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1、Chapter11. The Mill Run Golf & Country Club details the following accounts in its financial statements. (a) (b) Accounts payable and accrued liabilities _ _ Accounts receivable _ _ Property, plant, and equipment _ _ Food and beverage operations revenue _ _ Golf course operations revenue _ _ Inventor
2、y _ _ Long-term debt _ _ Office and general expense _ _ Professional fees expense _ _ Wages and benefits expense _ _Instructions.(a) Classify each of the above accounts as an asset (A) , liability(L), stockholders equity (SE), revenue (R), or expense (E) item.(b) Classify each of the above accounts
3、as a financing activity (F), investing activity (I), or operating activity (O). If you believe a particular account doesnt fit in any of these activities, explain why.2. The following information was taken from the 2004 financial statements of pharmaceutical giant Merck and Co. All dollar amounts ar
4、e in millions. Retained earnings, January 1, 2004 $34,142.0 Materials and production expense 4,959.8 Marketing and administrative expense 7,346.3 Dividends 3,329.1 Sales revenue 22,938.6 Research and development expense 4,010.2 Tax expense 2.161.1 Other revenue 1,352.2Instructions.(a) After analyzin
5、g the data, prepare an income statement and a retained earnings statement for the year ending December 31,2004.(b) Suppose that Merck decided to reduce its research and development expense by 50%. What would be the short-term implications? What would be the long-term implications? How do you think t
6、he stock market would react?3. Kellogg Company is the worlds leading producer of ready-to-eat cereal and a leading producer of grain-based convenience foods such as frozen waffles and cereal bars. The following items were taken from its 2004 income statement and balance sheet. All dollars are in mil
7、lions. _Retained earnings $2,701.3 _ Long-term debt $3,892.6 _Cost of goods sold 5,298.7 _ Inventories 681.0_Selling and administrative expense 2,634.1 _ Net sales 9,613.9_Cash 417.4 _ Accounts payable 767.2_Notes payable 709.7 _Common stock 103.8_Interest expense 308.6 _ Income tax expense 475.3 _
8、Other expense 6.6Instructions.Perform each of the following.(a) In each case identify whether the item is an asset (A), liability (L), stockholders equity (SE), revenue (R), or expense (E).(b) Prepare an income statement for Kellogg Company for the year ended December 31, 2004.4. The following items
9、 were taken from the balance sheet of Nike, Inc.(1)Cash $828.0 (7) Inventories $1,633.6(2)Accounts receivable 2,120.2 (8) Income taxes payable 118.2(3)Common stock 890.6 (9) Property, plant, and equipment 1,586.9(4)Notes payable 146.0 (10)Retained earnings 3,891.1(5)Other assets 1,722.9 (11)Accounts
10、 payable 763.8(6)Other liabilities 2,081.9 Instructions.Perform each of the following.(a) Classify each of these items as an asset, liability, or stockholders equity. (All dollars are in millions.)(b) Determine Nikes accounting equation by calculating the value of total assets, total liabilities, an
11、d total stockholders equity.(c) To what extent dose Nike rely on debt versus equity financing?Chapter 2.1 These items are taken from the financial statements of Donovan Co. at December 31.2007 Building $105,800 Accounts receivable 12,600 Prepaid insurance 4,680 Cash 16,840 Equipment 82,400 Land 61,2
12、00 Insurance expense 780 Depreciation expense 5,300 Interest expense 2,600 Common stock 62,000 Retained earnings (January 1, 2007) 40,000 Accumulated depreciation-building 45,600 Accounts payable 9,500 Mortgage payable 93,600 Accumulated depreciation-equipment 18,720 Interest payable 3,600 Bowling r
13、evenues 19,180Instructions.Prepare a classified balance sheet. Assume that $13,600 of the mortgage payable will be paid in 2008.2. The following items were taken from the 2004 financial statements of Texas Instruments, Inc.(All dollars are in millions.)Long-term debt $ 368 Cash $ 2,668Common stock 2
14、,488 Accumulated depreciation 5,655Prepaid expense 326 Accounts payable 1,444Property, plant, and equipment 9,573 Other noncurrent assets 1,927Other current assets 554 Other noncurrent liabilities 943Other current liabilities 470 Retained earnings 10,575Long-term investments 264 Accounts receivable
15、1,696Short-term investments 3,690 Inventories 1,256Loans payable in 2005 11Instructions.Prepare a classified balance sheet in good form as of December 31, 2004.3. These financial statement items are for Snyder Corporation at year-end, July 31, 2007.Salaries payable $ 2,080Salaries expense 51,700Util
16、ities expense 22,600Equipment 18,500Accounts payable 4,100Commission revenue 61,100Rent revenue 8,500Long-term note payable 1,800Common stock 16,000Cash 24,200Accounts receivable 9,780Accumulated depreciation 6,000Dividends 4,000Depreciation expense 4,000Retained earnings (beginning of the year) 35,
17、200Instructions.(a) Prepare an income statement and a retained earnings statement for the year. Snyder Corporation did not issue any new stock during the year.(b) Prepare a classified balance sheet at July 31.(c) Compute the current ratio and debt to total assets ratio.(d) Suppose that you are the p
18、resident of Allied Equipment. Your sales manager has approached you with a proposal to sell $20,000 of equipment to Snyder. He would like to provide a loan to Snyder in the form of a 10%, 5-year note payable. Evaluate how this loan would change Snyders current ratio and debt to total assets ratio, a
19、nd discuss whether you would make the sale.4. The chief financial officer (CFO) of SuperClean Corporation requested that the accounting department prepare a preliminary balance sheet on December 30, 007, so that the CFO could get an idea of how the company stood. He knows that certain debt agreement
20、s with its creditors require the company to maintain a current ratio of at least 2:1. The preliminary balance sheet is as follows.SUPERCLEAN CORP.Balance SheetDecember 30, 2007Current assets Current liabilitiesCash $30,000 Accounts payable $25,000Accounts receivable 20,000 Salaries payable 15,000 $4
21、0,000Prepaid insurance 10,000 $60,000 Long-term liabilities Notes payable 80,000 Total liabilities 120,000Property, plant, and equipment (net) 200,000 Stockholders equity Total assets $260,000 Common stock 100,000 Retained earnings 40,000 140,000 Total liabilities and stockholders equity$260,000Inst
22、ructions.(a) Calculate the current ratio and working capital based on the preliminary balance sheet.(b) Based on the results in (a), the CFO requested that $25,000 of cash be used to pay off the balance of the accounts payable account on December 31, 2007. Calculate the new current ratio and working
23、 capital after the company takes these actions.(c) Discuss the pros and cons of the current ratio and working capital as measures of liquidity.(d) Was it unethical for the CFO to take these steps?5. The following data were taken from the 2004 and 2003 financial statements of American Eagle Outfitter
24、s. (All dollars are in thousands.) 2004 2003 Current assets $525,623 $427,878Total assets 865,071 741,339Current liabilities 189,035 141,586Total liabilities 221,401 163,857Total stockholders equity 643,670 577,482Cash provided by operating activities 189,469 104,548Capital expenditures 64,173 61,40
25、7Dividends paid -0- -0-Instructions.Perform each of the following.(a) Calculate the debt to total assets ratio for each year.(b) Calculate the free cash flow for each year.(c) Discuss American Eagles solvency in 2004 versus 2003.(d) Discuss American Eagles ability to finance its investment activitie
26、s with cash provided by operating activities, and how any deficiency would be met.Chapter 3.1 During 2007, its first year of operations as a delivery service, Cheng Corp. entered into the following transactions.(1) Issued shares of common stock to investors in exchange for $110,000 in cash.(2) Borro
27、wed $45,000 by issuing bonds.(3) Purchased delivery trucks for $60,000 cash.(4) Received $16,000 from customers for services provided.(5) Purchased supplies for $4,200 on account.(6) Paid rent of $5,600.(7) Performed services on account for $8,000.(8) Paid salaries of $28,000.(9) Paid a dividend of
28、$11,000 to shareholders.InstructionsUsing the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to Stockholders Equity in the right-hand margin. Assets = Liabilities + Stockholders EquityCash+Accounts+Supplies+Property,Plant, =Ac
29、counts +Bonds + Common + Retained Receivable and Equipment Payable Payable Stock Earnings2. Selected transactions for Welcome Home, an interior decorator corporation, in its first month of business, are as follows.(1) Issued stock to investors for $12,000 in cash.(2) Purchased used car for $8,000 ca
30、sh for use in business.(3) Purchased supplies on account for $300.(4) Billed customers $2,600 for services performed.(5) Paid $200 cash for advertising start of the business.(6) Received $1,100 cash from customers billed in transaction(4).(7) Paid creditor $300 cash on account.(8) Paid dividends of
31、$400 cash to stockholders.Instructions(a) For each transaction indicate (a) the basic type of account debited and credited (asset, liability, stockholders equity); (b) the specific account debited and credited (Cash, Rent Expense, Service Revenue, etc.); (c) whether the specific account is increased
32、 or decreased; and (d) the normal balance of the specific account. Use the following format, in which transaction 1 is given as an example. Account Debited Account Credited (a) (b) (c) (d) (a) (b) (c) (d)Trans- Basic Specific Normal Basic Specific Normalaction Type Account Effect Balance Type Accoun
33、t Effect Balance 1 Asset Cash Increase Debit Stock- Common Increase Credit holders stock equity(b) Journalize the transaction. Do not provide explanations.3. This information relates to Matthews Real Estate Agency Corporation.Oct. (1) Stockholders invested $25,000 in exchange for common stock of the
34、 corporation.(2) Hires an administrative assistant at an annual salary of $42,000.(3) Buys office furniture for $3,600, on assount.(6) Sells a house and lot for M.E. Mills; commissions due from Mills, $10,800 (not paid by Mills at this time).(10) Receives cash of $140 as commission for acting as ren
35、tal agent renting an apartment.(27) Pays $700 on account for the office furniture purchased on October 3.(30) Pays the administrative assistant $3,500 in salary for October.InstructionsPrepare the debit-credit analysis for each transaction as illustrated on pages 119-124.4. Transaction data for Matt
36、hews Real Estate Agency are presented in 3 .InstructionsJournalize the transaction. Do not provide explanations.5. Selected transactions for P.F. Quick Corporation during its first month in business are presented below.Sept. (1) Issued common stock in exchange for $15,000 cash received from investors. (5) Pur