Chapter 24: 8BE_a (page 1447)
Answer each of the questions in the following unrelated situations.
a) The current ratio of a company is 5:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $500,000, what is the amount of current liabilities?
Current liabilities is $25,000.
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(Horizontal and Vertical Analysis) Presented below is the comparative balance sheet for Gilmour Company.
GILMOUR COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2018 AND 2017 | ||
December 31 | ||
2018 | 2017 | |
Assets | ||
Cash | \( 180,000 | \) 275,000 |
Accounts receivable (net) | 220,000 | 155,000 |
Short-term investments | 270,000 | 150,000 |
Inventories | 1,060,000 | 980,000 |
Prepaid expenses | 25,000 | 25,000 |
Plant & equipment | 2,585,000 | 1,950,000 |
Accumulated depreciation | (1,000,000) | (750,000) |
\(3,340,000 | (2,785,000) | |
Liabilities and Stockholders’ Equity | ||
Accounts payable | \) 50,000 | \( 75,000 |
Accrued expenses | 170,000 | 200,000 |
Bonds payable | 450,000 | 190,000 |
Common stock | 2,100,000 | 1,770,000 |
Retained earnings | 570,000 | 550,000 |
\)3,340,000 | (2,785,000) |
Instructions
(Round to two decimal places.)
An annual report of Ford Motor Corporation states, “Net income a share is computed based upon the average number of shares of capital stock of all classes outstanding. Additional shares of common stock may be issued or delivered in the future on conversion of outstanding convertible debentures, exercise of outstanding employee stock options, and for payment of defined supplemental compensation. Had such additional shares been outstanding, net income a share would have been reduced by 10¢ in the current year and 3¢ in the previous year. . . . As a result of capital stock transactions by the company during the current year (primarily the purchase of Class A Stock from Ford Foundation), net income a share was increased by 6¢.” What information is provided by this note?
“The significance of financial statement data is not in the amount alone.” Discuss the meaning of this statement.
Cineplex Corporation is a diversified company that operates in five different industries: A, B, C, D, and E. The following information relating to each segment is available for 2018.
A | B | C | D | E | |
Sales revenue | \(40,000 | \)75,000 | \(580,000 | \)35,000 | \(55,000 |
Cost of goods sold | 19,000 | 50,000 | 270,000 | 19,000 | 30,000 |
Operating expenses | 10,000 | 40,000 | 235,000 | 12,000 | 18,000 |
Total expenses | 29,000 | 90,000 | 505,000 | 31,000 | 48,000 |
Operating profit (loss) | \)11,000 | \((15,000) | \)75,000 | \(4,000 | \)7,000 |
Identifiable assets | \(35,000 | \)80,000 | \(500,000 | \)65,000 | \(50,000 |
Sales of segments B and C included intersegment sales of \)20,000 and $100,000, respectively.
Instructions
(a) Determine which of the segments are reportable based on the:
3) Identifiable assets test.
Foley Corporation has seven industry segments with total revenues as follows.
Penley \(600 Cheng \)225
Konami 650 Takuhi 200
KSC 250 Molina 700
Red Moon 275
Based only on the revenues test, which industry segments are reportable?
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