Introductory Accounting Questions

Busi 2222 Handout Assignment ch 16 Due: March 23, 2020 Chapter 16 Handout Assignment Question 1 Assuming that none of these are cash equivalents, for each of the following investments owned by Kowanda Industries, use the table provided to indicate whether it is most likely to be a) A non-strategic or a strategic investment; b) Classified as current assets or non-current assets; and c) measurement Method. Investment 10 year bonds; purchased and held with the intention of using the proceeds at the bond maturity to replace existing equipment that is expected to have a 10 year life. Common shares of a supplier purchased with the intention of electing a representative to the supplier’s board of directors. The supplier is a private corporation. The shares owned by Kowanda comprise 15% of the total shares. Common shares purchased on the TSX on the expectation that the trading price will increase in the near future, at which time they will be sold. 90-day Treasury Bills purchased with excess cash, with the knowledge that the cash will be required in 90 days to pay for inventory. 30 day, US dollar money-market funds purchased for resale. a) Non-strategic or Strategic? b) Current Assets, or Non-Current Assets c. Measurement Method Busi 2222 Handout Assignment ch 17 Due: April 1, 2020 Chapter 17 Handout Assignment Question 1 The Fisheries Processing Corporation prepared the following income statement and comparative balance sheet for 2021: FISHERIES PROCESSING CORPORATION Income Statement Year Ended December 31, 2021 Sales…………………………………………………………………………………………………………………….. $ 1,800,000 Cost of goods sold …………………………………………………………………………………………………. 880,000 Gross profit …………………………………………………………………………………………………………… 920,000 Depreciation expense ……………………………………………………………………………………………. 227,000 Other operating expenses………………………………………………………………………………………. 197,000 Interest expense ……………………………………………………………………………………………………. 165,000 Loss on sale of land ……………………………………………………………………………………………….. 120,000 Income before taxes ………………………………………………………………………………………………. 211,000 Income taxes ………………………………………………………………………………………………………… 70,800 Profit ……………………………………………………………………………………………………………………. $ 140,200 FISHERIES PROCESSING CORPORATION Comparative Balance Sheet December 31 Assets Cash Accounts receivable Merchandise inventory Property, plant, and equipment Less: Accumulated depreciation Goodwill Total Assets Liabilities and Shareholders’ Equity Accounts payable Other accrued payables Dividends payable Income taxes payable Note payable (long-term) Bonds payable Common shares Retained earnings Total Liabilities & Shareholders’ Equity Additional data: 2021 2020 $ 385,200 640,000 2,336,000 880,000 (787,000) 219,000 $ 3,673,200 $ 200,000 670,000 2,090,000 800,000 (560,000) 219,000 $ 3,419,000 $ 389,000 160,000 80,000 27,000 180,000 900,000 1,600,000 337,200 $ 3,673,200 $ 265,000 240,000 80,000 42,000 560,000 400,000 1,600,000 232,000 $ 3,419,000 Busi 2222 Handout Assignment ch 17 Due: April 1, 2020 1. 2. 3. Equipment was purchased for $ 400,000. Land was sold for cash proceeds of $ 200,000. The company sold bonds of $ 500,000 and made $ 380,000 of principal payments on notes payable. Instructions Prepare a cash flow statement for 2021, using the indirect method. Busi 2222 Handout Assignment ch 18 Due: April 8, 2020 Chapter 18 Handout Assignment Question 1 The income statements for the first three years of operations of Carol’s Music Ltd. are provided below: 2022 2021 2020 Revenue ………………………………….. $ 143,750 $ 115,000 $ 100,000 Cost of goods sold ……………………. 68,350 53,820 46,000 Gross profit ……………………………… 75,400 61,180 54,000 Expenses Salaries…………………………….. 19,000 15,080 13,000 Depreciation expense………… 22,000 15,000 4,000 Other operating expenses ….. 27,360 22,800 20,000 Total operating expenses …… 68,360 52,880 37,000 Profit from operations ……………… 7,040 8,300 17,000 Interest expense ………………………. (5,000) (3,000) (1,000) Income tax expense …………………. (600) (980) (2,000) Profit ………………………………………. $ 1,440 $ 4,320 $ 14,000 Instructions a) Is Carol’s gross profit improving over the three years or not? Use horizontal analysis, with 2020 as the base year, to support your answer. b) Provide one explanation for the decline in income from operations other than changes in gross profit. Support your answer using vertical analysis. c) Although profit is decreasing, Carol has not been concerned because her cash flows have increased from year to year. Using the information available in the income statements, explain why this is so. …