ADM 1340 Lecture Notes - Nackawic, John Wiley & Sons, Debt Service Coverage Ratio

23 views20 pages

coralturtle587

25 Feb 2013

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

ceruleanclam927 and 54 others unlocked

ADM 1340 Full Course Notes

Verified Note

42 documents

Document Summary

Exercise 13-3: an impairment loss on goodwill is the recording of a loss and a reduction of the asset account goodwill. The cash transaction occurred at the purchase of the property, plant, and equipment. Depreciation charges the cost to expense as the assets are being consumed. It does not involve cash, but reduces interest revenue which would be lower than the cash receipt of the interest. A stock split results in additional shares being issued and does not involve cash in any way. This would not be reported on the statement of cash flows or in the accompanying notes, but would be reported in the statement of changes in equity. Exercise 13-3 (continued: the conversion occurs as a result of non-payment of the outstanding receivable and does not involve cash. A revaluation gain or loss is recorded on the statement of comprehensive income and the asset"s carrying amount is adjusted on the statement of financial position.

Related Questions

Which of the following characteristics may result in theclassification of a liability being changed from current tononcurrent:

a) violation of a subjective acceleration clause

b) violation of a objective acceleration clause

c) a demand provision for payment

d) refiancing after the balance sheet date

Pending litigation would generally be considered:

a) nonmonetary liabilty

b) contingent liability

c) estimated liability

d) current liability

Barrons Co. current ratio is 2:1. Which of the followingtransactions would normally increase Barney's current ratio?

a) purchasing inventory on account

b) borring money by signing a long-term note

c) collecting an account receivable

d) purchasing land for cash

On multiple step income statement, gains or losses on sale ofequipment would be shown

a) before gross profit on sales

b) after gross profit on sales but before income from conitnuingoperations

c) after income from continuing operations but before incomefrom extraordinary items

d) after income before extraordinary items but before netincome

A single step income statement is a format that

a) compares the current years income with last year's income

b) recongnizes subtotals at intermediate stages such as grossmargin

c) combines revenues and gains and subtracts from them expensesand losses, resulting in income from operations

d) reports sales revenue, cost of goods sold, gross margin, andall other expenses

In contrast with a multiple-step income statement, a single stepincome statement does NOT show the amount of

a) income taxes on continuing operations

b) cost of goods sold

c) gross profit

d) earnings per share

The amount of income reported for tax purposes

a) is nomally greater than the net income reported tostockholders

b) must be computed according to GAAP

c) is used to compute earnings per share

d) may differ from the amount of income detemined for financialreporting purposes

Under the general rule of revenue recognition, revenue isrecognized when

a) marketability and market price are assured

b) a contractual agreement exists, and cash collection isassured

c) the earnings process is complete, and a valid promise ofpayment has been received

d) all related expenses have been incurred

Seaworth Company's gross sales in 2014 were 3930000. Assumingsales returns and allowances were 74000 sales discounts were 35000and freight-out was 28000 what were Seaworthy's net sales in2014?

a) 3792000

b) 3821000

c)3856000

d) 3930000

On June 30, 2014 Sonata COmpanys operating facilities inNebraska were detroyed by a flood. The loss of $700000 was notcovered by insurance. Sonata's tax rate for 2014 is 40 percent. InSonatas income statement for the year ended sept 30 2014 this eventshould be reported as an extraordinary loss of

a) 0

b) 280000

c) 420000

d) 700000

In a statement of cash flows, payments to acquire debtinstruments of other entities would typically be classified as cashoutflows for

a) financing activities

b) equity activities

c) operating activities

d) investing activities

A gain on the sale of a plan asset in the ordinary course ofbusiness should be presented in a staement of cash flows preparedusing the indirect method as

a) a cash inflow from investing activities

b) a cash inflow from financing activities

c) a deduction from net income

d) a addition to net income

In a statement of cash flows, proceeds from issuing equityinstruments should be classified as cash inflows from

a) brokerage activities

b) financing activities

c) investing activites

d) operating activities

When preparing a statement of cash flows using the indirectmethod, the amortization of trademarks should be reported as a

a) increase in cash flows from investing activities

b) reduction in cash flows from investing activities

c) increase in cash flows from operating activities

d) reduction in cash flows from operating activites

A loss in the sale of machinery in the ordinary course ofbusiness should be presented in a statement of cash flows( indirectmethod) as

a) an addition to net income

b) a deduction from net income

c) an inflow and outflow of cash

d) an outflow of cash

In preparing a statement of cash flows, which of the followingtransactions would be considered an investing activity?

a) sale of a business segment

b) Issuance of bonds payable at a discount

c) purchase of treasury stock

d) sale of capital stock

In a statement of cash flows (indirect method), depreciation istreated as an adjustment to reported net income becausedepreciation

a) is an inflow of cash to reserve account for assetreplacement

b) reduces the reported net income and involves an inflow ofcash

c) reduces the reported net inome but does not involve anoutflow of cash

d) usually represents a significant portion of operatingexpense

orchidfrog938

1. Which of the following would NOT be considered a significantnon cash transaction?

Issuing debt to purchase plant assets

Exchanging plant assets

Paying stock dividends

All of the above are significant non cash transactions

2. During 2018, ABC Company reports the following activities

1. Net Income was recorded in the amount of $75,000

2. Depreciation expense was $10,000

3. Repaid a loan of $10,000 cash

4. Issued stock in exchange for $30,000

5. Sold equipment which had a book value of $20,000 for $17,000(recognizing a $3,000 loss).

6. Accounts Receivable decreased by $5,000

7. Accounts Payable decreased by $2,000

Calculate the cash provided by operating activities given theabove information.

3. ABC Company reports cash flows from operating activities of$30,000. In addition, ABC Company pays dividends of $5,000 and doesnot purchase any fixed assets during the year. Interest expense forthe year was $7,000. Calculate free cash flows for ABC Company.

4. The net income reported on the income statement for thecurrent year was $245,000. Depreciation was $40,000. Accountreceivable and inventories decreased by $12,000 and $35,000,respectively. Prepaid expenses and accounts payable increased,respectively, by $1,000 and $8,000. How much cash was provided byoperating activities?

5. In calculating cash flows from operating activities using theindirect method, a gain on the sale of equipment is

Ignored because it does not impact cash

Added to net income

Subtracted from net income

Not reported on the Statement of Cash Flows

6. The following data are availablefor ABC Corporation.

Sale ofland $225,000

Sale ofequipment $130,000

Issuance of commonstock 140,000

Purchase ofequipment 70,000

Payment of cashdividends 120,000

Net cash provided by investing activities is:

7. ABC Company issues $50,000 of common stock during the yearfor cash. How would this be reported on the statement of cashflows?

As an addition to financing activities

As an addition to planning activities

As an addition to investing activities

As a subtraction from operating activities

8. XYZ Store had net credit sales of $8,500,000 and cost ofgoods sold of $5,000,000 for the year. The Accounts Receivablebalances at the beginning and end of the year were $600,000 and$760,000, respectively. The accounts receivable turnover was

9. ABC Company reports net income of $50,000 for 2018. Theprofit margin for ABC Company is 5%. Calculate the net sales forABC Company

10. Turnbull Department Store had net credit sales of$18,000,000 and cost of goods sold of $15,000,000 for the year. Theaverage inventory for the year amounted to $2,500,000. The averagenumber of days that it took to convert inventory into cash for ABCwas

11. Each of the following is included in computing the acid-testratio EXCEPT

Net accounts receivable

Cash

Inventory

Short-term investments

12. ABC Corporation had net income of $240,000. The weightedaverage number of shares outstanding in 2017 was 60,000 shares. AleCorporation's common stock is selling for $76 per share on the NewYork Stock Exchange. ABC Corporation's price-earnings ratio is

13. ABC Company reports Sales revenue of the following amountsfor 2016, 2017 and 2018:

2016: $125,000

2017: $210,000

2018: $215,000

Calculate the percentage change in sales revenue from 2016 to2018

14. Horizontal analysis is also called:

Linear anlysis

Common sizing

Trend analysis

Vertical analysis

15. XYZ Company reports cost of goods sold of $80,000 in 2018and of $60,000 in 2017. Calculate the % change in cost of goodssold from 2017 to 2018.

16. ABC, Inc. has the following income statement (inmillions):

ABC,INC.

IncomeStatement

Forthe Year Ended December 31, 2017

NetSales $300

Cost of GoodsSold 180

GrossProfit 120

OperatingExpenses 45

NetIncome $75

Using vertical analysis, what percentage is assigned to NetIncome?

17. Vertical analysis is also called:

Ratio anlysis

Common sizing

Trend analysis

Horizontal analysis

18. Swiss Clothing Store had a balance in the AccountsReceivable account of $920,000 at the beginning of the year and abalance of $980,000 at the end of the year. Net credit sales duringthe year amounted to $6,650,000. The average collection period ofthe receivables in terms of days was

skycheetah676

GOOGLE: MorningstarÂ® Document Research FORM 10-K GENERAL MILLS INC - GIS Filed: June 29, 2017 (period: May 28, 2017) Annual report with a comprehensive overview of the companyâ FOR THE ANNUAL REPORT

Instructions: Use the financial statements from the annual report for the year ended 5/28/2017 for General Mills. The Annual Report is on MOODLE. Answer the questions after each question. Use a different font to distinguish your answer from the question. All answers should be in your own words. Do not cut and paste from the annual report. Answers will be graded for content and written communication skills. Use complete sentences.

*****MAKE A NOTATION HERE IF THE DOLLAR AMOUNTS ARE STATED IN MILLIONS.

1. Who are the external auditors for General Mills? What does their Report of Independent Registered Public Accounting firm indicate about the amounts represented in the companyâs financial statements?

2. What specific title does General Mills use for its income statement? What type of income
statement does General Mills issue? (multi-step, singleâstep, or condensed multi-step)
Explain.

3. Did they disclose EPS as discussed in class? Explain. What about the EPS presentation
did we not discuss in ACC 3100?

4. How does General Mills define Cash Equivalents? Is this consistent with the textbook?

5. What is the amount of cash and cash equivalents reported for the year ended at May 28, 2017 and for the year ended at May 29, 2016. By how much has cash and cash equivalents increased/decreased? Show calculations.

6. Create a table illustrating the amount General Mills reports for net cash flows from operating, investing, and financing activities in its statement of cash flow for the year ended May 28, 2017. (Note: Include any effect of exchange rates on cash.) Show calculations. Compare your answers to question 5.

7. What amount is the balance in the Allowance for Doubtful Accounts at 5/28/2017? How is the estimate for Allowance for Doubtful Accounts determined?

8. What was the gross balance of trade receivables at 5/28/2017? What was the dollar amount of bad debt expense for the year ended 5/28/2017? How many accounts were written off (Dollar amount)?

9. What inventory method is used to value inventory in and out of the US?

10. What is the balance of their LIFO reserve account 5/28/2017?

11. What impact (dollar amount and increase or decrease) did the LIFO Reserve adjustment have on Cost of Goods Sold?

12. Which depreciation method(s) is used for PP& E? What estimates are made for the useful life of the different categories of assets?

13. What was total depreciation and amortization expense fiscal year ended 5/28/2017? Where were these amounts reported in the financial statements?

14. What was the major component of total PP&E? What was its amount and what percentage was it of the total for the year ended 5/28/2017?

15. What percentage of total PP&E has been depreciated as of 5/28/2017?

16. Did General Mills capitalize any interest in the fiscal year ended 5/28/2017? If so, what was the amount?

17. Did General Mills dispose of any property and equipment during the year ended 5/28/2017? If so, what was the cash proceeds?

18. Did General Mills issue more new long term debt than they paid in long term debt payments for the year ended 5/28/2017? Explain, show amounts.

19. Create a table to show the components of Comprehensive Income that was attributable to General Mills for the year ending 5/28/2107?

20. Create a table to show the components and amounts of General Millsâ Accumulated Other Comprehensive income(loss) for the year ending 5/28/2017 and 5/29/2016?

21. When does General Mills review impairment for long-lived assets? What is their measurement of an impairment loss based on for long-lived assets?

22. What is the amount of General Mills goodwill? Did General Mills have an impairment loss on Goodwill during fiscal year ended 5/28/2017? What are the standards for testing goodwill(How often and how is it tested)?

23. List any other indefinite life intangibles? How much was the impairment loss General Mills recorded for fiscal year ending 5/31/2015 and why was impairment indicated?

24. The Financial Accounting Standards Board (FASB) issued two new accounting requirements in 2017 that were mentioned in General Millsâ annual report? What are the standards and what is the expected impact of these new standards to the financial statements?

25. General Mills uses the three-level fair value hierarchy for disclosure. What level are the majority of their assets and liabilities measured at 5/28/2017? According to your textbook, how is this level defined?

26. When does General Mills recognize revenue? Do they handle consistently with the material presented in ACC 3100?

27. What was General Millsâ current ratio and working capital as of 5/28/2017? Show calculations.

28. Is the Statement of Changes in Stockholderâs Equity (Consolidated Statements of Total Equity, and Redeemable Interest) consistent with what we learned in class? Explain-indicate similarities and differences.

29. According to the MD&A (begins on p. 15) did General Millsâ Selling, general, and
administration expenses increase or decrease in fiscal year ended 5/28/2017? What was
the primary reason for the change?

30. In two detailed paragraphs, indicate a couple of interesting items you learned while
reading this annual report.

harlequinbat245

ADM 1340 Lecture Notes - Nackawic, John Wiley & Sons, Debt Service Coverage Ratio

ADM 1340 Full Course Notes

Document Summary

Get access

Related Documents

ADM 1340 Chapter Notes - Chapter 2: John Wiley & Sons, Big Rock Brewery, George Trenholm

ADM 1340 Lecture Notes - Profit Margin, Asset Turnover, John Wiley & Sons

ADM 1340 Chapter Notes - Chapter 4: John Wiley & Sons, Royal Bank Of Canada, George Trenholm

Related Questions