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S-A E  215 Cash flows from operating activities can be calculated using the indirect or direct method. Briefly describe how the two methods differ yet arrive at the same information about the net cash flows from operating activities. S-A E  216 How is it possible for a company to suffer a net loss.
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aEx. 194 The financial statements of Lowz Company appear below: LOWZ COMPANY Comparative Balance Sheet December 31     2017     2016  Assets Cash$  36,000$  23,000 Accounts receivable25,00034,000 Merchandise inventory32,00015,000 Property, plant, and equipment50,00078,000 Accumulated depreciation   (21,000)   (24,000) Total$122,000$126,000 Liabilities and Stockholders' Equity Accounts payable$  18,000$  23,000 Income taxes payable9,0008,000 Bonds payable8,00033,000 Common stock28,00024,000 Retained earnings    59,000    38,000 Total$122,000$126,000 LOWZ COMPANY Income Statement For the Year Ended December 31, 2017 Sales$400,000 Cost of goods sold  270,000 Gross.
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BRIEF EXERCISES BE 165 The following items were taken from the financial statements of Henager, Inc., over a three-year period:       Item         2017       2016    2015  Net Sales$355,000$340,000$300,000 Cost of Goods Sold  214,000  202,000  186,000 Gross Profit$141,000$138,000$114,000 Instructions Compute the following for each of the above time periods. a.The amount and percentage change from 2015 to 2016. b.The amount.
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MATCHING Set 1 — Indirect Method 210.For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method. A.Added to net income B.Deducted from net income C.Cash outflow—investing activity D.Cash inflow—investing activity E.Cash outflow—financing activity F.Cash inflow—financing activity G.Significant noncash investing and.
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77.Turnbull Department Store had net credit sales of $18,000,000 and cost of goods sold of $15,000,000 for the year. The average inventory for the year amounted to $2,500,000. Inventory turnover for the year is a.7.2 times. b.15 times. c.6 times. d.1.5 times. 78.Turnbull Department Store had net credit sales of $18,000,000 and cost of goods.
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aEx. 196 The income statement for Jones Company showed cost of goods sold of $80,000 and operating expenses of $65,000. The comparative balance sheets for the year show that inventory decreased $5,000, prepaid expenses increased $7,000, accounts payable increased $3,000, and accrued expenses payable decreased $5,000. Instructions Compute (a) cash payments to suppliers.
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Ex. 183 The comparative condensed income statements of Marks Corporation are shown below. MARKS CORPORATION Comparative Condensed Income Statements For the Years Ended December 31     2017        2016    Net sales$620,000$500,000 Cost of goods sold 450,000  400,000 Gross profit170,000100,000 Operating expenses   54,000    40,000 Net income$116,000$  60,000 Instructions (a)Prepare a horizontal analysis of the income statement data for Marks Corporation using 2016.
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57.A horizontal analysis performed on a statement of retained earnings would not show a percentage change in a.dividends paid. b.net income. c.expenses. d.beginning retained earnings. 58.Under which of the following cases may a percentage change be computed? a.The trend of the balances is decreasing but all balances are positive. b.There is no balance in the base year. c.There.
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Ex. 184 Operating data for Lewis Corporation are presented below.    2017   Net sales$500,000 Cost of goods sold310,000 Operating expenses120,000 Net income70,000 Instructions Prepare a schedule showing a vertical analysis for 2017. Ex. 185 The following information was taken from the financial statements of Lawson Company:     2017     2016  Gross profit on sales................................$900,000$840,000 Income before income taxes..........................280,000230,000 Net income.......................................240,000216,000 Net income as a percentage of.
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aEx. 193 The income statement of Frank Company is shown below: FRANK COMPANY Income Statement For the Year Ended December 31, 2017 Sales$8,400,000 Cost of goods sold  5,400,000 Gross profit3,000,000 Operating expenses Selling expenses$500,000 Administrative expense700,000 Depreciation expense90,000 Amortization expense    30,000  1,320,000 Net income$1,680,000 Additional information: 1.Accounts receivable increased $400,000 during the year. 2.Inventory increased $250,000 during the year. 3.Prepaid expenses increased $200,000 during the year. 4.Accounts payable.
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Ex. 182 The comparative condensed balance sheets of Able Corporation are presented below. ABLE CORPORATION Comparative Condensed Balance Sheets December 31 20172016 Assets Current assets$  72,000$  80,000 Property, plant, and equipment (net)95,40090,000 Intangibles    33,600    40,000 Total assets$201,000$210,000 Liabilities and stockholders' equity Current liabilities$  40,320$  48,000 Long-term liabilities142,500150,000 Stockholders' equity    18,180    12,000 Total liabilities and stockholders' equity$201,000$210,000 Instructions (a)Prepare a horizontal analysis of the balance sheet data for.
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BE 169 Using the following operating data for Complex Corporation, prepare a schedule showing a vertical analysis for 2017.    2017   2016 Net sales$360,000$320,000 Cost of goods sold210,000180,000 Operating expenses112,000100,000 Net income38,00040,000 BE 170 Using these data from the comparative balance sheet of Banner Company, perform vertical analysis. December 31, 2017December 31, 2016 Accounts receivable$   480,000$   336,000 Inventory720,000504,000 Total assets4,000,0003,000,000 BE 171 For each.
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107.An aircraft company would most likely have a.a high inventory turnover. b.low profit margin. c.high volume. d.a low inventory turnover. 108.Net sales are $8,000,000, beginning total assets are $2,500,000, and the asset turnover is 4.0 times. What is the ending total asset balance? a.$2,000,000 b.$1,500,000 c.$2,800,000 d.$2,500,000 109.Earnings per share is calculated a.only for common stock. b.only for preferred stock. c.for common and.
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SHORT-ANSWER ESSAY QUESTIONS S-A E 212 Distinguish among the three types of activities reported in the statement of cash flows The three activities are: S-A E 213 Why is the statement of cash flows useful? S-A E 214 The statement of cash flows is the only required financial statement that is not prepared from an adjusted trial.
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MULTIPLE CHOICE QUESTIONS 37.Which one of the following is primarily interested in the liquidity of a company? a.Federal government b.Stockholders c.Long-term creditors d.Short-term creditors 38.Which one of the following is not a characteristic generally evaluated in analyzing financial statements? a.Liquidity b.Profitability c.Marketability d.Solvency 39.In analyzing the financial statements of a company, a single item on the financial statements a.should be reported in.
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117.Blitzen Corporation had net income of $500,000 and paid dividends to common stockholders of $40,000 in 2017. The weighted average number of shares outstanding in 2017 was 60,000 shares. Blitzen Corporation's common stock is selling for $50 per share on the New York Stock Exchange. Blitzen Corporation's payout ratio for.
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Ex. 185 Planner Corporation's comparative balance sheets are presented below. PLANNER CORPORATION Comparative Balance Sheets December 31    2017    2016  Cash$ 21,570$ 10,700 Accounts receivable 18,20023,400 Land18,00026,000 Building70,00070,000 Accumulated depreciation  (15,000) (10,000)      Total$112,770$120,100 Accounts payable$  12,370$31,100 Common stock 75,00069,000 Retained earnings    25,400   20,000     Total$112,770$120,100 Additional information: 1.Net income was $27,900. Dividends declared and paid were $22,500. 2.All other changes in noncurrent account balances had a.
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Ex. 181 Towson Company prepared the tabulation below at December 31, 2016. Net Income.........................................................$340,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense, $43,000......................................_______ Increase in accounts receivable, $50,000..............................._______ Decrease in inventory, $13,000......................................_______ Amortization of patent, $4,000......................................_______ Increase in accounts payable, $5,600................................._______ Decrease in interest receivable, $7,000................................_______ Increase in prepaid expenses, $6,000................................._______ Decrease in income taxes.
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Ex. 186 Selected financial statement data for Mure Company are presented below. December 31, 2017December 31, 2016 Cash$  40,000$30,000 Short-term investments20,00018,000 Receivables (net)100,00090,000 Inventories80,00060,000 Total current liabilities100,00090,000 During 2017, net sales were $950,000, and cost of goods sold was $770,000. Instructions Compute the following ratios at December 31, 2017: (a)Current. (b)Acid-test. (c)Accounts receivable turnover. (d)Inventory turnover. Ex. 187 Selected information from the comparative financial statements of.
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147.Beacon, Inc. disposes of an unprofitable segment of its business. The operation of the segment suffered a $350,000 loss in the year of disposal. The loss on disposal of the segment was $150,000. If the tax rate is 30%, and income before income taxes was $2,300,000, a.the income tax expense on.
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137.The following financial statement information is available for Buil Corporation: a..31:1. b.3.2:1. c.1.5:1. d.4.24:1. 138.The following financial statement information is available for James Corporation: a.15.4%. b.47.9%. c.32.1%. d.13.5%. 139.The following financial statement information is available for Penn Corporation: a.21.7%. b.32.9%. c.28.6%. d.26%. 140.The following financial statement information is available for Long Corporation: a.7.4 times. b.6.4 times. c.9.1 times. d.7.8 times. 141.Dean Corporation reported net income $58,000, net sales $500,000, and.
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21.Inventory turnover measures the number of times on the average the inventory was sold during the period. 22.Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness. 23.The rate of return on total assets will be greater than the rate of return on common stockholders' equity if the company.
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Ex. 178 A comparative balance sheet for Rocker Company appears below: ROCKER COMPANY Comparative Balance Sheet Dec. 31, 2017Dec. 31, 2016 Assets Cash$  34,000$11,000 Accounts receivable18,00013,000 Inventory25,00017,000 Prepaid expenses6,0009,000 Long-term investments-0-17,000 Equipment60,00033,000 Accumulated depreciation—equipment  (20,000)(15,000) Total assets$123,000$85,000 Liabilities and Stockholders' Equity Accounts payable$  17,000$  7,000 Bonds payable36,00045,000 Common stock40,00023,000 Retained earnings    30,000  10,000 Total liabilities and stockholders' equity$123,000$85,000 Additional information: 1.Net income for the year ending December 31, 2017 was $35,000. 2.Cash.
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Ex. 186 Miroz Corporation's comparative balance sheets are presented below. MIROZ CORPORATION Comparative Balance Sheets December 31     2017     2016  Cash$ 18,700$ 22,700 Accounts receivable 24,70022,300 Investments25,00016,000 Equipment59,00070,000 Accumulated depreciation  (14,500) (10,000)      Total$112,900$121,000 Accounts payable $  13,600$11,100 Bonds payable      6,000  30,000 Common stock  50,00045,000 Retained earnings    43,300    34,900     Total $112,900$121,000 Additional information: 1.Net income was $17,700. Dividends declared and paid were $9,300. 2.Equipment which cost $11,000.
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Ex. 182 The current sections of Donny Inc.'s balance sheets at December 31, 2016 and 2017, are presented here. Donny's net income for 2017 was $203,000. Depreciation expense was $25,000.    2016    2017  Current assets     Cash$115,000$99,000     Accounts receivable105,00089,000     Inventory 154,000 172,000     Prepaid expense    27,000   21,000            Total current assets$401,000$381,000 Current liabilities     Accrued expenses.
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Ex. 180 The comparative balance sheet of Nathan Company appears below: NATHAN COMPANY Comparative Balance Sheet December 31, ——————————————————————————————————————————— Assets   2017 2016 Current assets .............................................$   420$333 Plant assets ...............................................     780  567 Total assets ...............................................$1,200$900 Liabilities and stockholders' equity Current liabilities ...........................................$   168$144 Long-term debt ............................................300162 Common stock .............................................432306 Retained earnings ..........................................     300  288 Total liabilities and stockholders' equity ........................$1,200$900 Instructions (a)Using horizontal analysis, show the percentage.
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Ex. 180 The following information is available for Sally Corporation for the year ended December 31, 2017: Collection of principal on long-term loan to a supplier$15,000 Acquisition of equipment for cash10,000 Proceeds from the sale of long-term investment at book value20,000 Issuance of common stock for cash27,000 Depreciation expense28,000 Redemption of bonds payable at carrying (book) value35,000 Payment.
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Ex. 174 The following information is available for Redcands Company: Receipts from customers$215,000 Dividends from stock investments3,000 Proceeds from sale of equipment18,000 Proceeds from issuance of stock90,000 Payments for inventory100,000 Payments for operating expenses78,000 Interest paid6,000 Taxes paid4,000 Dividends paid20,000 Instructions Based on the preceding information, compute the net cash provided by operating activities. Ex. 175 Plough Company reported net income of $180,000 for.
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TRUE-FALSE STATEMENTS 1.Intracompany comparisons of the same financial statement items can often detect changes in financial relationships and significant trends. 2.Calculating financial ratios is a financial reporting requirement under generally accepted accounting principles. 3.Measures of a company's liquidity are concerned with the frequency and amounts of dividend payments. 4.Analysis of financial statements is enhanced.
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S-A E  217(Ethics) Sact Creek Company's most recent financial statements showed dismal performance. There was a net loss of $10,000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to.
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BE 174 Shelly Company reported the following financial information: 12/31/1712/31/16 Accounts receivable$   340,000$   360,000 Net credit sales2,450,000 2,420,000 Compute (a) the accounts receivable turnover and (b) the average collection period for 2017. BE 175 Prepare a partial income statement, beginning with income before income taxes using the following information for Stone Corporation for the fiscal year ended.
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47.In analyzing financial statements, horizontal analysis is a a.requirement. b.tool. c.principle. d.theory. 48.Horizontal analysis is also called a.linear analysis. b.vertical analysis. c.trend analysis. d.common size analysis. 49.Vertical analysis is also known as a.perpendicular analysis. b.common size analysis. c.trend analysis. d.straight-line analysis. 50.In ratio analysis, the ratios are never expressed as a a.rate. b.negative figure. c.percentage. d.simple proportion. 51.The formula for horizontal analysis of changes since the base period is the.
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Ex. 178 Ladle Corporation had net income of $2,000,000 in 2015. Using 2016 as the base year, net income decreased by 70% in 2014 and increased by 180% in 2017. Instructions Compute the net income reported by Ladle Corporation for 2016 and 2017. Ex. 179 The following items were taken from the financial statements of.
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87.Trading on the equity (leverage) refers to the a.amount of working capital. b.amount of capital provided by owners. c.use of borrowed money to increase the return to owners. d.number of times interest is earned. 88.The current assets of Myers Company are $250,000. The current liabilities are $100,000. The current ratio expressed as a proportion is a.250%. b.2.5.
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67.In performing a vertical analysis, the base for sales revenues on the income statement is a.net sales. b.sales. c.net income. d.cost of goods available for sale. 68.In performing a vertical analysis, the base for sales returns and allowances is a.sales. b.sales discounts. c.net sales. d.total revenues. 69.In performing a vertical analysis, the base for cost of goods sold is a.total selling.
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Set 2 — Direct Method a211.For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the direct method. A.Added in determining cash receipts from customers B.Deducted in determining cash receipts from customers C.Added in determining cash payments to.
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127.The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures.  Assume that all sales were on credit. a.27.8% b.70.6% c.65.4% d.46.2% 128.The following information pertains to Rural Company. Assume that all balance sheet amounts represent both average and ending balance figures.  Assume that all sales.
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Ex. 176 Plexis Company reported net income of $148,000. For 2016, depreciation was $45,000, and the company reported a gain on sale of investments of $12,000. Accounts receivable increased $25,000 and accounts payable decreased $23,000. Instructions Compute net cash provided by operating activities using the indirect method. Ex. 177 Assuming a statement of cash flows.
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aEx. 189 Dense Company's income statement showed revenues of $275,000 and operating expenses of $135,000. Accounts receivable decreased by $40,000 and accounts payable increased by $35,000 during the year. Instructions Compute (a) cash receipts from customers and (b) cash payments for operating expenses using the direct method. aEx. 190 Clare Company had total operating.
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EXERCISES Ex. 176 Selected financial information for Trant Corporation is presented below. December 31, 2017December 31, 2016 Current assets$  55,000$  40,000 Long-term liabilities90,00080,000 Retained earnings125,000100,000 Instructions Prepare a schedule showing a horizontal analysis for 2017 using 2016 as the base year. Ex. 177 Comparative information taken from the Foren Company financial statements is shown below:     2017    2016  (a)Notes receivable$  20,000$    -0- (b)Accounts.
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Ex. 179 A comparative balance sheet for Halpern Corporation is presented below: HALPERN CORPORATION Comparative Balance Sheet     2017     2016   Assets Cash$  36,000$  31,000 Accounts receivable (net)70,00060,000 Prepaid insurance25,00017,000 Land18,00040,000 Equipment70,00060,000 Accumulated depreciation   (20,000)   (13,000) Total Assets$199,000$195,000 Liabilities and Stockholders' Equity Accounts payable$  11,000$   6,000 Bonds payable27,00019,000 Common stock140,000115,000 Retained earnings    21,000    55,000 Total liabilities and stockholders' equity$199,000$195,000 Additional information: 1.Net loss for 2017 is $20,000. 2.Cash dividends of $14,000 were.
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Ex. 184 The three accounts shown below appear in the general ledger of Lawson Corp. during 2016.                                   Equipment                                  DateDebitCreditBalance Jan.1Balance160,000 July 31Purchase of equipment75,000235,000 Sept.2Cost of equipment constructed56,000291,000 Nov.10Cost of equipment sold45,000246,000                          Accumulated Depreciation—Equipment                      DateDebitCreditBalance Jan.1Balance71,000 Nov. 10Accumulated depreciation on         equipment sold30,00041,000 Dec.31Depreciation for year20,00061,000 Ex. 184(Cont.)                               Retained Earnings                                 DateDebitCreditBalance Jan.1Balance105,000 Aug.23Dividends (cash)15,00090,000 Dec.31Net income50,000140,000 Instructions From the postings in the accounts, indicate how the information is reported on a.
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+Ex. 195 Condensed financial data of Drake Company appear below: DRAKE COMPANY Comparative Balance Sheet December 31    2017    2016  Assets Cash$  41,000$  35,000 Accounts receivable75,00053,000 Inventories120,000132,000 Prepaid expenses19,00025,000 Investments100,00075,000 Plant assets325,000250,000 Accumulated depreciation  (65,000)  (60,000) Total$615,000$510,000 Liabilities and Stockholders' Equity Accounts payable$  93,000$  75,000 Accrued expenses payable29,00024,000 Bonds payable120,000160,000 Common stock275,000170,000 Retained earnings  98,000    81,000 Total$615,000$510,000 DRAKE COMPANY Income Statement For the Year Ended December 31, 2017 Sales$450,000 Less: Cost of goods sold$300,000 Operating expenses (excluding depreciation)60,000 Depreciation.
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COMPLETION STATEMENTS               197.A statement of cash flows summarizes the operating, ____________, and  ___________ activities of an entity.               198.The cash effects of selling goods and services appears in the ______________ activities section of a statement of cash flows.               199.The operating activities section of the statement of cash flows may be prepared.
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aEx. 192 The income statement of Reagan Inc. for the year ended December 31, 2017, reported the following condensed information: Service revenue$700,000 Operating expenses  340,000 Income from operations360,000 Income tax expense    50,000 Net income$310,000 Roman's balance sheet contained the following comparative data at December 31:    2017   2016 Accounts receivable$75,000$45,000 Accounts payable40,00050,000 Income taxes payable6,0004,000 Reagan has no depreciable assets. Accounts payable.
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aEx. 188 Dredd Company has begun a worksheet for preparing a statement of cash flows. The following additional information is provided: 1.Cash dividends of $8,000 were paid during the year. 2.Land which originally cost $60,000 was sold for $52,000. 3.Common stock was issued at par value for cash. Instructions Complete the worksheet for Dredd Company. DREDD COMPANY Worksheet Statement.
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97.Nord Company had $375,000 of current assets and $150,000 of current liabilities before borrowing $70,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on Nord Company's current ratio? a.The ratio remained unchanged. b.The change in the current ratio cannot be determined. c.The ratio decreased. d.The ratio increased. 98.If.
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