Questions and Answers of Financial Managerial Accounting

Two income statements for Paragon Company follow:Prepare a horizontal analysis of Paragon Company’s income statements. Paragon Company Income Statements For the Years Ended December 31 20Υ7 20Υ6
Lisa Duncan, a junior in college, has been seeking ways to earn extra spending money. As an active sports enthusiast, Lisa plays tennis regularly at the Phoenix Tennis Club, where her family has a
The Home Depot, Inc. (HD), is the world’s largest home improvement retailer and one of the largest retailers in the United States based on sales volume. Home Depot operates over 2,200 stores that
Peyton Smith enjoys listening to all types of music and owns countless CDs. Over the years, Peyton has gained a local reputation for knowledge of music from classical to rap and the ability to put
Jose Loder established Bronco Consulting on August 1, 20Y1. The effect of each transaction and the balances after each transaction for August follow:Instructions1. Prepare an income statement for the
The assets and liabilities of Wilderness Travel Service on April 30, 20Y7, and its revenue and expenses for the year are as follows:Common stock was $25,000 and retained earnings was $155,000 as of
On August 1, 20Y9, Brooke Kline established Western Realty. Brooke completed the following transactions during the month of August:a. Opened a business bank account with a deposit of $35,000 in
Seth Feye established Reliance Financial Services on July 1, 20Y2. Reliance Financial Services offers financial planning advice to its clients. The effect of each transaction and the balances after
On April 1 of the current year, Morgan Jones established a business to manage rental property. She completed the following transactions during April:a. Opened a business bank account with a deposit
In this segment of our continuing case, you will use the following data to analyze trends in your company’s financial performance over the past five years.Prepare a trend analysis for your company
Ratio analysis enables one to compare the performance of companies whose financial statements are presented in different currencies. Selected data from 2006 for two large pharmaceutical
Caitlin Cleary is considering an investment in the common stock of a chain of souvenir stores. She has narrowed her choice to two companies, Dover Corporation and Calais Corporation, whose income
The condensed comparative income statements and balance sheets of UK Corporation are presented on the next page. All figures are given in thousands of dollars, except earnings per share and market
Data for Spain Corporation in 2011and 2010 follow. These data should be used in conjunction with the data in P 6.Selected balances at the end of 2009 were accounts receivable (net), $90,000;
Using the information for Smith Company in E 10, compute the operating cycle and finance period for both years. Comment on the change in the company’s operating cycle and required days of financing
Partial comparative balance sheet and income statement information for Smith Company is as follows:In 2009, the year-end balances for Accounts Receivable and Inventory were $64,800 and $102,400,
Express the partial comparative income statements for Davis Company that follow as common-size statements, and comment on the changes from 2009 to 2010. (Round computations to one decimal place.)
Compute the amount and percentage changes for the following balance sheets for Davis Company, and comment on the changes from 2009 to 2010. (Round the percentage changes to one decimal place.) Davis
Using 2006 as the base year, prepare a trend analysis of the following data, and tell whether the situation shown by the trends is favorable or unfavorable. (Round your answers to one decimal place.)
Using the information for Sarot, Inc., in SE 4, SE 5, and SE 9, compute the price/earnings (P/E) ratio and dividends yield for 2009 and 2010. The company had 20,000 shares of common stock
Using the information for Sarot, Inc., in SE 4, SE 5, and SE 7, compute the cash flow yield, cash flows to sales, cash flows to assets, and free cash flow for 2009 and 2010. Net cash flows from
Using the information for Sarot, Inc., in SE 4 and SE 5, compute the debt to equity ratio and the interest coverage ratio for 2009 and 2010. Comment on the results. (Round computations to one decimal
Using the information for Sarot, Inc., in SE 4 and SE 5, compute the profit margin, asset turnover, return on assets, and return on equity for 2009 and 2010. In 2008, total assets were $400,000 and
Using the information for Sarot, Inc., in SE 4 and SE 5, compute the current ratio, quick ratio, receivable turnover, days’ sales uncollected, inventory turnover, days’ inventory on hand,
Express the comparative balance sheets of Sarot, Inc. (shown on the opposite page) as common-size statements, and comment on the changes from 2009 to 2010. (Round computations to one decimal place.)
The comparative income statements and balance sheets of Sarot, Inc., appear on the opposite page. Compute the amount and percentage changes for the income statements, and comment on the changes from
Ecommerce has changed the way goods and services are obtained. How do companies like Barnes and Noble or Borders or Books-A-Million continue to anticipate customer needs? To answer this question,
What types of organizations are represented by recent recipients of the Malcolm Baldrige Award? Consult the website at http://www.quality.nist.gov.
Elam Insurance Agency incurred the following activity costs related to service quality. Identify those that are costs of conformance (CC) and those that are costs of nonconformance (CN).Policy
Orbit Machine had net income of $15,000 in 2010. Total assets were $80,000 at the beginning of the year and $140,000 at the end of the year. Calculate return on assets.
Tarech Corporation engaged in activities during the first year of its operations that resulted in the following: service revenue, $4,800; total expenses, $2,450; and dividends, $410. In addition, the
Use the following accounts and balances to prepare a balance sheet with the accounts in proper order for Global Company at June 30, 2009, using Exhibit 1-3 as a model: Accounts
Carlton Company had assets of $280,000 and liabilities of $120,000 at the beginning of the year, and assets of $400,000 and liabilities of $140,000 at the end of the year. During the year, there was
Use the accounting equation to answer each question below. 1. At the beginning of the year, Fazio Company’s assets were $45,000 and its stockholders’ equity was $25,000. During the year,
In 2009, Tanika Jones opened a small retail store in a suburban mall. Called Tanika’s Jeans Company, the shop sold designer jeans. Tanika Jones worked 14 hours a day and controlled all aspects of
Two of the largest chains of grocery stores in the United States are Albertson’s Inc. and the Great Atlantic & Pacific Tea Company (A&P). Albertson’s is now part of Supervalue, Inc. In
Saxon wants to know if its profitability performance has increased from 2009 to 2010. The company had net income of $48,000 in 2009 and $50,000 in 2010. Total assets were $400,000 at the end of 2008,
Below is information from the statement of retained earnings of Mrs. Kitty’s Cookies, Inc. for a recent year. Dividends...........................$ 0 Net
Listed in random order below are some of the account balances for the Uptime Services Company as of December 31, 2010. Place the balances in proper order and prepare a balance sheet
1. Indicate whether each of the following accounts is an asset (A), a liability (L), or a part of stockholders’ equity (SE): a. Cash b. Salaries Payable c. Accounts
Gottlieb Pharmacy has recently been formed to develop a new type of drug treatment for cancer. Previously a partnership, Gottlieb has now become a corporation. Describe the various groups that will
The Golden Nursery School Corporation provides baby-sitting and child-care programs. On January 31, 2010, the company had the following trial balance: During the month of February, the company
The Stewart Construction Corporation builds foundations for buildings and parking lots. The following alphabetical list shows Stewart Construction’s account balances as of April 30,
Alpha Pro Corporation is a marketing firm. The company’s trial balance on July 31, 2010, appears below. During the month of August, the company completed the following transactions: Aug.
Delux Design Corporation creates radio and television advertising for local businesses in the twin cities. The following alphabetical list shows Delux Design’s account balances as of January 31,
A company engaged in the following transactions: Dec. 1 Performed services for cash, $750 1 Paid expenses in cash, $550 2 Performed services on credit, $900 3 Collected on
The trial balance for Marek Services, Inc., at the end of July appears below. It does not balance because of a number of errors. Marek’s accountant compared the amounts in the trial balance with
Explain each transaction (a–h) in the T accounts that follow. EQUIPMENT ACCOUNTS RECEIVABLE CASH 20,000 750 e. 450 f. C. 4,000 b. 7,500 h. 750 450 g. a. d. 4,500 1,800 2,250 g. h. СоммON
After recording the transactions in E 9, prepare a trial balance in proper sequence for Ornega Repair Service, Inc., as of June 30, 2010. Data From E9Open the following T accounts: Cash; Repair
Open the following T accounts: Cash; Repair Supplies; Repair Equipment; Accounts Payable; Common Stock; Dividends; Repair Fees Earned; Salaries Expense; and Rent Expense. Record the following
The following accounts are applicable to Dale’s Lawn Service, Inc., a company that maintains condominium grounds: 1. Cash 2. Accounts Receivable 3. Supplies 4. Equipment 5.
Analyze transactions a–g, as in the example below for transaction a. a. Sarah Lopez established Sarah’s Beauty Parlor, Inc., by incorporating and investing $2,500 in exchange for 250 shares
Which of the following events would be recognized and recorded in the accounting records of Villa Corporation on the date indicated? Jan. 15 Villa Corporation offers to purchase a tract of land for
The following three independent sets of financial statements have several amounts missing: Required 1. Complete each set of financial statements by determining the amounts that correspond
Olbrot Corporation’s income statement for the year ended June 30, 2010 and its comparative balance sheets for June 30, 2010 and 2009 follow.Olbrot CorporationIncome StatementFor the Year Ended June
For the year ended June 30, 2010, net income for Silk Corporation was $7,400. Depreciation expense was $2,000. During the year, Accounts Receivable increased by $4,400, Inventories increased by
The condensed single-step income statement for the year ended December 31, 2010, of Sunderland Chemical Company, a distributor of farm fertilizers and herbicides, appears as follows:Selected accounts
In 2010, Ross Corporation had year-end assets of $550,000, sales of $790,000, net income of $90,000, net cash flows from operating activities of $180,000, purchases of plant assets of $120,000, and
Maxy Politt is the controller for Pratt Industries. She has been asked to develop a plan for installing a management information system in her company. The president has already approved the concept
Management at Fox Valley Machine Tool Co. is considering the development of a new automated drill press called the AutoDrill. After conferring with the design engineers, the controller’s staff
Gator Car Repair specializes in repairing hybrid cars. The company uses a 70 percent markup rate on parts to cover parts-related overhead costs and profit margin. It uses a 100 percent markup rate on
Turley Industries has just patented a new toothpaste called Sparkle for lasting protection against tooth decay. The company’s controller has developed the following annual information for use in
Mobile Battery features more than a dozen brands of batteries in many sizes. Two of the brands are PowerPlus and SuperPower. The following information about the two brands was obtained:As shown,
Flagstaff Enterprises makes flagpoles. Dan Dalripple, the company’s new controller, can find only the following partial information for the past two months:The current year’s predetermined
Refer to the statement of cash flows in the CVS annual report to answer the following questions:1. Does CVS use the indirect method of reporting cash flows from operating activities? Other than net
Ortega Corporation’s income statement for the year ended June 30, 2010 and its comparative balance sheets as of June 30, 2010 and 2009 appear on the next page. During 2010, the corporation sold at
The comparative balance sheets for Arif Fabrics, Inc., for December 31, 2010 and 2009 appear below.Additional information about Arif Fabrics’s operations during 2010 is as follows: (a) net income,
The comparative statements of cash flows for Executive Style Corporation, a manufacturer of high-quality suits for men, appear on the following page. To expand its markets and familiarity with its
For 20 years, Armand Service Corporation, a public corporation that has promoted itself to investors as a stable, reliable company, has paid a cash dividend every quarter. Recent competition from
Kolmeyer Steel Corporation (KSC) is a small specialty steel manufacturer located in northern Alabama. The Kolmeyer family has owned the company for several generations. Robert Kolmeyer is a major
In its 2009 annual report, Nike, Inc., the athletic sportswear company, provided the following data about its current and deferred income tax provisions (in millions):
The consolidated statement of stockholders’ equity for Jackson Electronics, Inc., a manufacturer of a broad line of electrical components, is presented on the below. It has nine summary
Income statement information for Nguyen Corporation in 2009 is as follows:a. Administrative expenses, $110,000b. Cost of goods sold, $440,000c. Extraordinary loss from a storm (net of taxes,
The stockholders’ equity section of Acerin Moving and Storage Company’s balance sheet as of December 31, 2010, appears below.Contributed capitalCommon stock, $2 par value, 6,000,000
On December 31, 2010, the stockholders’ equity section of Koval Company’s balance sheet appeared as follows:Contributed capitalCommon stock, $8 par value, 400,000 sharesauthorized, 120,000
The stockholders’ equity section of Lim Mills, Inc., as of December 31, 2009, was as follows:Contributed capitalCommon stock, $3 par value, 1,000,000 sharesauthorized, 80,000 shares issued and
During 2010, Vitos Corporation engaged in two complex transactions to improve the business—selling off a division and retiring bonds. The company has always issued a simple single-step income
Information concerning operations of Camping Gear Corporation during 2010 is as follows:a. Administrative expenses, $90,000b. Cost of goods sold, $420,000c. Extraordinary loss from an earthquake (net
Matka Company began operations in 2010. At the beginning of the year, the company purchased plant assets of $450,000, with an estimated useful life of ten years and no residual value. During the
During 2009, Arthur Corporation reported a net income of $3,059,000. On January 1, Arthur had 2,800,000 shares of common stock outstanding. The company issued an additional 1,680,000 shares of
Fabio Corporation’s income statement showed the following data for 2009 and 2010:On the balance sheet, deferred income taxes liability increased by $38,400 in 2009 and decreased by $18,800 in
The items below are components of Patel Company’s income statement for the year ended December 31, 2010. Recast the income statement in proper multistep form, including allocating income taxes to
Assume that Jefferson Company’s chief financial officer gave you the following information: net sales, $360,000; cost of goods sold, $175,000; loss from discontinued operations (net of income tax
Microsoft, one of the most successful businesses in the history of commerce, has accumulated a large investment portfolio, which in a recent year consisted of the following (in millions):20Cash and
DreamWorks Animation makes well-known animated films like Shrek 2. Two items on the company’s 2008 balance sheet are as follows:19Goodwill...................................$34,216Minority
Dell Computer Corporation has significant investment activities. The following items are from Dell’s 2009 financial statements (in millions):18Short-term investments.............................$
During certain periods, Yang Company invests its excess cash until it is needed. During 2010 and 2011, Yang engaged in these transactions:2010Jan. 16 Invested $146,000 in 120-day U.S. Treasury bills
On January 2, 2009, the Healey Company made several long-term investments in the voting stock of various companies. It purchased 10,000 shares of Zima at $4.00 a share, 15,000 shares of Kane at $6.00
The balance sheets of Ola and Jake Companies as of December 31, 2010, appear below.Assume that Ola Company purchased 100 percent of Jake’s common stock for $350,000 immediately prior to December
Snow Corporation owns 35 percent of the voting stock of Nivella Corporation. The Investment account on Snow’s books as of January 1, 2010, was $360,000. During 2010, Nivella reported the following
In a cash transaction, Gil Company purchased 70 percent of the outstanding stock of Cat Company for $296,800 cash on June 30, 2010. Immediately after the acquisition, the separate balance sheets of
The balance sheets of Sail and Ivan Companies as of December 31, 2010, appear on the next page.Assume that Sail Company purchased 100 percent of Ivan’s common stock for $700,000 immediately prior
Basic Company owns 40 percent of the voting stock of Oslo Company. The investment account for this company on Basic’s balance sheet had a balance of $600,000 on January 1, 2010. During 2010, the
Karas Gas Corporation is a successful oil and gas exploration business in the southwestern United States. At the beginning of 2010, the company made investments in three companies that perform
Jolanta Company experiences heavy sales in the summer and early fall, after which time it has excess cash to invest until the next spring. On November 1, 2009, the company invested $388,000 in U.S.
Lowell Company has owned 100 percent of Rich Company since 2009. The income statements of these two companies for the year ended December 31, 2010, follow.The following is additional information: (1)
On September 1, 2010, A Company purchased 100 percent of the voting stock of B Company for $480,000 in cash. The separate condensed balance sheets immediately after the purchase were as
The stockholders’ equity section of Veritas Corporation’s balance sheet appeared as follows on December 31:Common stock, $10 par value, 40,000 sharesauthorized and
R&M Manufacturing Company purchased 100 percent of the common stock of Bonn Manufacturing Company for $1,200,000. Bonn’s stockholders’ equity included common stock of $800,000 and retained
Teague Corporation has the following long-term investments:1. 60 percent of the common stock of Oho Corporation2. 13 percent of the common stock of Salt, Inc.3. 50 percent of the nonvoting

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