Financial Accounting, 8th Edition
8th Edition
ISBN: 9780078025556
Author: Robert Libby, Patricia Libby, Daniel Short
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 3, Problem 6E
Determining Financial Statement Effects of Various Transactions
Wolverine World Wide, Inc., manufactures military, work, sport, and casual footwear and leather accessories under a variety of brand names, such as Hush Puppies, Wolverine, Merrell, Stride Rite, and Bates, to a global market. The following transactions occurred during a recent year. Dollars are in thousands.
- a. Issued common stock to investors for $14,083 cash (example).
- b. Purchased $878,418 of additional inventory on account.
- c. Borrowed $11,000.
- d. Sold $1,409,068 of products to customers on account; cost of the products sold was $852,316.
- e. Paid cash dividends of $22,737.
- f. Purchased for cash $19,397 in additional property, plant, and equipment.
- g. Incurred $386,540 in selling expenses, paying three-fourths in cash and owing the rest on account.
- h. Earned $370 interest on investments, receiving 90 percent in cash.
- i. Incurred $1,395 in interest expense to be paid at the beginning of next year.
Required:
For each of the transactions, complete the tabulation, indicating the effect (+ for increase and − for decrease) of each transaction. (Remember that A = L + SE; R − E = NI: and NI affects SE through
| INCOME STATEMENT | ||||||
| Transaction | Assets | Liabilities | Stockholders’ Equity | Revenues | Expenses | Net Income |
| (a) (example) | +14,083 | NE | +14,083 | NE | NE | NE |
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Inferring Transactions from Financial StatementsCostco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 721locations across the U.S. as well as in Canada, the United Kingdom, Japan, Australia, South Korea, Taiwan, Mexico and Puerto Rico. As of its fiscal year-end 2016, Costco had approximately 86.7 million members. Selected fiscal-year information from the company's balance sheets follows.
Selected Balance Sheet Data ($ millions)
2016
2015
Merchandise inventories
$8,969
$8,908
Deferred membership income (liability)
1,362
1,269
(a) During fiscal 2016, Costco collected $2,739 million cash for membership fees. Use the financial statement effects template to record the cash collected for membership fees.(b) Costco recorded merchandise costs (that is, cost of goods sold) of $102,901 million in 2016. Record this transaction in the financial statement effects template.(c) Determine the…
Accounting supervalu one of the largest grocery retailers in the United states.is
Ratios Compared with Industry Averages
Because you own the common stock of Jacob Corporation, a paper manufacturer, you decide to analyze the firm's performance for the most recent year. The following data are taken from the firm's latest annual report:
Dec. 31, 2019 Dec. 31, 2018
$700,000
Quick assets
Inventory and prepaid expenses
Other assets
$552,000
372,000
312,000
4,788,000
4,200,000
Total Assets
$5,860,000 $5,064,000
Current liabilities
$724,000
$564,000
10% Bonds payable
1,440,000
1,440,000
8% Preferred stock, $100 par value
480,000
480,000
Common stock, $10 par value
2,700,000
2,160,000
Retained earnings
Total Liabilities and Stockholders' Equity
516,000
$5,860,000
420,000
$5,064,000
For 2019, net sales amount to $12,500,000, net income is $550,000, and preferred stock dividends paid are $50,000.
Required
Calculate the following ratios for 2019.
Round answers to two decimal places.
1. Return on sales
0
× %
2. Return on assets
0
x %
3. Return on common stockholders' equity
0
X…
Chapter 3 Solutions
Financial Accounting, 8th Edition
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Write the income statement equation and define...Ch. 3 - Explain the difference between a. Revenues and...Ch. 3 - Define accrual accounting and contrast it with...Ch. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Explain why stockholders equity is increased by...Ch. 3 - Explain why revenues are recorded as credits and...Ch. 3 - Complete the following matrix by entering either...
Ch. 3 - Complete the following matrix by entering either...Ch. 3 - Prob. 12QCh. 3 - State the equation for the net profit margin ratio...Ch. 3 - Which of the following is not a specific account...Ch. 3 - Prob. 2MCQCh. 3 - Prob. 3MCQCh. 3 - Prob. 4MCQCh. 3 - Prob. 5MCQCh. 3 - Prob. 6MCQCh. 3 - Prob. 7MCQCh. 3 - Prob. 8MCQCh. 3 - Prob. 9MCQCh. 3 - Prob. 10MCQCh. 3 - Prob. 1MECh. 3 - Reporting Cash Basis versus Accrual Basis Income...Ch. 3 - Prob. 3MECh. 3 - Prob. 4MECh. 3 - Prob. 5MECh. 3 - Prob. 6MECh. 3 - Prob. 7MECh. 3 - Prob. 8MECh. 3 - Prob. 9MECh. 3 - Prob. 10MECh. 3 - Prob. 11MECh. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3ECh. 3 - Prob. 4ECh. 3 - Prob. 5ECh. 3 - Determining Financial Statement Effects of Various...Ch. 3 - Prob. 7ECh. 3 - Prob. 8ECh. 3 - Prob. 9ECh. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Prob. 13ECh. 3 - Prob. 14ECh. 3 - Prob. 15ECh. 3 - Prob. 16ECh. 3 - Prob. 17ECh. 3 - Prob. 18ECh. 3 - Prob. 1PCh. 3 - Recording Journal Entries (AP3-2) Ryan Terlecki...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - Prob. 1APCh. 3 - Prob. 2APCh. 3 - Prob. 3APCh. 3 - Prob. 4APCh. 3 - Prob. 5APCh. 3 - Prob. 6APCh. 3 - Prob. 1CPCh. 3 - Prob. 2CPCh. 3 - Prob. 3CPCh. 3 - Prob. 4CPCh. 3 - Prob. 6CPCh. 3 - Evaluating an Ethical Dilemma Mike Lynch is the...Ch. 3 - Prob. 1CC
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
- Neiman Marcus Group (NMG) is one of the largest luxury fashion retailers in the world. Kohls Corporation (KSS) sells moderately priced private and national branded products through more than 1,100 department stores located throughout the United States. The current assets and current liabilities at the end of a recent year for both companies are as follows (in millions): a. Would an analysis of working capital between the two companies be meaningful? Explain. b. Compute the quick ratio for both companies. Round to one decimal place. c. Interpret your results.arrow_forwardMike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the companys financial statements for the 2 most recent years. Required: Note: Round all answers to two decimal places. 1. Compute the following for each year: (a) return on assets, (b) return on stockholders equity, (c) earnings per share, (d) price-earnings ratio, (e) dividend yield, and (f ) dividend payout ratio. 2. CONCEPTUAL CONNECTION Based on the analysis in Requirement 1, would you invest in the common stock of Kepler?arrow_forwardAnalyze and compare Clorox and Procter & Gamble The Clorox Company (CLX) and The Procter & Gamble Company (PG) produce and sell packaged consumer products around the world. Income and interest expense information from financial statements for a recent year follows (in millions): Clorox Procter & Gamble Interest expense $88 $579 Income before income tax expense 983 13,369 a. Compute the times interest earned for each company. Round to one decimal place. Clorox: fill in the blank 1 Procter & Gamble: fill in the blank 2 b. If you were a lender to these two companies, which one appears to have the greater coverage of interest expense and thus the greater protection for your loan interest?arrow_forward
- Thanksarrow_forwardAnalyze and compare Zynga, Electronic Arts, and Take-Two Data (in millions) from recent financial statements of Zynga Inc. (ZNGA), Electronic Arts Inc. (EA), and Take-Two Interactive Software, Inc. (TTWO) are as follows: a. Compute the working capital for Year 2 and Year 1 for each company. b. Which company has the largest working capital? c. Compute the current ratio for Year 2 and Year 1 for each company. Round to one decimal place. d. For Year 2, rank the companies from most liquid to least liquid based upon the current ratio.arrow_forwardPolo Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The companys products include such brands as Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren, Polo Jeans Co., and Chaps. Polo Ralph Lauren reported the following (in thousands) for two recent years: Assume that accounts receivable (in millions) were 486,200 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place. b. Compute the days sales in receivables for Year 2 and Year 1. Use 365 days and round to one decimal place. c. What conclusions can be drawn from these analyses regarding Ralph Laurens efficiency in collecting receivables?arrow_forward
- Financial Statement Analysis The financial statements for Nike, Inc., are presented in Appendix C at the end of the text. The following additional information (in thousands) is available: Instructions 1. Determine the following measures for the fiscal years ended May 31, 2013 (fiscal 2012), and May 31, 2012 (fiscal 2011), rounding to one decimal place. a. Working capital b. Current ratio c. Quick ratio d. Accounts receivable turnover e. Number of days sales in receivables f. Inventory turnover g. Number of days sales in inventory h. Ratio of liabilities to stockholders equity i. Ratio of sales to assets j. Rate earned on total assets, assuming interest expense is 23 million for the year ending May 31, 2013, and 31 million for the year ending May 31, 2012 k. Rate earned on common stockholders equity l. Price-earnings ratio, assuming that the market price was 61.66 per share on May 31, 2013, and 53.10 per share on May 31, 2012 m. Percentage relationship of net income to sales 2. What conclusions can be drawn from these analyses?arrow_forwardProfitability Ratios East Point Retail, Inc., sells professional women's apparel through company-owned retail stores. Recent financial information for East Point is provided below (all numbers in thousands). Fiscal Year 3 Fiscal Year 2 Net income $155,800 $80,200 Interest expense 3,200 12,000 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $2,116,558 $2,013,312 $1,749,954 Total stockholders' equity (at end of fiscal year) 1,157,044 1,134,132 821,966 Assume the apparel industry average return on total assets is 8.0%, and the average return on stockholders’ equity is 15.0% for the year ended April 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 fill in the blank 1 % Fiscal Year 2 fill in the blank 2 % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal…arrow_forwardUpda Profitability Ratios East Point Retail, Inc., sells professional women's apparel through company-owned retail stores. Recent financial information for East Point is provided below (all numbers in thousands). Fiscal Year 2 EGO Fiscal Year 3 Net income $141,900 $73,100 Interest expense 2,900 10,900 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $2,215,224 $2,107,164 $1,892,836 Total stockholders' equity (at end of fiscal year) 1,224,949 1,200,693 887,879 Assume the apparel industry average return on total assets is 8.0%, and the average return on stockholders' equity is 15.0% for the year ended April 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 % Fiscal Year 2 % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 % Fiscal Year 2 % c. The return on stockholders' equity is the return on…arrow_forward
- Profitability Ratios East Point Retail, Inc., sells professional women's apparel through company-owned retail stores. Recent financial information for East Point is provided below (all numbers in thousands). Fiscal Year 3 Fiscal Year 2 Net income $144,600 $74,500 Interest expense 3,000 11,100 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $3,981,316 $3,787,106 $3,346,228 Total stockholders' equity (at end of fiscal year) 1,177,790 1,154,468 859,046 Assume the apparel industry average return on total assets is 8.0%, and the average return on stockholders’ equity is 15.0% for the year ended April 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round to one decimal place. Fiscal Year 3 fill in the blank 1 % Fiscal Year 2 fill in the blank 2 % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round to one decimal…arrow_forwardComparing Two Companies in the Same Industry: Under Armour and Columbia Sportswear The following information is available from the financial statements included in Form 10-K for fiscal years 2014 and 2013 for Under Armour, Inc. and Columbia Sportswear Company (in thousands of dollars): Under Armour, Inc. Columbia Sportswear Company Net revenues (Net sales for Under Armour, Inc. & Columbia Sportswear) for the year ended December 31, 2014 $3,084,370 $2,100,590 Accounts receivable, net: December 31, 2014 279,835 344,390 December 31, 2013 209,952 306,878 Required: 1. Calculate the accounts receivable turnover ratios for both companies for the most recent year. Assume all sales are on credit. Round your answers to 2 decimal places. Under Armour fill in the blank 1 times Columbia Sportswear fill in the blank 2 times 2. Calculate the average length of time it takes each company to collect its accounts receivable. Use 360 days and round intermediate…arrow_forwardProfitability Ratios East Point Retail, Inc. sells apparel through company-owned retail stores. Recent financial information for East Point follows (in thousands): Fiscal Year 3 Fiscal Year 2 Net income (loss) $145,500 $(74,900) Interest expense 3,000 11,200 Fiscal Year 3 Fiscal Year 2 Fiscal Year 1 Total assets (at end of fiscal year) $1,654,483 $1,573,777 $1,395,189 Total stockholders' equity (at end of fiscal year) 1,013,482 993,414 728,426 Assume the apparel industry average return on total assets is 5.0% and the average return on stockholders' equity is 8.0% for the year ended February 2, Year 3. a. Determine the return on total assets for East Point for fiscal Years 2 and 3. Round percentages to one decimal place. If required, use a minus sign to indicate a negative return on total assets. Fiscal Year 3 % Fiscal Year 2 % b. Determine the return on stockholders' equity for East Point for fiscal Years 2 and 3. Round percentages to one decimal place. If required, use a minus sign to…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
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
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher: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
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License