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Greyhound Stables, Inc. operates several dog racing tracks throughout the
United States. Since most facilities are outdoor tracks only, most of the
cash receipts for Greyhound are received from April through October.
These funds are usually invested in short-term, very liquid investments,
such as stocks and bonds. Among the stocks purchased last year, was
Servitronics, a company specializing in automatic vending equipment.
The company decided not to sell its Servitronics stock at the end of last
year, and has purchased more of the stock this year. The company intends
to continue to purchase stock until it holds enough to make a takeover bid
for the company. The accountants have been instructed to continue to
classify the investment as short-term until the takeover is accomplished, so
that less attention will be directed to it. (Presently, Greyhound has no
long-term investment in stock at all.)
1> Is it ethical for Greyhound to attempt to take over another company?
Explain.
2> Is it ethical for Greyhound to leave its investment in the short-term
investment category? Explain.
Answer:
The change in cash is equal to the change in liabilities less the change in equity plus the
change in noncash assets.
Answer:
Gain on sale of equipment and interest expense are reported under other revenues and
gains in a multiple-step income statement.
Answer:
The post-closing trial balance is entered in the first two columns of a worksheet.
Answer:
The accounts receivable turnover is computed by dividing total sales by the average net
receivables during the year.
Answer:
If a company uses the allowance method to account for uncollectible accounts, the entry
to write off an uncollectible account only involves balance sheet accounts.
Answer:
As soon as a corporation is authorized to issue stock, an accounting journal entry should
be made recording the total value of the shares authorized.
Answer:
