unit 6 account
Ethel Barnett 45
CopyofUnit6HomeworkExerciseWorkingPapers.xlsE15-16
| E15-16 | |
| Compute the rate of return on total assets for 2016. (Round to two decimals.) | |
| Solution: | |
| Calculations (dollar amounts in thousands): |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 15: Investments&R&"Arial,Bold"Page &P of &N
P15-17A
| P15-17A | ||||||||||
| Requirements | ||||||||||
| 1. | Journalize Jenner and Sons’ transactions related to the bonds for 2016. | |||||||||
| 2. | Journalize the entry required on the McPhee bonds maturity date. (Assume the last interest payment has already been recorded.) | |||||||||
| Solution: | ||||||||||
| Requirement 1 | ||||||||||
| Date | Accounts and Explanation | Debit | Credit | |||||||
| Calculations: | ||||||||||
| Requirement 2 | ||||||||||
| Date | Accounts and Explanation | Debit | Credit |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 15: Investments&R&"Arial,Bold"Page &P of &N
P15-19A
| P15-19A | ||||||||||
| Requirements | ||||||||||
| 1. | Journalize the transactions for the year of Desk Source. | |||||||||
| 2. | Post transactions to T-accounts to determine the December 31 balances related to the investment and investment income accounts. | |||||||||
| 3. | Prepare Desk Source’s partial balance sheet at December 31 from your answers in Requirement 2. | |||||||||
| Solution: | ||||||||||
| Requirement 1 | ||||||||||
| Date | Accounts and Explanation | Debit | Credit | |||||||
| Date | Accounts and Explanation | Debit | Credit | |||||||
| Calculations: | ||||||||||
| Requirement 2 | ||||||||||
| Long-Term Investments—AFS | Fair Value Adjustment—AFS | |||||||||
| Long-Term Investments—Parson | Dividend Revenue | |||||||||
| Unrealized Holding Gain—AFS | Revenue from Investments | |||||||||
| Requirement 3 | ||||||||||
| DESK SOURCE CO. | ||||||||||
| Balance Sheet (Partial) | ||||||||||
| December 31, 2016 | ||||||||||
| Assets | ||||||||||
| Owners’ Equity |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 15: Investments&R&"Arial,Bold"Page &P of &N
S16A-11
| S16A-11 | |
| Prepare the company’s statement of cash flows for the year ended December 31, 2016. Format operating activities by the direct method. | |
| Solution: | |
| GREEN BEAN, INC | |
| Statement of Cash Flows | |
| Year Ended December 31, 2016 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 16: The Statement of Cash Flows&R&"Arial,Bold"Page &P of &N
E16-19
| E16-19 | |
| Compute cash flows from operating activities by the indirect method for year ended December 31, 2016. | |
| Solution: | |
| PARAMOUNT COLOR ENGRAVING | |
| Statement of Cash Flows—Partial | |
| Year Ended December 31, 2016 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 16: The Statement of Cash Flows&R&"Arial,Bold"Page &P of &N
E16-22
| E16-22 | |||
| Requirements | |||
| 1. | How much are cash dividends? | ||
| 2. | What was the amount of the cash receipt from the sale of plant assets? | ||
| Solution: | |||
| Requirement 1 | |||
| Retained Earnings | |||
| Requirement 2 | |||
| Plant Assets | |||
| Accumulated Depreciation – Plant Assets |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 16: The Statement of Cash Flows&R&"Arial,Bold"Page &P of &N
E16-26
| E16-26 | |
| Calculate the amount of free cash flow. | |
| Solution: |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 16: The Statement of Cash Flows&R&"Arial,Bold"Page &P of &N
E17-15
| E17-15 | ||
| Requirements | ||
| 1. | Prepare a horizontal analysis of the comparative income statement of McCormick Designs, Inc. Round percentage changes to one decimal place. | |
| 2. | Why did 2016 net income increase by a higher percentage than net sales revenue? | |
| Solution: | ||
| Requirement 1 | ||
| MCCORMICK DESIGNS, INC. | ||
| Comparative Income Statement | ||
| Years Ended December 31, 2016 and 2015 | ||
| Requirement 2 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 17: Financial Statement Analysis&R&"Arial,Bold"Page &P of &N
P17-31A
| P17-31A | |||||||||||
| Requirements | |||||||||||
| 1. | Compute the following ratios for 201 and 2015: | ||||||||||
| a. Current ratio | |||||||||||
| b. Cash ratio | |||||||||||
| c. Times-interest-earned ratio | |||||||||||
| d. Inventory turnover | |||||||||||
| e. Gross profit percentage | |||||||||||
| f. Debt to equity ratio | |||||||||||
| g. Rate of return on common stockholders’ equity | |||||||||||
| h. Earnings per share of common stock | |||||||||||
| i. Price/earnings ratio | |||||||||||
| 2. | Decide (a) whether Dangerfield’s ability to pay debts and to sell inventory improved or deteriorated during 2016 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased. | ||||||||||
| Solution: | |||||||||||
| Requirement 1 | |||||||||||
| 2016 | 2015 | ||||||||||
| Requirement 2 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 17: Financial Statement Analysis&R&"Arial,Bold"Page &P of &N
Ethical Issue 17-1
| Ethical Issue 17-1 | ||
| Requirements | ||
| 1. | What effect will reclassifying the investments have on the current ratio? Is Ross’s true financial position stronger as a result of reclassifying the investments? | |
| 2. | Shortly after the financial statements are released, sales improve; so, too, does the current ratio. As a result, Ross’s management decides not to sell the investments it had reclassified as short-term. Accordingly, the company reclassifies the investments as long-term. Has management behaved unethically? Give the reasoning underlying your answer. | |
| Solution: | ||
| Requirement 1 | ||
| Requirement 2 |
&L&"Arial,Bold"&12HORNGREN'S ACCOUNTING - Eleventh Edition
&L&"Arial,Bold"Chapter 17: Financial Statement Analysis&R&"Arial,Bold"Page &P of &N
