FINANCIAL ACCOUNTING 9TH
16th Edition
ISBN: 9781308821672
Author: Libby
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2, Problem 2.5E
Determining Financial Statement Effects of Several Transactions
Nike. Inc., with headquarters in Beaverton. Oregon, is one of the world’s leading manufacturers of athletic shoes and sports apparel. The following activities occurred during a recent year. The amounts are rounded to millions.
- a. Purchased additional buildings for $172 and equipment for $270: paid $432 in cash and signed a longterm note for the rest.
- b. Issued 100 shares of $2 par value common stock for $345 cash.
- c. Declared $145 in dividends to be paid in the following year.
- d. Purchased additional short-term investments for $7,616 cash.
- e. Several Nike investors sold their own stock to other investors on the stock exchange for $84.
- f. Sold $4,313 in short-term investments for $4,313 in cash.
Required:
- 1. For each of the events (a) through (f). perform transaction analysis and indicate the account, amount, and direction of the effect on the
accounting equation . Check that the accounting equation remains in balance after each transaction. Use the following headings:
- 2. Explain your response to event (e).
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Wolverine World Wide, Incorporated, designs, markets, and licenses casual, industrial, performance outdoor, and athletic footw
apparel under a variety of brand names, such as Hush Puppies, Wolverine, Merrell, Sperry, and Saucony, to a global market. Th
following transactions occurred during a recent year. Dollars are in millions.
a. Issued common stock to investors for $14.4 cash (example).
b. Purchased $1,685.6 of additional inventory on account.
c. Paid $57.1 on long-term debt principal and $4.6 in interest on the debt.
d. Sold $2,350 of products to customers on account.
e. Cost of the products sold was $1,448.6.
f. Paid cash dividends of $23 to shareholders.
g. Purchased for cash $34.4 in additional property, plant, and equipment.
h. Incurred $706.6 in selling expenses, paying three-fourths in cash and owing the rest on account.
i. Earned $1 of interest on investments, receiving 80 percent in cash.
j. Incurred $32 in interest expense to be paid at the beginning of next year.…
Wolverine World Wide, Incorporated, designs, markets, and licenses casual, industrial, performance outdoor, and athletic footwear and
apparel under a variety of brand names, such as Hush Puppies, Wolverine, Merrell, Sperry, and Saucony, to a global market. The
following transactions occurred during a recent year. Dollars are in millions.
a. Issued common stock to investors for $21.4 cash (example).
b. Purchased $1,647.6 of additional inventory on account.
c. Paid $49.1 on long-term debt principal and $4.6 in interest on the debt.
d. Sold $2,371 of products to customers on account.
e. Cost of the products sold was $1,402.6.
f. Paid cash dividends of $29 to shareholders.
g. Purchased for cash $29.4 in additional property, plant, and equipment.
h. Incurred $707.6 in selling expenses, paying three-fourths in cash and owing the rest on account.
i. Earned $1 of interest on investments, receiving 80 percent in cash.
j. Incurred $32 in interest expense to be paid at the beginning of next year.…
Wolverine World Wide, Incorporated, designs, markets, and licenses casual, industrial, performance outdoor, and athletic footwear and
apparel under a variety of brand names, such as Hush Puppies, Wolverine, Merrell, Sperry, and Saucony, to a global market. The
following transactions occurred during a recent year. Dollars are in millions.
a. Issued common stock to investors for $15.4 cash (example).
b. Purchased $1,601.6 of additional inventory on account.
c. Paid $65.1 on long-term debt principal and $5.6 in interest on the debt.
d. Sold $2,372 of products to customers on account.
e. Cost of the products sold was $1,419.6.
f. Paid cash dividends of $23 to shareholders.
g. Purchased for cash $36.4 in additional property, plant, and equipment.
h. Incurred $705.6 in selling expenses, paying three-fourths in cash and owing the rest on account.
i. Earned $1 of interest on investments, receiving 80 percent in cash.
j. Incurred $30 in interest expense to be paid at the beginning of next year.…
Chapter 2 Solutions
FINANCIAL ACCOUNTING 9TH
Ch. 2 - Prob. 1QCh. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Explain what the following accounting terms mean:...Ch. 2 - Why are accounting assumptions necessary?Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the fundamental accounting model?Ch. 2 - Prob. 7QCh. 2 - Explain what debit and credit mean.Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - How is the current ratio computed and interpreted?Ch. 2 - Prob. 14QCh. 2 - Prob. 1MCQCh. 2 - Which of the following is not an asset? a....Ch. 2 - Total liabilities on a balance sheet at the end of...Ch. 2 - The dual effects concept can best be described as...Ch. 2 - The T-account is a tool commonly used for...Ch. 2 - Prob. 6MCQCh. 2 - The Cash T-account has a beginning balance of...Ch. 2 - Prob. 8MCQCh. 2 - At the end of a recent year, The Gap, Inc.,...Ch. 2 - Prob. 10MCQCh. 2 - Matching Definitions with Terms Match each...Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Events as Accounting Transactions...Ch. 2 - Classifying Accounts on a Balance Sheet The...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 2.6MECh. 2 - Prob. 2.7MECh. 2 - Prob. 2.8MECh. 2 - Prob. 2.9MECh. 2 - Prob. 2.10MECh. 2 - Prob. 2.11MECh. 2 - Computing and Interpreting the Current Ratio...Ch. 2 - Identifying Transactions as Investing or Financing...Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Account Titles The following are...Ch. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Recording Investing and Financing Activities Refer...Ch. 2 - Prob. 2.7ECh. 2 - Recording Investing and Financing Activities...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Prob. 2.11ECh. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Recording Journal Entries Nathanson Corporation...Ch. 2 - Prob. 2.14ECh. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Prob. 2.16ECh. 2 - Prob. 2.17ECh. 2 - Prob. 2.18ECh. 2 - Inferring Typical Investing and Financing...Ch. 2 - Prob. 2.20ECh. 2 - Identifying the Investing and Financing Activities...Ch. 2 - Prob. 2.22ECh. 2 - Identifying Accounts on a Classified Balance Sheet...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2.3PCh. 2 - Prob. 2.4PCh. 2 - Prob. 2.5PCh. 2 - Prob. 2.6PCh. 2 - Prob. 2.1APCh. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions in T-Accounts, Preparing...Ch. 2 - Prob. 2.4APCh. 2 - Accounting for the Establishment of a New Business...Ch. 2 - Prob. 2.1CPCh. 2 - Prob. 2.2CPCh. 2 - Prob. 2.3CPCh. 2 - Prob. 2.4CPCh. 2 - Prob. 2.5CPCh. 2 - Prob. 2.6CPCh. 2 - Prob. 2.7CPCh. 2 - Prob. 2.8CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Statement of Cash Flows Colorado Corporation was organized at the beginning of the year, with the investment of $250,000 in cash by its stockholders. The company immediately purchased an office building for $300,000, paying $210,000 in cash and signing a three-year promissory note for the balance. Colorado signed a five-year, $60,000 promissory note at a local bank during the year and received cash in the same amount. During its first year, Colorado collected $93,970 from its customers. It paid $65,600 for inventory, $20,400 in salaries and wages, and another $3,100 in taxes. Colorado paid $5,600 in cash dividends. Required Prepare a statement of cash flows for the year. What does this statement tell you that an income statement does not?arrow_forwardStock transactions for corporate expansion On December 1 of the current year, the following accounts and their balances appear in the ledger of Latte Corp., a coffee processor: At the annual stockholders meeting on March 31, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately 11,000,000. The plan provided (a) that a building, valued at 3,375,000, and the land on which it is located, valued at 1,500,000, be acquired in accordance with preliminary negotiations by the issuance of 125,000 shares of common stock, (b) that 40,000 shares of the unissued preferred stock be issued through an underwriter, and (c) that the corporation borrow 4,000,000. The plan was approved by the stockholders and accomplished by the following transactions: Instructions Journalize the entries to record the May transactions.arrow_forwardBalance Sheet You are evaluating the balance sheet for Cypress Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $670,000, Accounts receivable = $870,000, Inventory = $570,000, Accrued wages and taxes = $111,000, Accounts payable = $207,000, and Notes payable = $1,070,000. What is Cypress's net working capital? Multiple Choice $1,388,000 O $2,110,000 $722,000 O $3,498,000arrow_forward
- Excel Activity: Calculating the WACC Here is the condensed 2021 balance sheet for Skye Computer Company (in thousands of dollars): Current assets Net fixed assets Total assets Accounts payable and accruals Short-term debt Long-term debt Preferred stock (10,000 shares) Common stock (50,000 shares) Retained earnings Total common equity Total liabilities and equity 2021 $1,750 3,250 $5,000 Skye's earnings per share last year were $3.50. The common stock sells for $45.00, last year's dividend (Do) was $2.60, and a flotation cost of 11% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual rate of 8%. Skye's preferred stock pays a dividend of $3.60 per share, and its preferred stock sells for $30.00 per share. The firm's before-tax cost of debt is 12%, and its marginal tax rate is 25%. The firm's currently outstanding 12% annual coupon rate, long-term debt sells at par value. The market risk premium is 6%, the risk-free…arrow_forwardadditional information on current year transactions a. purchased equipment for $36,000 cash b. issued 12,000 shares of common stock for 45 cash per share c. declared and paid $89,000 in cash dividendsarrow_forwardAn analysis of Karman Corporation's Investment in Marketable Securities account during Year 2 disclosed the following: Debit entries Credit entries Karman's Year 2 income statement included a $40,000 gain on sale of marketable securities and $30,000 dividend income from marketable securities. All payments and proceeds relating to marketable securities transactions were in cash. $ 160,000 240,000 The cash proceeds received by Karman Corporation in Year 2 for the sale of marketable securities was: Select one: a. $240,000. b. $280,000. c. $230,000. d. $160,000. $arrow_forward
- Please do fast answer with correct calculation for this accounting questionarrow_forwardAccounting Equation The total assets and total liabilities (in millions) of ThriftShop, Inc. and Bullseye Corporation follow: ThriftShop Bullseye Assets $17,829 $24,426 Liabilities 3,388 1,954 Determine the stockholders' equity of each company. ThriftShop's stockholders' equity million Bullseye's stockholders' equity million %24arrow_forwardPreparing an income statement The following information was taken from the records of Arizona Motorsports, Inc. at November 30, 2018: Prepare a multi-step income statement for Arizona Motorsports for the fiscal year ended November 30, 2018. Include earnings per share.arrow_forward
- Subject: acountingarrow_forwardBalance Sheet You are evaluating the balance sheet for Campus Corporation. From the balance sheet you find the following balances: Cash and marketable securities = $391,000, Accounts receivable = $191,000, Inventory = $91,000, Accrued wages and taxes = $10,900, Accounts payable = $309,000, and Notes payable = $609,000. What is Campus's net working capital? Multiple Choice $1,601,900 О $673,000 О -$255,900 $928,900arrow_forwardIdentifying and reporting non-cash transactions Dirtbikes, Inc. identified the following selected transactions that occurred during the year ended December 31, 2018: Issued 750 shares of $3 par common stock for cash of $17,000. Issued 5,100 shares of $3 par common stock for a building with a fair market value of $96,000. Purchased a new truck with a fair market value of $29,000. Financed it 100% with a long-term note. Retired short-term notes of $28,000 by issuing 1,900 shares of $3 par common stock. Paid long-term note of $10,500 to Bank of Tallahassee. Issued new long-term note of $23,000 to Bank of Trust. Identify any non-cash transactions that occurred during the year, and show how they would be reported in the non-cash investing and financing activities section of the statement of cash flows?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY