Professional Documents
Culture Documents
$13,905
$ 6,048
$ 7,857
56.5%
54.2%
43.5%
77.0%
None of the above
2. As inventory and property plant and equipment on the balance sheet are consumed, they are
reflected:
A)
B)
C)
D)
E)
3. How would cash collected in advance for services affect the balance sheet?
A)
B)
C)
D)
4. A statement of cash flows usually does not include which of the following?
A)
B)
C)
D)
E)
Net income
Increase in accounts receivable
Contributed capital
Depreciation expense
None of the above
5. Sams Club (part of the WalMart consolidated operations) collects annual non-refundable membership
fees from customers. When should Sams Club recognize revenue for these membership fees?
A) Immediately when cash is received because the fees are nonrefundable
B) Evenly over the membership year
C) Evenly over the current fiscal year
D) At the end of the membership year when Sams has discharged its obligation to the customer
E) Pro rata over the customers actual purchasing pattern
6. Life Technologies Corporation and Affymetrix Inc. are competitors in the life sciences and clinical
healthcare industry. Following is a table of Total revenue and R&D expenses for both companies.
(in thousands)
Total revenue
R&D expenses
2012
Affymetrix Inc
2011
2010
$3,798,510
$3,775,672
$3,588,094
$295,623
$267,474
$310,746
$341,892
$377,924
$375,465
$57,881
$63,591
$67,934
Assume that Barber Co. uses the LIFO inventory costing method for both tax and financial reporting
purposes. The balance sheet reports inventories at $198 million. Then, in its footnotes, the company
reports that inventories would have been $218 million had the company used the FIFO method.
The difference between these two numbers ($20 million) is referred to as:
A) LIFO reserve
B) LIFO conformity rule
C) LIFO holding gain
D) Inventory temporary difference
E) None of the above
Problem 2 (6 Points)
Record the following transactions in the financial statement effects template below:
Balance Sheet
Transaction
Cash Asset +
Noncash
Assets
Liabilities
Income Statement
Contrib.
Capital
Earned
Capital
Revenues Expenses =
Performed
services for
$2,500 cash
Net
Income
$285,477
479,709
761,780
-629,099
-34,259
140,975
239,397
769,725
3,591,839
832,491
58,800
287,798
27,087
1,180,736
725,957
Marketable securities
Net revenue
733,522
5,824,686
172,291
5,367
210,724
47,501
1,024,469
2,245,415
5,460,629
841,051
581,087
(3,473,617)
Required:
Prepare a balance sheet at December 31, 2013. (You do not need to use all of these accounts)
Problem 4 (8 Points)
Use the accounts below for Stanley Black and Decker to prepare an income statement for the year
ended December 28, 2013. ($ millions)
Cost of goods sold
Sales
Other operating expenses
Selling, general and administrative expenses
Income tax expense
Interest and other nonoperating expenses, net
Net (loss) earnings from discontinued operations
Net (loss) attributable to noncontrolling interests
$7,068.3
11,001.2
497.8
2,700.9
69.3
147.6
(28.0)
(1.0)
Problem 5 (6 Points)
James Corporation has aged its accounts receivable and estimated uncollectible accounts as follows
(in millions):
Age of Receivables
Current
30-60 days past due
61-90 days past due
Over 90 days past due
Total
Balance
$5,600
1,400
860
430
$8,290
Estimated % uncollectible
1%
3%
5%
10%
Year 1
Year 2
$14,233
9,778
$14,851
10,474
Income statement
Net sales
Cost of goods sold
$84,705
61,759
$92,589
66,814
Problem 8 (6 Points)
The Lowes Theatre purchased a new projector costing $72,000 on January 1, 2014. Because of
changing technologies, the projector is estimated to last four years after which it will be obsolete and
have a salvage value of $4,000 as a collectors item. Compute the depreciation expense for 2014
using:
a. The straight-line method (SL)
b. Would this amount of depreciation expense in 2014 under (SL) be higher or lower than that
calculated under the double-declining balance method.
Problem 9 (6 Points)
How do companies use accounts receivables to shift income? Explain why managers engage in this
sort of activity.