Videos
1)
Explain whether Corporation S uses a multiple-step or a single-step format on its income statement.
1)
Explanation of Solution
Multi-step income statement: The income statement represented in multi-steps with several subtotals, to report the income from principal operations, and separate the other expenses and revenues which affect net income, is referred to as multi-step income statement.
Corporation S uses a multiple-step income statement because there are deduction of cost of sales and various operating expenses from the total net revenues to determine the operating income. After the determination of operating income, it adds and deducts interest income and interest expense respectively to calculate the earnings before income taxes, and then subtracts income taxes to compute net earnings including non-controlling interests.
2)
Ascertain the net earnings attributable to Corporation S and also state the basic earnings per common share for 2013.
2)
Explanation of Solution
Net earnings: The bottom line of income statement which is the result of excess of earnings from operations (revenues) over the costs incurred for earning revenues (expenses) is referred to as net earnings.
The net earnings attributable to Corporation S for 2013 are $8.3 million.
Basic earnings per common share: Basic earnings per common share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders.
The basic earnings per common share attributable to Corporation S for 2013 are $0.01.
3)
Determine the amount of operating income for the year 2013 and 2012.
3)
Explanation of Solution
Operating income: Income statement reports revenues and expenses from business operations, and the result of those operations, before taxes, other revenues and expenses, is referred to as income from operations.
The amount of operating loss for the year 2013 is ($325.4) million and the operating income for the year 2012 is $1,997.4 million.
4)
Determine the amount of interest expense incurred in the year 2013 and 2012.
4)
Explanation of Solution
The amount of interest expense incurred during the year 2013 is $28.1 million.
The amount of interest expense incurred during the year 2012 is $32.7 million.
5)
Determine the amount of the income taxes related to income before income taxes for 2013.
5)
Explanation of Solution
The income taxes related to income before income taxes of Corporation S for 2013 is ($238.7) million.
6)
Determine the amount of general and administrative expense for 2013.
6)
Explanation of Solution
Selling, general, and administrative expenses: The cost expended for selling the merchandise, and general administrative purposes during a certain period are referred to as selling, general, and administrative expenses. Some examples are salaries of sales personnel, salaries of office personnel, store supplies, office supplies, rent, delivery, and advertising expenses.
The general and administrative expense of Corporation S for 2013 is $937.9 million.
7)
Determine the amount of
7)
Explanation of Solution
Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to its wear and tear or obsolescence. It is a method of distributing the cost of the fixed assets over its estimated useful life.
- Depreciation and amortization expense reported on the income statement of Corporation S for the year 2013 is $621.4 million.
- Depreciation and amortization expense of 655.6 million is added back to net income on the statement of cash flows.
- The major difference on the income statement is the depreciation expense allocated to cost of sales that includes depreciation on roasting and other production equipment for the production of roast coffee beans.
8)
Determine the amount of dividends on common stock that was paid and declared in 2013. Identify the difference on balance sheet if the amounts are different.
8)
Explanation of Solution
Dividends: This is the amount of cash distributed to stockholders by a company out its earnings, according to their proportion of shares invested in the company.
The amount of Dividends paid reported on the statement of cash flows in 2013 is $628.9 million. However, according to the statement of shareholders’ equity, the dividends declared were $668.6 million. The difference of $39.7 million represents dividends declared but not yet paid by year-end. This amount is reported as increase in the dividend payable liability on the balance sheet that is reported under Note 7: “Other accrued liabilities”.
9)
Identify whether the revenues of Corporation S are seasonal. If so, determine the two quarters in which Corporation S generate most revenues during the year 2012 and 2013.
9)
Explanation of Solution
Revenues: Revenues are earnings from operations of a business. The operating activities are sale of goods and services, and rent revenue.
The revenues of Corporation S are seasonal because the net revenues of Corporation S were highest in the first and second quarters. Corporation S generated revenues in the first and fourth quarter of 2013 which was $3,799.6 million.
10)
Identify whether Corporation S used direct or indirect method to compute the net cash flow from operating activities in 2013 and state the amount.
10)
Explanation of Solution
Statement of cash flows: Statement of cash flows reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.
Cash flow from operating activities: This section of cash flow statement provides information about the cash received or cash paid in day-to-day operating activities of a company.
Indirect method: Under indirect method, net income is reported first, and then non-cash expenses, losses from fixed assets, and changes in opening balances and ending balances of current assets are adjusted to reconcile the net income balance.
Corporation S reports net cash provided by operating activities by using the indirect method. The net cash flow from operating activities of Corporation S for 2013 is $2,908.3 million.
11)
Determine the amount of net cash used in investing activities for 2013.
11)
Explanation of Solution
Statement of cash flows: Statement of cash flows reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.
Cash flow from investing activities: This section of cash flows statement provides information concerning about the purchase and sale of capital assets by the company.
The net cash flow used in investing activities of Corporation S for 2013 is $(1,411.2) million.
12)
Determine the amount of cash used to pay for long-term debt in 2013.
12)
Explanation of Solution
Statement of cash flows: Statement of cash flows reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.
Cash flow from financing activities: This section of cash flows statement provides information about the
The net cash used to pay for long-term debt of Corporation S for 2013 is ($35.2) million.
Want to see more full solutions like this?
Chapter 5 Solutions
EBK INTERMEDIATE ACCOUNTING: REPORTING
- Analyzing Starbuckss Balance Sheet Disclosures Review the financial statements and related notes of Starbucks in Appendix A. Required: Answer the following questions pertaining to Starbuckss balance sheet as of October 1, 2017, and related information. (Note: You do not need to make any calculations. All answers may be found in the financial report.) 1. What was the amount of the current assets and current liabilities? 2. What was the single largest current asset and current liability? 3. What was the amount in the allowance for doubtful accounts? 4. What is the par value of the companys common stock? How many shares were issued and outstanding? 5. What was the total amount of inventory? What were the principal categories of inventory? 6. What costing method was used for inventories? 7. What was the total property, plant, and equipment before and after accumulated depreciation? 8. What was the accumulated depreciation? What method does the company use to depreciate its property, plant, and equipment? 9. What was the long-term debt? When is the debt due? 10. What was the retained earnings balance? What caused retained earnings to change in 2017? 11. What was the accumulated other comprehensive income/(loss) balance? 12. What was the noncontrolling interest balance?arrow_forwardYou are provided with the Income Statement and the Balance Sheet of HTS software, Inc. for 2011. Required: (b) Analyze the current financial position for the company from a time series and cross section viewpoint. (c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios. Historical and Industry Average Ratios HTS Software , Inc. Ratio 2010 2011 Industry2011 Current Ratio 2.6 2.08 2.7 Quick Ratio 1.8 1.32 1.75 Inventory Turnover 4.5 6 4.7 Average Collection Period 40days 9.125 42 days Total Asset Turnover 1.2 1.69 1 Debt Ratio 20% 28.2% 21% Times Interest Earned 9 5.9% 8.9 Gross Profit Margin 43% 42.8% 44% Operating Profit Margin 30% 25.5% 32% Net Profit Margin 20% 17% 21% Return on total assets 12% 4.11% 13% Return on Equity Price/Earnings Ratio 15% 7.3 19% 4.4 16% 8…arrow_forwardYou are provided with the Income Statement and the Balance Sheet of HTS software, Inc. for 2011. Required: (b) Analyze the current financial position for the company from a time series and cross section viewpoint. (c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios. Historical and Industry Average Ratios HTS Software , Inc. Ratio 2010 2011 Industry2011 Current Ratio 2.6 — 2.7 Quick Ratio 1.8 — 1.75 Inventory Turnover 4.5 — 4.7 Average Collection Period 40days — 42 days Total Asset Turnover 1.2 — 1 Debt Ratio 20% — 21% Times Interest Earned 9 — 8.9 Gross Profit Margin 43% — 44% Operating Profit Margin 30% — 32% Net Profit Margin 20% — 21% Return on total assets 12% — 13% Return on Equity Price/Earnings Ratio 15% 7.3 — — 16% 8 Balance SheetHTS Software, Inc.December 31,…arrow_forward
- Consider the balance sheets and selected data from the income statement of Keith Corporation that follow (attached) a. Calculate the firm's net operating profit after taxes (NOPAT) for the year ended December 31, 2015. b. Calculate the firm's operating cash flow (OCF) for the year ended December 31, 2015. c. Calculate the firm's free cash flow (FCF) for the year ended December 31, 2015. d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c).arrow_forwardThis problem is based on the 2017 annual report of Campbell Soup Company. Answer the following questions. Refer to the Selected Financial Data for parts (a) to (d).Required: Find the net sales in 2014. (Enter your answer in millions.) Calculate the operating income (earnings before interest and taxes) in 2013. (Enter your answer in millions.) Calculate the difference between operating income (earnings before interest and taxes) and net income (net earnings) in 2015. (Enter your answer in millions.) Find the year(s) in which net income (net earnings) decreased compared to the previous year. attatched are the charts needed for the following questions, I have tried to figure these out but I come up with incorrect answers. Thank Youarrow_forwardConsider the comparative balance sheet and income statement for Starbucks provided in the shown Figures . Based on these financial statements, determine the following for the year September 30, 2018: Solve, a. Return on assets employed. b. Return on owner’s equity. c. Current ratio.arrow_forward
- Perform the Reperformance or Recalculation procedures to check the mathematical accuracy ofthe Income Statement. What issue did you find? What is the next step? Create a Correctedversion of the Income Statement. Income Statement For the Year Ended For the Year Ended Revenue 3/31/2021 3/31/2022 Sales Revenue: Corporate Accounts $ 353,739.57 $ 343,050.56 Sales Revenues: Storefront $ 80,649.00 $ 91,411.50 Total Sales Revenue $ 434,388.57 $ 434,462.06 Cost of Goods Sold: Ingredients $ 69,736.39 $ 64,645.64 Cost of Goods Sold: Boxes and Cupcake Cups $ 3,875.55 $ 3,755.55 Cost of Goods Sold: Beverages $ 5,466.50 $ 5,681.50 Total COGS $ 76,078.44 $ 74,082.69 Gross Profit $ 358,310.13 $ 360,379.37 Interest Revenue $…arrow_forwardUse the following tables to answer the question: LOGIC COMPANY Income Statement For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Gross sales 19,800 15,600 Sales returns and allowances 900 100 Net sales 18,900 15,500 COGS 11,800 8,800 Gross profit 7,100 6,700 Depreciation 780 640 Selling and administrative expenses 2,800 2,400 Research 630 540 Miscellaneous 440 340 Total operating expenses 4,650 3,920 Income before interest and taxes 2,450 2,780 Interest expense 640 540 Income before taxes 1,810 2,240 Provision for taxes 724 896 LOGIC COMPANY Balance Sheet For years ended December 31, 2016 and 2017 (values in $) 2016 2017 Current assets 12,300 9,400 Accounts receivable 16,900 12,900 Merchandise inventory 8,900 14,400 Prepaid expenses 24,400 10,400 Total current assets 62,500 47,100 Building (net) 14,900 11,400 Land 13,900 9,400 Total plant and equipment 28,800 20,800 Total assets 91,300 67,900 Accounts payable 13,400 7,400 Salaries payable 7,500 5,400 Total current…arrow_forwardepare an income statement for the year ended December 31, 2018, which includes amounts gross profit, income before income taxes, and net income. List expenses (other than cost of for goods sold and income tax expense) in order, from the largest to the smallest dollar balance. You may ignore earnings per share. pare a statement of retained earnings for the year ending December 31, 2018. Prepare thes a statement of financial position (balance sheet) as of December 31, 2018, following Include separate asset and liability categories for those items that are "current." Include and label amounts for total assets, total liabilities, total stockholders' equity, and total liabilities and stockholders' equity. Present deferred income taxes as a noncurrent liability. To the extent information is available that should be disclosed, include the parenthetical disclosure of that information.arrow_forward
- Consider the comparative balance sheet and income statement for Starbucks provided in the shown Figures . Based on these financial statements, determine the following for the year September 30, 2018: Solve,d. Acid test ratio. e. Accounts receivable turnover. f. Inventory turnover.arrow_forwardAccess the February 21, 2017, filing of the December 31, 2016, 10-K report of The Hershey Company (ticker: HSY) at SEC.gov and complete the following requirements. Required Compute or identify the following profitability ratios of Hershey for its years ending December 31, 2016, and December 31, 2015. Interpret its profitability using the results obtained for these two years. 1. Profit margin ratio (round the percent to one decimal). 2. Gross profit ratio (round the percent to one decimal). 3. Return on total assets (round the percent to one decimal). (Total assets at year-end 2014 were $5,622,870 in thousands.) 4. Return on common stockholders’ equity (round the percent to one decimal). (Total shareholders’ equity at year-end 2014 was $1,519,530 in thousands.) 5. Basic net income per common share (round to the nearest cent).arrow_forwardThe financial statements for Tyler Toys, Inc. are shown in the popup window: LOADING... . Calculate the profit margin, return on assets, and return on equity for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders? Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue $14,146,094 $13,567,551 Cost of goods sold $-8,448,688 $-8,131,338 Selling, general, and administrative expenses $-998,878 $-980,620 Depreciation $-1,497,580 $-1,472,740 EBIT $3,200,948 $2,982,853 Interest expense $-376,634 $-354,060 Taxes $-1,073,239 $-998,941 Net income $1,751,075 $1,629,852 Right-click on the table and select Copy to Clipboard and then right-click the highlighted texts in the popup dialogue box and select Copy in order to paste its…arrow_forward
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning