Chapter 05 B Set Exercises

Chapter 5 Set B Exercises Libby 7e E5-1B (Similar to E5-6) [LO !
! "repari#$ a#% &#terpreti#$ a Classi'ie% Bala#ce Sheet (ith )isc*ssio# o' +ermi#olo$y (Challe#$i#$) Kingston, Inc., manufactures, markets, and distributes fishing gear. Presented here are the items listed on its recent balance sheet (dollars in millions) in alphabetical order: Accounts payable Accounts recei&able, net Accrued compensation Additional paid,in capital -ash and cash e.ui&alents -ommon stock, *',"%+,*** shares outstanding 0ood1ill In&entories 3ong,term debt $ !," " #ther assets (noncurrent) '%,%() #ther current assets *), $* #ther intangible assets, net %",$ ' #ther long,term liabilities '(+ #ther payables and accrued liabilities %),*)' Prepaid e/penses "(,$$( Property, plant, and e.uipment, net % ,$$* 2etained earnings $($,((( 4hort,term debt $$%,"%" $*,++' ,")) !',(+( *, $' $*," * ),('! $+(,$($ $(,(((
Required: $. Prepare a classified consolidated balance sheet for Kingston, Inc., for the current year (ended 5ecember $) using the categories presented in the chapter. *. 6hree of the items end in the term #et, 7/plain 1hat this term means in each case. E5--B (Similar to E5-7) [LO ! .ecor%i#$ Stoc/ &ss*a#ces (ith "ar 0al*e In a recent year, 41ish, Inc., a designer and marketer of computer accessories, issued $!,*(( shares of its $(.($ par &alue stock for $) ,((( (these numbers are rounded). 6hese additional shares 1ere issued under an employee stock option plan. Prepare the 8ournal entry re.uired to record the stock issuance. E5- B (Similar to E5-1) [LO ! &#'erri#$ Stoc/ &ss*a#ces a#% Cash )i2i%e#%s 'rom Cha#$es i# Stoc/hol%ers3 E4*ity 6he -orner -o. is a large retailer that processes food. -orner reported the follo1ing 9anuary $ balances in its stockholders: e.uity accounts (dollars in millions): C*rre#t 5ear -ommon stock Paid,in capital 2etained earnings $ "*! , )) ',%'" "rior 5ear $ "$" ,* $ !,%'(
5uring the current year, -orner reported net income of $ ,*%". Required: $. ;o1 much did -orner declare in di&idends for the year< *. Assume that the only other transaction that affected stockholders: e.uity during the current year 1as a single stock issuance. 2ecreate the 8ournal entry reflecting the stock issuance. E5-6B (Similar to E5-1-) [LO ! "repari#$ a 7*ltiple-Step &#come Stateme#t 6he follo1ing data 1ere taken from the records of Kramer -orporation at 5ecember $, *($*: 4ales re&enue 0ross profit 4elling (distribution) e/pense Administrati&e e/pense Preta/ income Income ta/ rate 4hares of stock outstanding $+',((( *%,!(( ),((( < $ ,!(( != ,*!(
Required: Prepare a complete multiple,step income statement for the company (sho1ing both gross profit and income from operations). 4ho1 all computations. ( 8i#t9 4et up the side captions or ro1s starting 1ith sales re&enue and ending 1ith earnings per share> rely on the amounts and percentages gi&en to infer missing &alues.) E5-5B (Similar to E5-1 ) [LO ! "repari#$ a 7*ltiple-Step &#come Stateme#t 6he follo1ing data 1ere taken from the records of -olins Industries at 5ecember $, *($$: 4ales re&enue Administrati&e e/pense 4elling (distribution) e/pense Income ta/ rate 0ross profit $$ ',((( $*,((( $ ,((( (= ) ,(((
4hares of stock outstanding
*,'((
Required: Prepare a complete multiple,step income statement for the company (sho1ing both gross profit and income from operations). 4ho1 all computations. ( 8i#t9 4et up the side captions or ro1s starting 1ith sales re&enue and ending 1ith earnings per share> rely on the amounts and percentages gi&en to infer missing &alues.) E5-6B (Similar to E 5-16) [LO ! )etermi#i#$ the E''ects o' +ra#sactio#s o# Bala#ce Sheet a#% &#come Stateme#t Cate$ories ;all Inc. is a large manufacturer. 3isted here are selected aggregate transactions from the first .uarter of a recent year (dollars in millions). -omplete the follo1ing tabulation, indicating the sign ( ? for increase, @ for decrease, and A7 for no effect) and amount of the effect of each transaction. -onsider each item independently. a. 2ecorded sales on account of $'$*.* and related cost of goods sold of $ * .!. b. 6ook out a loan, 1hich must be repaid in ) months 1ith a principal amount of $%*".(. c. Incurred research and de&elopment e/pense of $%%.!, 1hich 1as paid in cash. +ra#sactio# a. b. c. C*rre#t :ssets ;ross "ro'it C*rre#t Liabilities
E5-7B (Similar to E 5-11) [LO 6! :#aly<i#$ a#% E2al*ati#$ .et*r# o# :ssets 'rom a Sec*rity :#alyst3s "erspecti2e Parker Inc. is a large restaurant chain. Presented here are selected income statement and balance sheet amounts (dollars in thousands). C*rre#t 5ear Aet sales Aet income A&erage shareholders: e.uity A&erage total assets $$,$ *,('+ ',+") $*',%%! "%,$% "rior 5ear $$,() ,!"! %,+ ! $ ),! ) "(,+*'
Required: $. -ompute 2#A for the current and prior years and e/plain the meaning of the change.
*. Bould security analysts more likely increase or decrease their estimates of share &alue on the basis of this change< 7/plain. E5-1B (Similar to E5-17) [LO 6! :#aly<i#$ a#% &#terpreti#$ .et*r# o# :ssets 5ailey -ompany is a large house1ares retailer. Presented here are selected income statement and balance sheet amounts (dollars in thousands). C*rre#t 5ear Aet sales Aet income A&erage shareholders: e.uity A&erage total assets $*,)!",""+ ** ,(** $,)!*,*% ,(!$,!"% "rior 5ear $*,+ ',++$ *",%+' $,+*$,$ $ *,'' ,'
Required: $. -ompute 2#A for the current and prior years and e/plain the meaning of the change. *. 7/plain the ma8or cause(s) of the change in 2#A using 2#A profit dri&er analysis. E5-=B (Similar to E5-16) [LO ! "repari#$ a Simple Stateme#t o' Cash >lo(s ?si#$ the &#%irect 7etho% ;ernandeC -orporation is preparing its annual financial statements at 5ecember $, *($$. 3isted here are the items on its statement of cash flo1s presented in alphabetical order. Parentheses indicate that a listed amount should be subtracted on the cash flo1 statement. 6he beginning balance in cash 1as $*+,((( and the ending balance 1as $+',)((. -ash borro1ed on three,year note 5ecrease in accounts payable 5ecrease in in&entory Increase in accounts recei&able 3and purchased Aet income Ae1 deli&ery truck purchased for cash 4tock issued for cash $%(,((( (*,((() $,!(( (+,((() ( $,"(() *,((( ($(,((() *",(((
Required: Prepare the *($$ statement of cash flo1s for ;ernandeC -orporation. 6he section reporting cash flo1s from operating acti&ities should be prepared using the indirect method discussed in the chapter.
E5-1@B (Similar to E5-15) [LO ! )etermi#i#$ the E''ects o' +ra#sactio#s o# Bala#ce SheetA &#come Stateme#tA a#% Stateme#t o' Cash >lo(s Cate$ories 3isted here are selected aggregate transactions for 0reat 5esigns -ompany from the first .uarter of a recent year (dollars in millions). a. 2ecorded collections of cash from customers o1ed on open account of $ +.*. b. 2epaid $ .' on a ),month note o1ed to a bank. 6he remainder of the principal is due in t1o months. .e4*ire%9 $. -omplete the follo1ing tabulation, indicating the sign ( ? for increase, @ for decrease, and A7 for no effect) and amount of the effect of each additional transaction. -onsider each item independently. *. Dake the related 8ournal entries and using -A and -3 to denote current asset and current liability, respecti&ely. +ra#sactio# a. b. C*rre#t :ssets ;ross "ro'it C*rre#t Liabilities Cash >lo( 'rom Operati#$ :cti2ities

Chapter 05 B Set Exercises

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Chapter 5 Set B Exercises Libby 7e E5-1B (Similar to E5-6) [LO !

4hares of stock outstanding

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