Questions and Answers of Fundamentals Financial Accounting

As a team, select an industry to analyze. Reuters provides lists of industries at www.reuters .com/finance/personal-finance. Another source is csimarket.com. Each group member should access the
Refer to PB10-5. Assume Methodical uses the effective-interest bond amortization method. PB10-5ABC Entertainment, Inc. owns and operates 361 movie theatres worldwide, with 5,203 screens in
Assume the same facts as PB10-5, but now assume that Methodical uses the simplified effective-interest bond amortization method, as shown in Supplement 10C.PB10-5ABC Entertainment, Inc. owns and
Suppose your company’s income statement reports $105 of net income, and its comparative balance sheet indicates the following. Required: 1. Prepare the operating activities section of the
1. On an individual basis, each team member should write a short report that lists the following information:a. The major revenue and expense accounts on the most recent income statement. b.
Coke and Pepsi are well-known international brands. Coca-Cola sells more than $35 billion worth of beverages each year while annual sales of Pepsi products exceed $43 billion. Compare the two
Use the information in E13-3 to complete the following requirement. Required: Compute the times interest earned ratios for 2017 and 2016. In your opinion, does Computer Tycoon generate sufficient
Kohl?s Corporation is a national retail department store in the United States. Assume the company?s total revenues for the year ended January 29, 2017, were $18 billion. J.C. Penney is a
Mattel and Hasbro are the two largest manufacturers of games and toys in the world. Mattel sells some $9 billion of products each year, while annual sales of Hasbro products exceed $4 billion.
A condensed income statement for Simultech Corporation and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by computing each line item from
Use the information in E13-3 to complete the following requirements. Required: 1. Compute the gross profit percentage for each year (rounded to one decimal place). Assuming that the change for 2016
A condensed income statement for Electric Arts and a partially completed vertical analysis follow. Required: 1. Complete the vertical analysis by computing each line item from (a) through (d) as a
A condensed income statement for Northwest Airlines and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by computing each line item from (a)
A condensed balance sheet for Simultech Corporation and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by computing each line item from (a)
Assume the average cost of computer equipment fell 20.9 percent between 2016 and 2017. Let?s see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended
Electric Arts is a video game company. A condensed balance sheet for Electric Arts and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by
Refer to CP12-4.1. Prepare the statement of cash flows for the year ended December 31, 2017, using the indirect method.TIP: Net cash flows provided by operating activities equal $3,000.TIP: Net cash
At December 31, 2016, the records of Hoffman Company reflected the following balances in the shareholders’ equity accounts:Common shares: par $12 per share; 40,000 shares outstandingPreferred
On April 15, the board of directors for AuctionPro declared a cash dividend of 40 cents per share payable to shareholders of record on May 20. The dividends will be paid on June 14. The company has
Refer to the Wiki Art Gallery (WAG) instructional case in Appendix D and read the case in sufficient depth to answer the following questions.1. Is there any evidence that Rob failed to follow
Waterbahn Waterslide Company issued 25,000 ten-year, 6 percent, $100 bonds on January 1, 2017, at face value. Interest is payable each December 31. Show the accounting equation effects and prepare
On January 1, 2017, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 5 percent, paid annually on December 31, and a maturity date of December
Zumiez Inc. is a leading action sports retailer, focusing on skateboarding, snowboarding, surfing, and BMX, selling some of its merchandise under the Blue Tomato brand. The company’s financial
Kraft Foods Inc. is the second-largest food company in the world. Assume the company recently reported the following amounts in its unadjusted trial balance (in millions) as of December 31,
Refer to the information about Sears given in E8-14. Data From E8-14.Assume the 2017 annual report for Sears Holding Corporation contained the following information (in millions): A
Wiater Company operates a small manufacturing facility. On January 1, 2017, an asset account for the company showed the following balances: Manufacturing
A condensed balance sheet for Northwest Airlines and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by computing each line item from (a)
Use the information for Suncor Energy Inc. in E13-1 to complete the following requirements. Required: 1. Compute the gross profit percentage for each year (one decimal place). Assuming that the
Use the data given in CP13-1 for Golden Corporation. Required: 1. Compute the gross profit percentage for 2017 and 2016. Round the percentages to one decimal place. Is the trend going in the right
The Lumber Yard Ltd. competes with Hardesty Inc. in product lines such as hardwood flooring, noise-reducing underlay, and mouldings. Assume the two companies reported the following financial results
Use the data given in PB13-1 for Tiger Audio. Required: 1. Compute the gross profit percentage in 2017 and 2016. Is the trend going in the right direction? 2. Compute the net profit margin for 2017
Assume the average price of a litre of gas in 2017 jumped $0.17 (16 percent) from $1.04 in 2016 to $1.21 in 2017. Let?s see whether this change is reflected in the income statement of Suncor Energy
Looking back over the past few years, it is clear that Nicole Mackisey has accomplished a lot running her business, Nicole?s Getaway Spa (NGS). Nicole is curious about her company?s performance as
The 2017 financial statements for the Thor and Gunnar companies are summarized below. These two companies are in the same business and in the same province but in different cities. One-half of
A consumer products company reported a 25 percent increase in sales from 2016 to 2017. Sales in 2016 were $200,000. In 2017, the company reported Cost of Goods Sold in the amount of $150,000. What
Match each ratio or percentage with its formula by entering the appropriate letter for each numbered item. Ratios or Percentages Formula 1. Current ratio 2. Net profit margin A. Net income ÷ Net
The comparative financial statements prepared at December 31, 2017, for Tiger Audio showed the following summarized data: Required: 1. Complete the two final columns shown beside each item in
The 2017 financial statements for Royale and Cavalier companies are summarized below. These two companies are in the same business and the same province but in different cities. One-half of
Given the following data, compute the 2017 return on equity ratio (expressed as a percentage with one decimal place). 2017 2016 Net Income $ 1,850,000 $ 1,600,000 Shareholders' Equity Total Assets
A manufacturer reported an inventory turnover ratio of 8.6 during 2016. During 2017, management introduced a new inventory control system that was expected to reduce average inventory levels by 25
Refer to the calculations from M13-1. What are the two most significant year-over-year changes in terms of dollars and in terms of percentages? Give one potential cause of each of these changes.
You plan to retire in twenty years. Calculate whether it is better for you to save $25,000 a year for the last ten years before retirement or $15,000 for each of the twenty years. Assume you are able
Refer to M13-1. Perform the calculations needed for vertical analyses. Round percentages to one decimal place. LOCKEY FENCING CORPORATION Income Statements For the Years Ended December 31 2017 2016
On March 10, 2016, Gesalt Solutions Inc. purchased 5,000 shares of Sperior Technologies for $50 per share. The following information pertains to the price per share of Sperior Technologies
During 2017, Princeton Company acquired some of the 50,000 outstanding common shares of Cox Corporation as trading securities. The accounting period for both companies ends December 31. Give the
Lisa Company had 100,000 outstanding common shares. On January 10, 2017, Marg Company purchased a block of these shares in the open market at $20 per share, with the intent of holding the shares for
Bart Company had 30,000 outstanding common shares for $10 per share. On January 1, 2017, Homer Company purchased some of these shares at $25 per share, with the intent of holding them for a long
On June 30, 2016, MetroMedia Unlimited purchased 10,000 shares of Mitekii for $20 per share. The following information pertains to the price per share of Mitekii shares:
On July 12, 2015, Rossow Corporation purchased 1,000 shares of Reimer Company for $30,000. The following information applies to the share price of Reimer Company:
On August 4, 2015, Cappio Corporation purchased 1,000 shares of Maxweller Company for $45,000. The following information applies to the shares price of Maxweller Company:
You have the chance to purchase an oil well. Your best estimate is that the oil well’s net royalty income will average $25,000 per year for five years. There will be no residual value at that time.
On January 1, 2017, you start making plans to take a trip around the world when you graduate in four years. Your grandmother wants to deposit sufficient funds for this trip into a savings account for
On each December 31, you plan to transfer $2,000 from your chequing account into a savings account. The savings account will earn 9 percent annual interest, which will be added to the savings account
As a result of a slowdown in operations, Mercantile Stores is offering employees who have been terminated a severance package of $100,000 cash, another $100,000 to be paid in one year, and an annuity
If you deposited $10,000 in a savings account that earns 2 percent, how much would you have at the end of ten years? Use a convenient format to display your computations.
On January 1, 2017, Alan King decided to transfer an amount from his chequing account into a savings account that later will provide $80,000 to send his son to university (four years from now). The
What is the present value of ten equal payments of $15,000, with an interest rate of 10 percent?
Using the following income statements, perform the calculations needed for horizontal analyses. Round percentages to one decimal place. LOCKEY FENCING CORPORATION Income Statements For the Years
On January 1, 2017, you deposited $6,000 in a savings account. The account will earn 10 percent annual compound interest, which will be added to the fund balance at the end of each
How are the Accounting Standards for Private Enterprises similar to International Financial Reporting Standards and how are they different?
The comparative financial statements for Golden Corporation, prepared at December 31, 2017, showed the following summarized data: Required: 1. Complete the two final columns shown beside each item
What is the full disclosure principle?
In its most recent annual report, Laurentian Beverages reported current assets of $54,000 and a current ratio of 1.80. Assume that the following transactions were completed:a. Purchased merchandise
Loonie Corporation stores feature quality merchandise at low prices to meet the needs of middle-, low-, and fixed-income families. For the year ended January 30, 2017, the company reported average
In 2016, Big W Company reported earnings per share of $2.50 when its shares were selling for $50.00. If its 2017 earnings increase by 10 percent and the P/E ratio remains constant, what will be the
Procter & Gamble is a multinational corporation that manufactures and markets many products that you use every day. In 2017, assume that sales for the company were $83,503 (all amounts in
Assume that for the 2017 fiscal year, AstroCo reported sales revenue of $2.8 billion and cost of goods sold of $1.6 billion. Required: Assuming that all sales are on credit, compute the current
Golf Universe is a regional and online golf equipment retailer. The company reported the following for the current year: ? Purchased a long-term investment for cash, $15,000 ? Paid cash dividend,
During fiscal 2017, M&Q Entertainment sold its Ferentio assets for $20,360,000 cash and recorded a gain on disposal of $18,360,000, which was included in the company’s net income of
Payton Place Industries, Inc. is a manufacturer of steel products for customers such as House Depot and Private Motors. In the year ended December 31, 2017, it reported the following
Rowen Furniture Corporation reported the following activities in a recent quarter: Required: Based on this information, present the cash flows from investing and financing activities sections of
Consultex Company was founded in 2014 as a small financial consulting business. The company had done reasonably well in 2014?2016, but noticed that its cash was beginning to dwindle early in 2017. In
Colgate-Palmolive was founded in 1806. Assume its statement of cash flows reported the following information (in millions) for the year ended December 31, 2017:Operating ActivitiesNet
New Vision Company completed its income statement and balance sheet for 2017 and provided the following information: Required: 1. Present the operating activities section of the statement of cash
Using the data from M12-6, calculate the maximum investing cash inflows that could be reported under IFRS. Using data from M12-7 calculate the maximum financing cash flows that could be reported
Assume the same facts as PA12-4, except for the income statement and additional item (a). The new income statement is shown below. Instead of item (a) from PA12-4, assume that the company bought new
Assume the same facts as CP12-4, except for additional data item (a) and the income statement. Instead of using the data from item (a), assume that the company bought new golf clubs for $3,000 cash
The following information pertains to Guy?s Gear Company: Required: Present the operating activities section of the statement of cash flows for Guy?s Gear Company using the indirect method. $
Based on the following information, compute cash flows from financing activities under ASPE.Purchase of investments......................................................$ 250Dividends
Refer to PA12-4. Required: Complete requirements 1 and 2 using the direct method. 2017 2016 Balance Sheet at December 31 $ 6,000 $4,000 Cash Accounts Receivable 1,000 1,750 Equipment 5,500 5,000
Based on the following information, compute cash flows from investing activities under ASPE. Cash collections from customers Purchase of used equipment Depreciation expense Sale of investments
Refer to the information in PB12-2.Required:Prepare the cash flows from the operating activities section of the 2017 statement of cash flows using the direct method. Income Statement Selected Balance
Refer to the information in PA12-2. Required: Prepare the cash flows from operating activities section of the 2017 statement of cash flows using the direct method. Income Statement Selected Balance
Refer to the information in CP12-2. Income StatementSales Revenue...............................................$2,060Expenses:Cost of Goods
For the following two independent cases, show the cash flows from the operating activities section of the statement of cash flows for Year 2 using the indirect method. Case A Case B Year 2 Year 2
Buddies? Dive In Company was started several years ago by two diving instructors. The company?s comparative balance sheets and income statement are presented below, followed by additional
Heads Up Company was started several years ago by two hockey instructors. The company?s comparative balance sheets and income statement appear on the next page, along with additional
Soft Touch Company was started several years ago by two golf instructors. The company?s comparative balance sheets and income statement appear below, along with additional information. Additional
For each of the following independent cases, compute cash flows from operating activities. Assume the list below includes all balance sheet accounts related to operating activities. (Amounts in
Audio City Inc. is developing its annual financial statements at December 31, 2017. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and
XS Supply Company is developing its annual financial statements at December 31, 2017. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and
Hunter Company is developing its annual financial statements at December 31, 2017. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and
The income statement and selected balance sheet information for Calendars Incorporated for the year ended December 31, 2017, is presented below. Required: Prepare the cash flows from operating
The income statement and selected balance sheet information for Direct Products Company for the year ended December 31, 2017 are as follows: Required: Prepare the cash flows from operating
The income statement and selected balance sheet information for Hamburger Heaven for the year ended December 31, 2017, are presented below. Income StatementSales
Suppose your company sells services of $150 in exchange for $100 cash and $50 on account. Depreciation of $40 also is recorded.Required:1. Show the journal entries to record these transactions.2.
During a recent year (ended December 31, 2017), Nicole’s Getaway Spa (NGS) reported net income of $2,300. The company reported the following activities:a. Increase in inventories of $400b.
Assume for each of the following independent cases that the annual accounting period ends on December 31, 2017, and that the total of all revenue accounts was $150,000 and the total of all expense
J. Bartley Pools Inc. reported the following in its financial statements for the quarter ended March 31, 2017. During the quarter ended March 31, 2017, Bartley reported Net Income of $5,000 and
At December 31, 2017, the following account balances were selected from the records of beverage maker Blake Corporation after all adjusting entries were completed:Common shares (no-par value;

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