Stockholders’ equity Stockholders’ equity is those assets that are invested by the stockholders in a business. It is referred to as the claims of the stockholders on the assets of the business. It consists of two parts: Common stock and Retained earnings . Statement of cash flows Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company. To determine: Net Income reported by M Corporation in 2017.

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Answer 1

Question

Chapter 12, Problem 12.2AP

(a)

To determine

Stockholders’ equity

Stockholders’ equity is those assets that are invested by the stockholders in a business. It is referred to as the claims of the stockholders on the assets of the business. It consists of two parts: Common stock and Retained earnings.

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

To determine: Net Income reported by M Corporation in 2017.

(b)

To determine

cash inflows and cash outflows related to common stock and dividends accounts.

(c)

To determine

To indicate: Where each cash inflows and outflows would be classified on the statement of cash flows.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 12, Problem 12.2AP

(a)

To determine

Stockholders’ equity

Stockholders’ equity is those assets that are invested by the stockholders in a business. It is referred to as the claims of the stockholders on the assets of the business. It consists of two parts: Common stock and Retained earnings.

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

To determine: Net Income reported by M Corporation in 2017.

(b)

To determine

cash inflows and cash outflows related to common stock and dividends accounts.

(c)

To determine

To indicate: Where each cash inflows and outflows would be classified on the statement of cash flows.

Expert Solution & Answer

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Answer 3

Question

Chapter 12, Problem 12.2AP

(a)

To determine

Stockholders’ equity

Stockholders’ equity is those assets that are invested by the stockholders in a business. It is referred to as the claims of the stockholders on the assets of the business. It consists of two parts: Common stock and Retained earnings.

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

To determine: Net Income reported by M Corporation in 2017.

(b)

To determine

cash inflows and cash outflows related to common stock and dividends accounts.

(c)

To determine

To indicate: Where each cash inflows and outflows would be classified on the statement of cash flows.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 12.2AP

(a)

To determine

Stockholders’ equity

Stockholders’ equity is those assets that are invested by the stockholders in a business. It is referred to as the claims of the stockholders on the assets of the business. It consists of two parts: Common stock and Retained earnings.

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

To determine: Net Income reported by M Corporation in 2017.

(b)

To determine

cash inflows and cash outflows related to common stock and dividends accounts.

(c)

To determine

To indicate: Where each cash inflows and outflows would be classified on the statement of cash flows.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 12.2AP

(a)

To determine

Stockholders’ equity

Stockholders’ equity is those assets that are invested by the stockholders in a business. It is referred to as the claims of the stockholders on the assets of the business. It consists of two parts: Common stock and Retained earnings.

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

To determine: Net Income reported by M Corporation in 2017.

(b)

To determine

cash inflows and cash outflows related to common stock and dividends accounts.

(c)

To determine

To indicate: Where each cash inflows and outflows would be classified on the statement of cash flows.

Answer 6

Chapter 12, Problem 12.2AP

(a)

To determine

Stockholders’ equity

Stockholders’ equity is those assets that are invested by the stockholders in a business. It is referred to as the claims of the stockholders on the assets of the business. It consists of two parts: Common stock and Retained earnings.

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

To determine: Net Income reported by M Corporation in 2017.

Answer 7

Chapter 12, Problem 12.2AP

(a)

To determine

Stockholders’ equity

Stockholders’ equity is those assets that are invested by the stockholders in a business. It is referred to as the claims of the stockholders on the assets of the business. It consists of two parts: Common stock and Retained earnings.

Statement of cash flows

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

To determine: Net Income reported by M Corporation in 2017.

Answer 8

(b)

To determine

cash inflows and cash outflows related to common stock and dividends accounts.

Answer 9

(b)

To determine

cash inflows and cash outflows related to common stock and dividends accounts.

Answer 10

(c)

To determine

To indicate: Where each cash inflows and outflows would be classified on the statement of cash flows.

Answer 11

(c)

To determine

To indicate: Where each cash inflows and outflows would be classified on the statement of cash flows.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - Prob. 4Q Ch. 12 - Prob. 5Q Ch. 12 - Prob. 6Q Ch. 12 - Why is it necessary to use comparative balance...Ch. 12 - Prob. 8Q Ch. 12 - Prob. 9Q Ch. 12 - Prob. 10Q

Solution Summary: The author calculates the net income for the current year by adding stock dividend and cash dividend with opening balance of retained earnings.

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cash inflows and cash outflows related to common stock and dividends accounts.

To indicate: Where each cash inflows and outflows would be classified on the statement of cash flows.

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