Question 1

Explain the differences between accounts payable, short-term debt, current maturities of long-term debt, accrued liabilities and unearned revenue.

Accepted Answer

The answer of Explain the differences between accounts payable, short-term...

Question 2

The Breakfast Company purchases equipment for $100,000.Management estimates that the equipment will have a useful life of eight years and no salvage value.
a.Calculate depreciation expense and the book value of the equipment at the end of the first year using the straight-line method of depreciation.
b.Calculate depreciation expense and the book value at the end of the first year using the double-declining balance method of depreciation.

Accepted Answer

The answer of The Breakfast Company purchases equipment for $100,000.Management...

Question 3

Explain the format and key components of a balance sheet prepared in the U.S.or overseas.

Accepted Answer

The answer of Explain the format and key components of...

Question 4

Why should the allowance for doubtful accounts and the valuation and qualifying accounts schedule be analyzed?

Accepted Answer

The answer of Why should the allowance for doubtful accounts...

Question 5

Using the following information calculate the ending inventory balance and the cost of goods sold expense that would be reported at the end of the year if the following inventory valuation methods are used:
a.Average cost
b.FIFO
c.LIFO
 $$\begin{array} { l r c } 
& \text { Units } & \text { Purchase Price } \
\text { Beginning inventory } & 8 & \$ 8 \
\text { Purchase \#1 } & 15 & \$ 9 \
\text { Purchase \#2 } & 24 & \$ 11 \
\text { Purchase \#3 } & 12 & \$ 13 \
\text { Sales } & 40 &
\end{array}$$

Accepted Answer

The answer of Using the following information calculate the ending...

Question 6

Redtop Co.purchased a piece of equipment last year for $300,000.Management estimates that the equipment will have a useful life of five years and no salvage value.The depreciation expense recorded for tax purposes will be $72,000 this year (Year 2).The company uses the straight-line method of depreciation for reporting purposes.
a.Calculate the amount of depreciation expense for reporting purposes this year (Year 2).
b.What will be the net book value of the equipment reported on the balance sheet at the end of this year (Year 2)?
c.Will a deferred tax asset or liability be created as a result of the depreciation recorded for tax and financial reporting purposes?
d.What amount will be added to the deferred tax account as a result of the depreciation timing difference?

Accepted Answer

The answer of Redtop Co.purchased a piece of equipment last...

Question 7

Explain the differences between long-term notes payable, mortgages, debentures, bonds payable, and convertible debt.

Accepted Answer

The answer of Explain the differences between long-term notes payable,...

Question 8

Using the following excerpts from the most recent annual report of WooHoo, a high technology firm, analyze the accounts receivable and allowance for doubtful accounts.Be sure to show all calculations and write a thorough interpretation of those calculations.
 $$\begin{array} {| l | r r| } 
\hline \text { (dollars in millions) } & 2015 & 2014 \
\hline \text { Net sales } & \$ 7,200 & \$ 6,400 \
\text { Accounts receivable - less allowance for doubtful accounts of } & \$ 1,000 & \$ 1,030 \
\$ 22 \text { at April } 30,2015 \text { and } \$ 40 \text { April } 30,2014 &\\hline
\end{array}$$ WooHoo
Valuation And Qualifying Accounts
For the Years Ended April 30, 2015, 2014 and 2013
 $$\begin{array} { | l | r | r | r | r | } 
\hline & \begin{array} { c } 
\text { Balance at } \
\text { beginning of } \
\text { period }
\end{array} & \begin{array} { c } 
\text { Charged to } \
\text { expenses }
\end{array} & \text { Deductions } & \begin{array} { c } 
\text { Balance at } \
\text { end of period }
\end{array} \
\hline \begin{array} { l } 
\text { Allowance for } \
\text { doubtful accounts }
\end{array} & & & & \
\hline 2015 & \$ 40 & \$ 5 & \mathbf { ( \$ 2 3 ) } & \$ 22 \
\hline 2014 & \$ 51 & \$ 4 & \mathbf { ( \$ 1 5 ) } & \$ 40 \
\hline 2013 & \$ 46 & \$ 25 & \mathbf { ( \$ 2 0 ) } & \$ 51 \
\hline
\end{array}$$

Accepted Answer

The answer of Using the following excerpts from the most...

Question 9

Define current assets and current liabilities and give two examples of each.

Accepted Answer

The answer of Define current assets and current liabilities and...

Question 10

Why is the inventory accounting method chosen by a company important to the user of financial statement information?

Accepted Answer

The answer of Why is the inventory accounting method chosen...

Question 11

Using the following balance sheet, prepare a common size balance sheet: $\begin{array}{lrcr}\text { Assets }&&\text { Liabilities and stockholders' equity }\\hline
\text { Current assets }&&\text { Current liabilities }\
\text { Cash }&4&\text { Accounts payable }&28\
\text { Short-term investments } & 9 & \text { Current portion of } \
\text { Accounts receivable } & 32 & \text { long-term debt } & \underline{12} \
\text { Inventory } & 41 & \text { Total current liabilities } & 40\
\text { Prepaid expenses } & 2 & \text { Long-term liabilities } \
\text { Deferred taxes, current } & 7 & \text { Long-term debt } & 48\
\text { Total current assets }&95&\text { Total liabilities }&88\\
\text { Long-term assets }&&\text { Stockholders' equity }\
\text { Property \& equipment } & 53 & \text { Common stock and PIC } & 51 \
\text { Goodwill } & 12 & \text { Retained earnings } & 30\\text { Long-term investments }&8\
\text { Other assets }&1&\text { Total stockholders' equity }&81\
\text { Total assets }&169&\text { Total liabilities and equity }&169
\end{array}$

Accepted Answer

The answer of Using the following balance sheet, prepare a...

Question 12

Explain the impact of calculating depreciation using the straight-line method versus an accelerated method on the amounts shown on a balance sheet.

Accepted Answer

The answer of Explain the impact of calculating depreciation using...

Question 13

Write a short explanation of why you agree or disagree with the following statement:
"The LIFO method of inventory valuation cannot be used by grocery stores."

Accepted Answer

The answer of Write a short explanation of why you...

Question 14

Using the following information calculate the ending inventory balance and the cost of goods sold expense that would be reported at the end of the year if the following inventory valuation methods are used:
a.Average cost
b.FIFO
c.LIFO
 $\begin{array}{lrr}
&\text { Units } & \text { Purchase Price }\
\text { Beginning inventory } & 100 & \$ 25 \
\text { Purchase \#1 } & 80 & \$ 26 \
\text { Purchase \#2 } & 160 & \$ 23 \
\text { Purchase \#3 } & 90 & \$ 24 \
\text { Sales } & 260 &
\end{array}$

Accepted Answer

The answer of Using the following information calculate the ending...

Question 15

Analyze the following common size balance sheet: $\begin{array}{lcl}&2015&2014\
\text { Current assets: }\
\text { Cash } & 1 \% & 16 \% \
\text { Accounts receivable } & 24 & 18 \
\text { Inventory } & \underline{35} & \underline{30}\
\text { Total current assets }&620\%&64\%\\\text { Property, plant and equipment } & 37 & 26 \
\text { Other assets } & \underline{3} & \underline{10} \
\text { Total assets } & \underline{\underline{100 \%}} & \underline{100 \%}\\\text { Current liabilities: }\
\text { Accounts payable } & 29 \% & 27 \% \
\text { Short-term debt } & \underline{23} & \underline{33}\
\text { Total current liabilities }&52\%&60\%\\
\text { Long-term debt } & {22} & {17}\
\text { Total liabilities } &{74} \%&{77 \%} \\\text { Common stock and paid in capital } & 9 & 10 \
\text { Retained earnings } & 17 & 13 \\text { Total stockholders' equity } & \overline{26 \%} & \underline{23} \% \
\text { Total liabilities and stockholders' equity } & \overline{100 \%} & 100 \%
\end{array}$

Accepted Answer

The answer of Analyze the following common size balance sheet:...

Quiz 2: The Balance Sheet

Explain the differences between accounts payable, short-term debt, current maturities of long-term debt, accrued liabilities and unearned revenue.

Explain the format and key components of a balance sheet prepared in the U.S.or overseas.

Why should the allowance for doubtful accounts and the valuation and qualifying accounts schedule be analyzed?

Explain the differences between long-term notes payable, mortgages, debentures, bonds payable, and convertible debt.

Define current assets and current liabilities and give two examples of each.

Why is the inventory accounting method chosen by a company important to the user of financial statement information?

Explain the impact of calculating depreciation using the straight-line method versus an accelerated method on the amounts shown on a balance sheet.

Write a short explanation of why you agree or disagree with the following statement: "The LIFO method of inventory valuation cannot be used by grocery stores."