Exam 6: Operating Transactions Revenues, Expenses, and Working Capital

Bradley Incorporated owns a chain of retail stores.During December of 2009, a customer slipped in a doorway of its Missouri store and broke his ribs.He is suing Bradley for $200,000 for negligence.Bradley's legal counsel believes that it is only reasonably probable that Bradley will lose its defense of the lawsuit because, although the doorway was icy due to an ice storm that was occurring at the time of the fall, a sign on the door warned customers that the doorway was slippery when icy.On December 30, 2009, before considering the effects of this lawsuit, Bradley's current assets, total assets, current liabilities, and total liabilities were $420,000, $840,000, $100,000, and $300,000, respectively.After this event is properly accounted for, calculate Bradley's debt/equity ratio on December 31, 2009.

What three characteristics should all liabilities that appear on the balance sheet have in common?

For each item numbered below, select the appropriate effect on liabilities listed in a through e that each transaction describes.You may use each letter more than once or not at all.In some cases, two effects are correct. -A portion of long-term debt is due next year.

For each item listed in, place the letter (a through e) of the accounting effect in the space provided.You may use each letter more than once or not at all. -Transportation-in is properly expensed instead of being added to the cost of ending inventory.

For each item numbered below, select the appropriate effect on liabilities listed in a through e that each transaction describes.You may use each letter more than once or not at all.In some cases, two effects are correct. -Declared cash dividends to holders of stock.

Given below are several items that will be reported on a company's financial statements.Select the letter of the proper financial statement reporting section listed as a through f.You may use each letter more than once or not at all. -A loss due to a decline in market value on an available-for-sale investment

Beginning inventory is valued at $7,000, purchases are $15,000 and ending inventory is valued at $8,000.Cost of goods sold is

Given below are several items that will be reported on a company's financial statements.Select the letter of the proper financial statement reporting section listed as a through f.You may use each letter more than once or not at all. -Financial impacts of the adoption of a new FASB standard on goodwill.

For each item listed in, place the letter (a through e) of the accounting effect in the space provided.You may use each letter more than once or not at all. -A company applies lower-of-cost-or-market for valuing ending inventory when market price is less than cost.

For each item numbered below, select the appropriate effect on liabilities listed in a through e that each transaction describes.You may use each letter more than once or not at all.In some cases, two effects are correct. -In a lawsuit filed against the firm, counsel indicates that the potential $10,000 loss is remote.

Profiles Corp.had the following infrequent income statement items during 2009: ·$44,000 of dividends received from a stock investment ·$20,000 gain on the sale of a plant asset which became outdated because of new technology ·$19,000 loss due to the sale of treasury stock at a price less than its original cost ·$34,000 fair value adjustment increase to market for available-for-sale investments ·$50,000 interest expense for the year of which only $42,000 was actually paid How much should Profiles report as a component of 'income from continuing operations'?

For each item numbered below, identify the letter of the best description by selecting from items a through e below.You may use each letter more than once or not at all. -Current ratio

For each transaction provided in items , select the proper section of the statement of cash flows in which it should be reported using the indirect method from the reporting categories provided in a through h below.If the item is not required to be reported on the statement of cash flows, place an 'X' in the space provided. -Cash paid for income taxes

Before adjusting entries, Kelvin's accounts receivable and allowance for doubtful accounts are $65,000 and $1,500, respectively.Using an aging schedule of accounts receivable, it is determined that $3,000 of the accounts receivable would probably be uncollectible.Calculate bad debts expense to be reported on Kelvin's current year's income statement?

For each transaction provided in items , select the proper section of the statement of cash flows in which it should be reported using the indirect method from the reporting categories provided in a through h below.If the item is not required to be reported on the statement of cash flows, place an 'X' in the space provided. -Recognized loss on the sale of equipment

Nakita Inc.reported beginning inventory of $90,000, ending inventory of $23,000, purchases of $128,000, purchase returns of $2,000, and transportation-in of $3,000.Calculate cost of goods sold.

For each item listed in, place the letter (a through e) of the accounting effect in the space provided.You may use each letter more than once or not at all. -During a period of increasing inventory and rising prices, a company decides to use FIFO instead of LIFO.

For each item numbered below, select the appropriate effect on liabilities listed in a through e that each transaction describes.You may use each letter more than once or not at all.In some cases, two effects are correct. -Paid the cash dividend previously declared.

Given below are several items that will be reported on a company's financial statements.Select the letter of the proper financial statement reporting section listed as a through f.You may use each letter more than once or not at all. -The financial effects of outsourcing the company's industrial product division

Yakir Company began business on August 1, 2004.During August, Yakir made the following purchases: Calculate Yakir's August 31 ending inventory under the FIFO and LIFO cost flow assumptions.