Chapter 13, Problem 1CCTC

(1)(a)

To determine

Financial Statements: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Liabilities: Liabilities are referred to as the obligations of the business towards the creditors for operating the business. Liabilities may be short-term or long-term depending upon the time duration in which it is paid back to the creditors. Liabilities are classified in to current liabilities and long-term liabilities. Current liabilities are those liabilities which need to be paid within a year. Long-term liabilities are those liabilities that have longer maturity period.

To provide: Four components of T’s current liabilities.

b.

To determine

Whether current assets are sufficient to cover current liabilities.

c.

To determine

To provide: Reason for company avoiding low current ratio.

(2)(a)

To determine

To find out: Change in gift card liability between January 30, 2016 and January 31, 2015.

b.

To determine

Effect on the gift card liability due to given circumstances.

(3)(a)

To determine

The approach for accruing losses for litigation claims associated with the data breach.

b.

To determine

To prepare: Journal entry to record T’s recognition of new expenses associated with the data breach litigation for the fiscal year ended January 30, 2016.

c.

To determine

To prepare: Journal entry to record T’s reduction of its liability associated with the data breach litigation for the fiscal year ended January 30, 2016.