ACCT 2220 Lecture Notes - Lecture 2: Current Liability, Accounts Receivable, Tim Hortons

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peartermite830

19 Jan 2018

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Current assets: converted to cash within 1 year, cash, short term investment, accounts receivable, merchandise inventory, supplies, prepaid expense. Our tuition is an unearned revenue to uofg until they provide us the semesters worth of classes: current maturities of long term debt ex. Shareholders equity: investment of cash in the company by shareholders in exchange for, preferred share, common share, retained earnings, cumulative profit-> dividends. Depreciation: slowly assets lose value: land never loses value (unless some waste was dumped on the property), land generally gains value. Ex. equipment purchased for 10000, expected life og 5 years, no resale value. Current ratio= current assets/current liabilities the higher current assets are the better. Debt to asset =total debt/ total assets the lower debt to assets is the better. Earning per share (eps)= net profit/ number of common shares the higher the better. Price earning ratio (pe)= share price/ earning per share the higher the better.

Related Questions

Balance Sheet Preparation

The following is a December 31, 2015, post-closing trial balancefor the Happy Valley Corporation.

Account Title	Debits	Credits
Cash	25100
Accounts Receivable	53600
Inventories	82000
Interest Payable		8420
Marketable Securities	41600
Land	105000
Buildings	304000
Accumulated Depreciation -- Building		100000
Equipment	76000
Accumulated Depreciation -- Equipment		25600
Copyright (net of Amortization)	9760
Prepaid Expenses	32700
Accounts Payable		60200
Unearned Revenues		17300
Notes Payable		256000
Allowance for Uncollectible Accounts		4950
Common Stock		?
Retained Earnings		69900

Additional Information:

1. The $105000 balance in the landaccount consists of $87600 for the cost of land where the plant andoffice buildings are located. The remaining amount represents thecost of land being held for speculation.

2. The $41600 in the marketablesecurities account represents an investment in the common stock ofanother corporation. Valley intends to sell one-half of the stockwithin the next year.

3. The notes payable account consistsof a note due in six months and a $187000 note due in three equalannual installments, with the first payment due in August of2015.

Required: Calculate the following balance sheet totals for theValley Pump Corporation at December 31, 2014.

Common Stock

Current Assets

Property, Plant and Equipment (net)

Intangible and Other Assets

Total Assets

Short-term Note Payable

Current Liabilities

Long-term Liabilities

Total Equity

Total Liabilities and Equity

Please include a detailed answer for the accounts you includedto find the balance of each.

Listed below are several terms and phrases associated with current liabilities. Mach each List A to B

List A

1, Cash, current investments, and A/R all divided by current liabilities.

2, Payment is probable and can be reasonably estimated.

3, Gift cards

4, Long-term debt maturing within one year

5, Social Security and Medicare

6, Interest expense is recorded in the period interest is incurred rather than in the period interest is paid.

7, payment is reasonably possible and can be reasonably estimated.

8, Incurred on a notes payable.

9, Unsecured notes sold in minimum denominations of $25,000 with up to 270 days.

10, Classifying liabilities as either current or long-term helps inverstors and creditors assets this.

List B

a, Recoding a contingentliability

b, disclosure of a contingent liability

c, Interest expense

d, FICA

e, Commercial paper

f, The riskiness of a business's obligations

g, Current portion of Long-term debt

h, Unearned revenue

i, Acid=test ratio

j, Accual Accounting

chocolatewoodchuck193

1. The net income reported on the income statement for thecurrent year was $288,417. Depreciation recorded on fixed assetsand amortization of patents for the year were $41,876, and $11,524,respectively. Balances of current asset and current liabilityaccounts at the end and at the beginning of the year are asfollows:

	End	Beginning
Cash	$46,710	$55,173
Accounts receivable	100,038	129,780
Inventories	87,496	101,142
Prepaid expenses	7,305	4,393
Accounts payable (merchandise creditors)	62,403	55,238

What is the amount of cash flows from operating activitiesreported on the statement of cash flows prepared by the indirectmethod?

a. $315,644

b. $389,458

c. $276,574

d. $385,205

Determine the relationship of $219,652 to $115,020, expressed asa ratio.

Select the correct answer.

a. 1.9 to 1

b. 1.1 to 1

c. 0.5 to 1

d. 0.7 to 1

Based on the following data for Privett Company, what is thequick ratio, rounded to one decimal point?

Privett Company
Accounts payable	$33,191
Accounts receivable	68,636
Accrued liabilities	6,715
Cash	23,006
Intangible assets	35,944
Inventory	88,660
Long-term investments	99,015
Long-term liabilities	71,468
Marketable securities	38,057
Notes payable (short-term)	23,392
Property, plant, and equipment	691,785
Prepaid expenses	1,629

a. 16.5

b. 1

c. 2

d. 3.5

The balance sheets at the end of each of the first two years ofoperations indicate the following:

Kellman Company
	Year 2	Year 1
Total current assets	$618,015	$564,556
Total investments	60,948	41,643
Total property, plant, and equipment	882,682	618,461
Total current liabilities	101,282	83,040
Total long-term liabilities	302,446	237,252
Preferred 9% stock, $100 par	84,252	84,252
Common stock, $10 par	521,610	521,610
Paid-in capital in excess of par-common stock	65,163	65,163
Retained earnings	486,892	233,343

Using the balance sheets for Kellman Company, if net income is$113,275 and interest expense is $33,061 for Year 2, what is thereturn on total assets for the year (round percent to two decimalpoints)?

a. 9.25%

b. 10.50%

c. 7.25%

d. 10.99%

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ACCT 2220 Lecture Notes - Lecture 2: Current Liability, Accounts Receivable, Tim Hortons

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