adjustments. The firm uses a calendar-year accounting period, but prepares monthly accounting adjustments.
Supplies
Supplies Expense
Jan. 31 Bal. 1,800 1,800 Jan. 31 Bal.
Jan. 31 Bal. 1,920 1,148 Jan. 31 Bal.
My Subscriptions / Courses / ACC3010-Financial Report and Analysis / Module 2 / HW2
Prepaid Insurance
Jan. 31 Bal. 1,148 1,148 Jan. 31 Bal.
Started on
Sunday, 20 January 2019, 1:09 PM
State Finished
Completed on Sunday, 20 January 2019, 1:57 PM
Time taken
Marks
Correct
Mark 9.00 out of 9.00
Do not use negative signs with answers, unless to indicate a net loss.
Baiman Corporation
Jan. 31 Bal. 6,400 6,400 Jan. 31 Bal.
Accumulated Depreciation -Truck
Jan. 31 Bal. 17,376 17,376 Jan. 31 Bal.
$ 2,480
50,000
!
Wages expense
19,000
!
Net income (loss) $
31,000
!
5,068 Jan. 31 Bal.
!
b. The amount in the insurance expense account represents the adjustment made at January 31 for January insurance
expense. If the original insurance premium was for one year, what was the amount of the premium, and on what date did
the insurance policy start?
The policy began on
For the month ended January 31
Jan. 31 Bal. 5,068
a. If the amount in supplies expense represents the January 31 adjustment for the supplies used in January, and $1,240
worth of supplies were purchased during January, what was the January 1 beginning balance of supplies?
Amount of the premium $ 1,968
Income Statement
$
Jan. 31 Bal.
Wages Expense
1,400 Jan. 31 Bal.
Truck
191.00/191.00
Constructing Financial Statements from Transaction Data
Baiman Corporation commences operations at the beginning of January. It provides its services on credit and bills its
customers $50,000 for January sales. Its employees also earn January wages of $19,000 that are not paid until the first of
February. Complete the following statements for the month-end of January.
Sales
Wages Payable
Jan. 31 Bal. 1,400
164 164
47 mins 28 secs
Grade 10.00 out of 10.00 (100%)
QUESTION 1
Insurance Expense
Jan. 31 Bal.
September 1
!
! of the previous year.
c. If we assume that no beginning balance existed in either in either wage payable or wage expense on January 1, how
much cash was paid as wages during January? $ 5,000
!
d. If the truck has a useful life of four years (or 48 months), what is the monthly amount of depreciation expense, and how
many months has Bloomfield owned the truck?
Baiman Corporation
14
! months
Balance Sheet
January 31
Correct
0
!
50,000
!
50,000
!
$
Cash
Accounts receivable
Marks for this submission: 5.00/5.00.
QUESTION 3
Total assets
$
Wages payable
$
Retained earnings
19,000
!
31,000
!
Correct
Inferring Transactions from Financial Statements
The GAP is a global clothing retailer for men, women, children, and babies. The following information is taken from The
Gap's fiscal 2015 annual report.
Selected Balance Sheet Data ($ millions)
Inventories
Total liabilities and equity $
50,000
!
Mark 16.00 out of 16.00
Accounts Payable
2015
2014
$1,901 $1,861
1,140
1,145
a. The Gap purchased inventories totaling $10,314 million during fiscal 2015. Use the financial statement effects template
to record cost of goods sold for The Gap's fiscal year ended 2015. (Assume accounts payable is used only for recording
purchases of inventories and all inventories are purchased on credit.)
Correct
Marks for this submission: 9.00/9.00.
QUESTION 2
b. What amount did the company pay to suppliers during the year? Record this with the financial statement effects
template.
Correct
Mark 5.00 out of 5.00
Financial Analysis Using Adjusted Account Data
Selected T-account balances for Bloomfield Company are shown below as of January 31, which reflect its accounting
adjustments. The firm uses a calendar-year accounting period, but prepares monthly accounting adjustments.
Use negative signs with answers, if appropriate.
Balance
Sheet
Income
Statement
Sheet
Transaction
Cash Asset
a. Recognize
cost of goods
sold.
Noncash
Assets
+
0
Liabilities
(10,274)
!
!
(10,319)
b. Cash paid
to suppliers.
=
0
!
Statement
+
Contrib.
Capital
0
0
!
!
(10,319)
!
!
+
Earned
Capital
(10,274)
!
Revenues
0
!
-
Expenses
10,274
Total expenses
=
Net income
$
Net income
0
0
0
0
!
!
!
Correct
QUESTION 4
Correct
348,000
!
Barth Company
Balance Sheet
December 31, 2011
Assets
Cash
Marks for this submission: 16.00/16.00.
!
(10,274)
!
!
452,000
$
96,000
!
Liabilities and equity
Accounts receivable
!
60,000
!
Accounts payable
!
32,000
!
Supplies inventory
!
6,000
!
Bonds payable, long-term
!
400,000
!
Inventory
!
72,000
!
432,000
!
234,000
!
Common stock
!
300,000
!
Retained Earnings
!
120,000
!
420,000
!
852,000
!
$
Total liabilities
Mark 3.00 out of 3.00
Determining Missing Information Using the Accounting Equation
Use your knowledge of accounting relations to complete the following table for Boatsman Company.
2011
Net income (loss)
(19,455)
69,634
!
Dividends
!
160,000
!
Equipment
!
140,000
!
Buildings
!
302,000
!
Goodwill
!
16,000
!
852,000
!
Total equity
!
48,192
0
Ending retained earnings
Land
2012
$89,089 $
Beginning retained earnings
Total current assets
69,634
15,060
102,766
!
$
Total assets
Total liabilities and equity
$
Correct
Correct
Marks for this submission: 3.00/3.00.
QUESTION 5
Correct
Marks for this submission: 38.00/38.00.
Mark 38.00 out of 38.00
QUESTION 6
Constructing Financial Statements from Account Data
Barth Company reports the following year-end account balances at December 31, 2011. Prepare the 2011 income
statement and the balance sheet as of December 31, 2011.
Accounts payable
$ 32,000
Accounts receivable
60,000
Inventory
$ 72,000
Land
160,000
Bonds payable, long-term
400,000
Goodwill
Buildings
302,000
Retained earnings
120,000
Sales revenue
800,000
Cash
96,000
300,000
Supplies inventory
6,000
Cost of goods sold
360,000
Supplies expense
12,000
Equipment
140,000
Wages expense
80,000
!
$
800,000
Comparing Income Statements and Balance Sheets of Competitors
Following are selected income statement and balance sheet data from two retailers: Abercrombie & Fitch (clothing retailer
in the high-end market) and TJX Companies (clothing retailer in the value-priced market).
Round your answers to one decimal place (example: 0.2345 = 23.5%).
Income Statement
($ millions)
Sales
Barth Company
Income Statement
For Year Ended December 31, 2011
Sales revenue
Mark 23.00 out of 23.00
(a) Express each income statement amount as a percentage of sales.
16,000
Common stock
Correct
!
ANF
TJX
$3,469
$21,942
Cost of goods sold
1,257
36.2
!
%
16,040
73.1
!
%
Gross profit
2,212
63.8
!
%
5,902
26.9
!
%
Total expenses
2,062
59.4
!
%
4,559
20.8
!
%
Net income
$ 150
4.3
!
%
$ 1,343
6.1
!
%
Expenses
Cost of goods sold
!
360,000
!
(b) Express each balance sheet amount as a percentage of total assets.
Wages expense
!
80,000
!
Round your answers to one decimal place (ex: 0.2345 = 23.5%)
Supplies expense
!
12,000
!
Total expenses
Balance Sheet
($ millions)
452,000
!
Current assets
ANF
$1,433
TJX
48.6
!
%
$5,100
64
!
%
Current assets
Long-term assets
$1,433
48.6
!
%
$5,100
64
!
%
1,515
51.4
!
%
2,872
36
!
%
$2,948
Total assets
$7,972
$ 559
19
!
%
$3,133
39.3
!
%
498
16.9
!
%
1,739
21.8
!
%
Total liabilities
1,057
35.9
!
%
4,872
61.1
!
%
Stockholders' equity
1,891
64.1
!
%
3,100
38.9
!
%
Current liabilities
Long-term liabilities
Total liabilities and equity $2,948
$7,972
Merchandise inventories
824
Use negative signs with your answers, when appropriate. Enter answers in millions.
Balance Sheet
Cash
Asset
Transaction
Noncash
Assets
+
=
Liabilities
+
Contributed
Capital
+
Earned
Capital
1,736
!
0
!
1,736
!
0
!
0
!
0
!
(67,995)
!
0
!
0
!
(67,995)
!
0
!
68,228
!
68,228
!
0
!
0
!
(b)
ANF's expenses as a percentage of sales are higher because it spends more on advertising than does TJX.
ANF is a high-end retailer that is able to charge high prices for its products, but bears substantial operating costs to
support its "shopping experience."!
869
(a) During fiscal 2010, Costco collected $1,736 cash for membership fees. Use the financial statement effects template to
record the cash collected for membership fees.
(b) In 2010, Costco recorded $67,995 million in merchandise costs (that is, cost of goods sold). Record this transaction in
the financial statement effects template.
(c) Determine the value of merchandise that Costco purchased during fiscal-year 2010. Use the financial statement effects
template to record these merchandise purchases. Assume all of Costco's purchases are on credit.
(a)
Which of the following statements about business models is most consistent with the computations for part (a)?
$5,638 $5,405
Deferred membership income (liability)
(c)
Income Statement
ANF's profit is higher than TJX's as a percentage of sales because its sales are higher than TJX's.
ANF's gross profit is higher than TJX's because its sales volume allows it to manufacture clothes at a lower per unit cost
than can TJX.
Transactions
Revenue
(a)
(b)
Which of the following statements about business models is most consistent with the computations for part (b)?
ANF reports lower current assets as a percentage of total assets because it pays its vendors on a more timely basis
(c)
-
Expenses
=
Net Income
0
!
0
!
0
!
0
!
67,995
!
(67,995)
!
0
!
0
!
0
!
than does TJX.
ANF reports higher long-term assets as a percentage of total assets because it depreciates its long-term assets more
slowly than does TJX.
Correct
ANF reports lower current assets and higher long-term assets as a percentage of total assets because it carries less
inventory and has a greater capital investment in its stores than does TJX.!
ANF reports lower current assets as a percentage of total assets because it is a smaller company and cannot afford the
investment in inventory.
Marks for this submission: 24.00/24.00.
QUESTION 8
Correct
Mark 21.00 out of 21.00
Comparing Operating Characteristics Across Industries
Following are selected income statement and balance sheet data for companies in different industries.
(c) Which company has a lower proportion of debt? What do the ratios tell us about relative riskiness of the two
companies?
($ millions)
Sales
ANF has a lower proportion of debt than does TJX, which implies that ANF is less risky than TJX.!
Target Corp.
$67,390
TJX has a lower proportion of debt than does ANF, which implies that TJX is less risky than ANF.
Nike, Inc.
HarleyDavidson
Cisco
Systems
ANF has a higher proportion of debt than does TJX, which implies that ANF is less risky than TJX.
TJX has a higher proportion of debt than does ANF, which implies that TJX is less risky than ANF.
Correct
Mark 24.00 out of 24.00
Inferring Transactions from Financial Statements
Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel
and other household goods at 582 locations across the U.S. as well as in Canada, the United Kingdom, Japan, Australia,
South Korea, Taiwan, Mexico and Puerto Rico. As of its fiscal year-end 2010, Costco had approximately 60 million
members. Selected fiscal-year information from the company's balance sheets follows. ($ millions).
Selected Balance Sheet Data ($ millions)
Net Income
Assets
Liabilities
$45,725
$21,665
$2,920
$43,705
$28,218
$15,487
20,862
11,354
9,508
2,133
14,998
5,155
9,843
4,859
2,749
2,110
147
9,431
7,224
2,207
40,040
14,397
25,643
7,767
81,130
36,845
44,285
Round all answers to one decimal place (percentage answer example: 0.2345 = 23.5%).
Company
Correct
Stockholders'
Gross Profit
(a) Compute the following ratios for each company.
Marks for this submission: 23.00/23.00.
QUESTION 7
Cost of
Goods Sold
2010
2009
Gross Profit/
Sales
Net Income/
Sales
Net Income/
Equity
Liabilities/
Equity
Target Corp.
32.1
!
%
4.3
!
%
18.9
!
%
1.8
!
Nike, Inc.
45.6
!
%
10.2
!
%
21.7
!
%
0.5
!
Harley-Davidson
43.4
!
%
3
!
%
6.7
!
%
3.3
!
64
!
%
19.4
!
%
17.5
!
%
0.8
!
Cisco Systems
Equity
(b) Which of the following statements about business models best describes the differences in gross (and net) profit
margin that we observe?
The higher gross profit companies are typically those that have some competitive advantage that allows them to
charge a market price for their products that cannot be easily competed away.!
The lower gross profit companies are those that can manufacture their products at the lowest cost.
B
!
Total liabilities
6,960
B
!
Stockholders' equity
6,951
B
!
=$
13,911
!
Total Expenses = $
23,656
!
Total Assets
The higher gross profit companies are those that charge a higher price for their products.
Nike Inc.
1,954
(b) Using the data, compute total assets and total expenses.
The lower gross profit companies are those that sell the highest unit volumes.
(c) Which company reports the highest ratio of net income to equity?
Accounts receivable
!
Which of the following statements best describes the differences in the ratio of net income to equity that we observe?
The highest return to equity companies are those that are able to keep their operating costs the lowest.
The highest return on equity companies are those that maintain high levels of debt and, as a result, reduce their
utilization of equity.
Correct
Marks for this submission: 12.00/12.00.
The highest return on equity companies are those that are able to sustain some competitive advantage that leads to
higher profitability and are also able to minimize their use of equity.!
The highest return on equity companies are those that are able to charge high prices for their products and, thus,
report the highest gross profit-to-sales ratio.
QUESTION 10
Correct
Mark 40.00 out of 40.00
Assessing Financial Statement Effects of Transactions and Adjustments
Selected accounts of Piotroski Properties, a real estate management firm, are shown below as of January 31, before any
accounts have been adjusted.
(d) Which company has financed itself with the highest percentage of liabilities to equity?
Harley-Davidson
Debits Credits
!
Which of the following statements best describes the reason why some companies are able to take on higher levels of
debt than are others?
Companies that can sustain higher levels of debt generally operate in consumer products industries.
Companies that can sustain higher levels of debt are typically larger companies.
Companies that can sustain higher levels of debt are typically those with the most stable and positive cash flows.!
Prepaid Insurance
$6,660
Supplies
1,930
Office Equipment
8,928
Unearned Rent Revenue
$ 5,250
Salaries Expense
3,100
Rent Revenue
15,000
Companies that can sustain higher levels of debt are generally younger companies whose market values are relatively
low and, as a result, cannot raise equity capital.
Piotroski properties prepares monthly financial statements. Using the following information, adjust the accounts as
necessary on January 31, using the financial statement effects template.
(a) Prepaid insurance represents a three-year premium paid on January 1.
(b) Supplies of $850 were still available on January 31.
(c) Office equipment is expected to last eight years (or 96 months).
(d) The unearned rent revenue represents six months of rent received in advance on January 1.
(e) Salaries of $490 have been earned by employees but yet not recorded as of January 31.
Correct
Marks for this submission: 21.00/21.00.
QUESTION 9
Correct
Mark 12.00 out of 12.00
Balance Sheet
Identifying and Classifying Balance Sheet and Income Statement Accounts
Following are selected accounts for Staples, Inc.
Transaction
(a) Indicate whether each account appears on the balance sheet (B) or income statement (I).
(a)
($ millions)
Sales
Accumulated depreciation
Depreciation expense
Retained earnings
Net income
Property, plant & equipment, net
Selling, general & administrative expense
Amount
$24,545
3,556
498
6,492
889
2,148
4,913
Classification
(b)
I
!
B
!
I
!
B
!
I
!
B
!
I
Cash
(c)
(d)
(e)
Noncash
Asset
+
Contributed
Assets
=
Liabilities
+
!
Transactions
(b)
Earned
+
Capital
0
!
(185)
!
0
!
0
!
(185)
!
0
!
(1,080)
!
0
!
0
!
(1,080)
!
0
!
(93)
!
0
!
0
!
(93)
!
0
!
0
!
(875)
!
0
!
875
!
0
!
0
!
490
!
0
!
(490)
!
Income Statement
(a)
Capital
Revenue
-
Expenses
=
Net Income
0
!
185
!
(185)
!
0
!
1,080
!
(1,080)
!
(c)
(d)
(e)
0
!
1,080
!
(1,080)
!
0
!
93
!
(93)
!
875
!
0
!
875
!
0
!
490
!
(490)
!
Correct
Marks for this submission: 40.00/40.00.