. Issuance of $2 million, 6% bonds at face value. Complete the ta

> The following data are taken from the financial statements of Colby Company. Compute for each year (a) the accounts receivable turnover and (b) the average collection period. What conclusions about the management of accounts receivable can be drawn from

> Name the major ratios useful in assessing (a) liquidity and (b) solvency.

> (a) What is a convertible bond? (b) Discuss the advantages of a convertible bond from the standpoint of the bondholders and of the issuing corporation.

> Why is it necessary to convert accrual basis net income to cash-basis net income when preparing a statement of cash flows?

> (a) What are the principal differences between common stock and preferred stock? (b) Preferred stock may be cumulative. Discuss this feature. (c) How are dividends in arrears presented in the financial statements?

> On January 1, 2017, Opal Company issued $2,000,000 face value, 7%, 10-year bonds at $2,147,202. This price resulted in a 6% effective-interest rate on the bonds. Opal uses the effective-interest method to amortize bond premium or discount. The bonds pay

> The comparative balance sheets for Spicer Company as of December 31 are presented below. Additional information: 1. Operating expenses include depreciation expense of $42,000. 2. Land was sold for cash at book value. 3. Cash dividends of $12,000 were pa

> Identify the five components of a good internal control system.

> A The bank portion of the bank reconciliation for Bogalusa Company at October 31, 2017, is shown below. The adjusted cash balance per bank agreed with the cash balance per books at October 31. The November bank statement showed the following checks and

> Mobbe Company issued $500,000, 15-year, 7% bonds at 96. Instructions (a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (b) Suppose the remaining Discount on Bonds Payable was $12,000 on December 31, 2022. Show the balanc

> Zimmer Company completed its first year of operations on December 31, 2017. Its initial income statement showed that Zimmer had sales revenue of $198,000 and operating expenses of $83,000. Accounts receivable and accounts payable at year-end were $60,000

> The following financial information is available for Flintlock Corporation. Instructions Calculate the payout ratio and return on common stockholders’ equity for 2017 and 2016. Comment on your findings. (in millions) 2017 2016 Aver

> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin.cfm to log in and prepare responses to the following. (a) What does it mean to capitalize an item? (b) What is the definition provided for an intangible asset? (c

> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin.cfm to log in and prepare responses to the following. Use the Master Glossary for determining the proper definitions. (a) Discontinued operations. (b) Comprehensi

> If your school has a subscription to the FASB Codification, go to http://aaahq.org/ascLogin.cfm to log in and prepare responses to the following. Use the Master Glossary to determine the proper definitions. (a) What are cash equivalents? (b) What are fin

> If your school has a subscription to the FASB Codification, go to http://aaahq org/ascLogin.cfm to log in and prepare responses to the following. (a) What is the stock dividend? (b) What is a stock split? (c) At what percentage point does the issuance of

> During the summer of 2002, the financial press reported that Citigroup was being investigated for allegations that it had arranged transactions for Enron so as to intentionally misrepresent the nature of the transactions and consequently achieve favorabl

> A company’s trade name is a very important asset to the company, as it creates immediate product identification. Companies invest substantial sums to ensure that their product is well-known to the consumer. Test your knowledge of who owns some famous bra

> Explain each of these important terms in issuing bonds: (a) Face value. (b) Contractual interest rate. (c) Bond certificate.

> The following control procedures are used in Bunny’s Boutique Shoppe for cash disbursements. 1. Each week, 100 company checks are left in an unmarked envelope on a shelf behind the cash register. 2. The store manager personally approves all payments befo

> 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) Identify two accounts on Amazon’s balance sheet that provide evidence that Amazon uses a

> (a) Distinguish among the following bases of comparison: intra company, intercompany, and industry averages. (b) Give the principal value of using each of the three bases of comparison.

> Describe the indirect method for determining net cash provided (used) by operating activities.

> Monet, Inc. purchases 1,000 shares of its own previously issued $5 par common stock for $11,000. Assuming the shares are held in the treasury, what effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d)

> On January 1, 2017, Lachte Corporation issued $1,800,000 face value, 5%, 10-year bonds at $1,667,518. This price resulted in an effective-interest rate of 6% on the bonds. Lachte uses the effective-interest method to amortize bond premium or discount. Th

> Data for Granger Inc. are presented in P12-9A(given below): Further analysis reveals that accounts payable pertain to merchandise creditors. Instructions Prepare a statement of cash flows for Granger Inc. using the direct method. GRANGER INC. Compar

> Arroyo Company issued $600,000, 10-year, 6% bonds at 103. Instructions (a) Prepare the journal entry to record the sale of these bonds on January 1, 2017. (b) Suppose the remaining Premium on Bonds Payable was $10,800 on December 31, 2020. Show the balan

> Suppose selected comparative statement data for the giant bookseller Barnes & Noble are presented here. All balance sheet data are as of the end of the fiscal year (in millions). Instructions Compute the following ratios for 2017. (a) Profit margin.

> The following accounts appear in the ledger of Paisan Inc. after the books are closed at December 31, 2017. Common Stock (no-par, $1 stated value, 400,000 shares authorized, 250,000 shares issued) $ 250,000 Paid-in Capital in Excess of Stated Value

> In this chapter, you learned that companies prepare a statement of cash flows in order to keep track of their sources and uses of cash and to help them plan for their future cash needs. Planning for your own short- and long-term cash needs is every bit a

> a. Indicate whether each of the following statements is true or false. 1. A company has the following assets at the end of the year: cash on hand $40,000, cash refund due from customer $30,000, and checking account balance $22,000. Cash and cash equivale

> The July 1998 issue of Inc. magazine includes an article by Jeffrey L. Seglin entitled “Would You Lie to Save Your Company?” It recounts the following true situation: “A Chief Executive Officer (CEO) of a $20-million company that repairs aircraft engines

> The following transactions are for Alonzo Company. 1. On December 3, Alonzo Company sold $500,000 of merchandise to Arte Co., terms 1/10, n/30. The cost of the merchandise sold was $330,000. 2. On December 8, Arte Co. was granted an allowance of $25,000

> Hans Miken, president of Miken Corporation, believes that it is a good practice for a company to maintain a constant payout of dividends relative to its earnings. Last year, net income was $600,000, and the corporation paid $120,000 in dividends. This ye

> When the total cash inflows exceed the total cash outflows in the statement of cash flows, how and where is this excess identified?

> Contrast these types of bonds: (a) Secured and unsecured. (b) Convertible and callable.

> (a) Gina Jaimes believes that the analysis of financial statements is directed at two characteristics of a company: liquidity and profitability. Is Gina correct? Explain. (b) Are short-term creditors, long-term creditors, and stockholders interested in p

> For what reasons might a company like IBM repurchase some of its stock (treasury stock)?

> Megan Corporation purchased machinery on January 1, 2017, at a cost of $250,000. The estimated useful life of the machinery is 4 years, with an estimated salvage value at the end of that period of $30,000. The company is considering different depreciatio

> Condensed financial data of Granger Inc. follow. Additional information: 1. New plant assets costing $100,000 were purchased for cash during the year. 2. Old plant assets having an original cost of $57,500 and accumulated depreciation of $48,500 were so

> Saylor Co. sold $3,000,000, 8%, 10-year bonds on January 1, 2017. The bonds were dated January 1, 2017, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.

> 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 Answer the following questions for each company. (a) What is the balance in cash and cash eq

> The following stockholders’ equity accounts, arranged alphabetically, are in the ledger of Ryder Corporation at December 31, 2017. Common Stock ($2 stated value) $1,600,000 Paid-in Capital in Excess of Par Value—Preferred Stock 45,000 Paid-

> Lendell Company has these comparative balance sheet data: Additional information for 2017: 1. Net income was $25,000. 2. Sales on account were $375,000. Sales returns and allowances amounted to $25,000. 3. Cost of goods sold was $198,000. 4. Net cash pr

> Assume information similar to that in DO IT! 5-2. That is: On October 5, Iverson Company buys merchandise on account from Lasse Company. The selling price of the goods is $5,000, and the cost to Lasse Company is $3,000. On October 8, Iverson returns defe

> Clean Aire Anti-Pollution Company is suffering declining sales of its principal product, non biodegradable plastic cartons. The president, Wade Truman, instructs his controller, Kate Rollins, to lengthen asset lives to reduce depreciation expense. A proc

> Jerry Hogan, president of Norwest, Inc., is considering the issuance of bonds to finance an expansion of his business. He has asked you to do the following: (1) discuss the advantages of bonds over common stock financing, (2) indicate the types of bonds

> René Kelly, president of RL Industries, wishes to issue a press release to bolster her company’s image and maybe even its stock price, which has been gradually falling. As controller, you have been asked to provide a list of 20 financial ratios and other

> Pendleton Automotive Corp. is a medium-sized wholesaler of automotive parts. It has 10 stockholders who have been paid a total of $1 million in cash dividends for 8 consecutive years. The board’s policy requires that, for this dividend to be declared, ne

> Cooper Corporation has paid 60 consecutive quarterly cash dividends (15 years). The last 6 months have been a real cash drain on the company, however, as profit margins have been greatly narrowed by increasing competition. With a cash balance sufficient