Help with ACCT 504 Final Exam (Keller)

    Question 1.1.(TCO A) An advantage of the corporate form of business is _____.(Points : 5)
    it is simple to establish
    the corporate tax rate is less than the personal tax rate
    corporations must pay dividends
    the shareholders are not responsible for the corporations debts
    Question 2.2.(TCO A) Dividends flow through which one of the following statements?(Points : 5)
    The Balance Sheet
    The Statement of Retained Earnings
    The Income Statement
    None of the above
    Question 3.3.(TCOs A B)Below is a partial list of account balances forLBJ Company:
    Cash
    $15000
    Prepaid insurance
    1000
    Accounts receivable
    3500
    Accounts payable
    3000
    Notes payable
    6000
    Common stock
    100000
    Dividends
    1500
    Revenues
    75000
    Expenses
    45500
    What did LBJ Company show as total credits?(Points : 5)
    $185500
    $250500
    $66000
    $184000
    Question 4.4.(TCOs B E) Which of the following statements is correct with regard to accrual accounting?(Points : 5)
    Accrual accounting is consistent with the matching principle.
    Accrual accounting is less complex than the cash-basis method.
    Accrual accounting does not record expenses until paid.
    Accrual accounting does not record revenue until payment is received.
    Question 5.5.(TCO D) Which inventory method will result in the lowest income taxes when prices are decreasing?(Points : 5)
    The average cost method
    LIFO
    FIFO
    Income tax expense will be the same.
    Question 6.6.(TCO A E) Equipment was purchased for $27000. Freight charges amounted to $1000 and there was a cost of $5000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $5000 salvage value at the end of its 7-year useful life. Depreciation expense each year using the straight-line method will be _____.(Points : 5)
    $4714
    $4000
    $3857
    $3285
    Question 7.7.(TCOs D G) When the market rate of interest is equal to the stated rate of interest on the bond the bond will require _____.(Points : 5)
    a debit to Discount on Bonds Payable
    a credit to Discount on Bonds Payable
    a credit to Bonds Payable
    a debit to Bonds Payable
    Question 8.8.(TCO C) Accounts receivable arising from sales to customers amounted to $50000 and $45000 at the beginning and end of the year respectively. Income reported on the income statement for the year was $150000. Based on these transactions the cash flows from operating activities to be reported on the statement of cash flows would be _____.(Points : 5)
    $195000
    $145000
    $115000
    $155000
    Question 9.9.(TCO F) If you are calculating the percentage change between 2 years worth of sales data you are conducting a _____.(Points : 5)
    common-size analysis
    vertical analysis
    horizontal analysis
    ratio analysis
    Question 10.10.(TCO F) When performing a common-size Income Statement the 100% figure is _____.(Points : 5)
    net sales
    total liabilities plus stockholders equity
    net income
    total assets
    Question 11.11.(TCO F) Ratios are most useful in expressing _____.(Points : 5)
    cause-and-effect relationships
    the relationships between numbers
    the delta between numbers
    the root cause of the problem
    Question 12.12.(TCO F) Creditors are usually most concerned with analyzing _____.(Points : 5)
    the company stock price
    turnover
    liquidity
    profitability
    Question 13.13.(TCO F) Shareholders are usually most interested in evaluating _____.(Points : 5)
    profitability
    leverage
    turnover
    the ability to pay debts as they come due
    Question 14.14.(TCO G) To calculate the market value of a bond we need to use the time-value-of-money concept called _____.(Points : 5)
    interpolation
    future value
    compounding
    discounting
    (TCO A) Below you will find selected information (in millions) from Coca-Cola Co.s 2012 Annual Report:
    Income Taxes Payable
    $471
    Short-term Investments and Marketable Securities
    8109
    Cash
    8442
    Other non-current Liabilities
    10449
    Common Stock
    1760
    Receivables
    4812
    Other Current Assets
    2973
    Long-term Investments
    10448
    Other Non-current Assets
    3585
    Property Plant and Equipment
    23486
    Trademarks
    6527
    Other Intangible Assets
    20810
    Allowance for Doubtful Accounts
    53
    Accumulated Depreciation
    9010
    Accounts Payable
    8680
    Short Term Notes Payable
    17874
    Prepaid Expenses
    2781
    Other Current Liabilities
    796
    Long-Term Liabilities
    14736
    Paid-in-Capital in Excess of Par Value
    11379
    Retained Earnings
    55038
    Inventories
    3264
    Treasury Stock
    35009
    Other information taken from the Annual Report:
    Sales Revenue for 2012
    $48017
    Cost of Goods Sold for 2012
    19053
    Net Income for 2012
    9019
    Inventory Balance on 12/31/11
    3092
    Net Accounts Receivable Balance on 12/31/11
    4920
    Total Assets on 12/31/11
    79974
    Equity Balance on 12/31/11
    31921
    Required:
    1.Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also separate the current liabilities from the non-current liabilities and provide a total for each.
    2.Using the Balance Sheet from your answer above calculatetheCurrent Ratioand Return on common stockholders equity ratio. (Make sure to show all your work).
    (Points : 36)
    Question 2.2.
    (TCO B) The following selected data was retrieved from the Walmart Inc. financial statements for the year ending January 31 2013:
    Accounts Payable
    $38080
    Accounts Receivable
    6768
    Cash
    7781
    Common Stock
    3952
    Cost of Goods Sold
    352488
    Income Tax Expense
    7981
    Interest Expenses
    2064
    Membership Revenues
    3048
    Net Sales
    466114
    Operating Selling and Administrative Expenses
    88873
    Retained Earnings
    72978
    Required:
    Using the information provided above:
    1.Prepare a multiple-step income statement
    2.Calculate the Profit Margin and Gross profit rate for the company. Be sure to provide the formula you are using show your calculations and discuss your findings/results.
    (Points : 36)
    Question 3.3.(TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the two questions below:
    Cash flow from operating activities
    In millions
    In millions
    For the year ended 2012
    For the year ended 2011
    Net (loss) earnings
    $(12650)
    $7074
    Depreciation and amortization
    5095
    4984
    Impairment of goodwill and purchased intangible assets
    18035
    885
    Stock-based compensation expense
    635
    685
    Provision for doubtful accounts
    142
    81
    Provision for inventory
    277
    217
    Restructuring charges
    2266
    645
    Deferred taxes on earnings
    (711)
    166
    Excess tax benefit from stock-based competition
    (12)
    (163)
    Other net
    265
    (46)
    Accounts and financing receivables
    1269
    (227)
    Inventory
    890
    (1252)
    Accounts payable
    (1414)
    275
    Taxes on earnings
    (320)
    610
    Restructuring
    (840)
    (1002)
    Other assets and liabilities
    (2356)
    (293)
    Net cash provided by operating activities
    10571
    12639
    Cash flows from investing activities:
    Investment in property plant and equipment
    (3706)
    (4539)
    Proceeds from sale of property plant and equipment
    617
    999
    Purchases of available-for-sale securities and other investments
    (972)
    (96)
    Maturities and sales of available-for-sale securities and other investment
    662
    68
    Payments in connection with business acquisitions net of cash acquired
    (141)
    (10480)
    Proceeds from business divestiture net
    87
    89
    Net cash used in investing activities
    (3453)
    (13959)
    Cash flow from financing activities:
    (Payments) issuance of commercial paper and notes payable net
    (2775)
    (1270)
    Issuance of debt
    5154
    11942
    Payment of debt
    (4333)
    (2336)
    Issuance of common stock under employee stock plans
    716
    896
    Repurchase of common stock
    (1619)
    (10117)
    Excess tax benefit from stock-based compensation
    12
    163
    Cash dividends paid
    (1015)
    (844)
    Net cash used in financing activities
    (3860)
    (1566)
    Increase (decrease) in cash and cash equivalents
    3258
    (2886)
    Cash and cash equivalents at beginning of period
    8043
    10929
    Cash and cash equivalents at end of period
    $11301
    $8043
    Required:
    1)Please calculate the percentage increase or decrease in cash for the total line of the operating investing and financing sections bolded aboveand explain the major reasons for the increase or decrease for each of these sections.
    2) Please calculate the free cash flow for 2012 and explain the meaning of this ratio.
    (Points : 36)
    Question 4.4.(TCO D) You are CFO of Goforit Inc. a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a companys net income can vary widely depending on which accounting choices are made from the GAAP menu.
    Assuming the goal is tomaximizenet income choose an accounting treatment from each of the following scenarios and explain to your CEO why the choice will produce the desired effect on reported Net Income for the current year. Include in your answer the effect of the choice on both the income statement and balance sheet.
    Required:
    a. Goforit carries significant electronics inventory in a competitive environment in which prices are actually falling. Which inventory valuation method would you chooseLIFO FIFO or average cost? Assume that unit purchases exceed unit sales.
    b.Goforit has a large investment in warehouse equipment including conveyor belts forklifts and automated packaging systems. Which depreciation method would you choose: straight line (SL) or double declining balance (DDB)?
    (Points : 36)
    Question 5.5.(TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below.
    Ratio Name
    Johnson & Johnson
    Pfizer
    Profit margin
    16.1%
    24.7%
    Inventory turnover ratio
    3.1
    1.7
    Average collection period
    59.4 days
    69.1 days
    Cash debt coverage ratio
    .27
    .16
    Debt to Total assets
    46.6%
    127.5%
    Required:
    1)Please explain the meaning of each of the Pfizer ratios above.
    2)Please state which company performed better for each ratio.
    (Points : 36)

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