Problem C-6BA (60 minutes)
Part 1
2015
May 26
Accounts Receivable—Fuji ……………………….….
60,450
Sales …………………………………………………..…..
60,450
(6,500,000 yen x $0.0093/yen)
June 1
Cash ………………………………………………………………………………
64,800
Sales …………………………………………………..…..
64,800
July 25
Cash*…………………………..…………………………………………………
59,800
Foreign Exchange Loss …………………………….……………………
650
Accounts Receivable—Fuji ………………….……….
60,450
*(6,500,000 yen x $0.0092/yen)
Oct. 15
Accounts Receivable—Martinez Brothers ….……………………
38,556
Sales …………………………………………………..…..
38,556
(378,000 pesos x $0.1020/peso)
Dec. 6
Accounts Receivable—Chi–Ying ………………..…………
35,975
Sales …………………………………………………..…..
35,975
(250,000 yuans x $0.1439/yuan)
Dec. 31
Accounts Receivable—Martinez Brothers …..……………………
1,512
Foreign Exchange Gain* …………………………..
1,512
Dec. 31
Accounts Receivable—Chi–Ying ………………..…………
275
Foreign Exchange Gain* …………………………..
275
2016
Jan. 5
Cash*…………………………..…………………………………………………
39,500
Accounts Receivable—Chi–Ying** ………..…………………
36,250
Foreign Exchange Gain ……………………….….
3,250
*(250,000 yuans x $0.1580/yuan) **($35,975 + $275)
Jan. 13
Cash*…………………………..…………………………………………………
39,274
Foreign Exchange Loss …………………………….……………………
794
Accounts Receivable—Martinez Bros** ….……………………
40,068
* (378,000 pesos x $0.1039/peso) ** ($38,556 + $1,512)
Problem C-6BA (Concluded)
Part 2
Foreign exchange gain reported on 2015 income statement
July 25 …………………………………………....
$ (650)
December 31 …………………………………...
1,512
December 31 …………………………………...
275
Total ……………………………………………....
$1,137
Part 3
To reduce the risk of foreign exchange gain or loss, Datamix could attempt
to negotiate foreign customer sales that are denominated in U.S. dollars.
Serial Problem — SP C
Serial Problem, Business Solutions (35 minutes)
Part 1
2016
April 16
Short-Term Investments—Trading (J&J) ……………...
20,300
Cash ……………………………………………………….
20,300
Purchased Johnson & Johnson shares
[(400 x $50) + $300].
30
Short-Term Investments—Trading (Starbucks) …....
4,650
Cash ……………………………………………………….
4,650
Purchased Starbucks shares
[(200 x $22) + $250].
Part 2 Adjusting entry at June 30, 2016
June 30
Fair Value Adjustment—Trading* …………………...
850
Unrealized Gain—Income ………………………....
850
To reflect an unrealized gain in fair values of
trading securities.
* Fair Value Adjustment computations
Trading securities’
portfolio
Shares
Share Price
at 6/30/2016
Fair
Value
Cost
Unrealized
Gain (Loss)
J & J ………………….
400
$55
$22,000
$20,300
$1,700
Starbucks …………..
200
$19
3,800
4,650
(850)
Totals ………………..
$25,800
$24,950
$ 850
Reporting in Action — BTN C-1
1. Yes, Apple’s financial statements are consolidated. The statements are
2. Apple’s comprehensive income for the year ended September 28, 2013,
is $36,067 million. This comprehensive income amount is reported on
Apple’s consolidated statement of comprehensive income—a summary
follows.
Net income …………………………..…………………………………………………..
$37,037
Change in foreign currency translation, net of tax effects of $35 …………….
(112)
Total change in unrecognized gains/losses on derivative instruments,
net of tax…………………………………………………………………………………………...
64
Total change in unrealized gains/losses on marketable securities, net
of tax ………………………………………………………………………………………………...
(922)
Total comprehensive income ……………………………………………………...
$36,067
4. The return on total assets for the year ended September 28, 2013, ($
5. Answer depends on the annual report information obtained.
Comparative Analysis — BTN C-2
1. Apple’s return on total assets
Current Year: $37,037 / [($207,000 + $176,064) / 2] = 19.3%
2. Return on total assets = Profit margin x Total asset turnover
—— Returns in part 2 can differ from those in part 1 due to rounding ——
Apple’s component analysis of return on total assets*
Current Year
One Year Prior
Google’s component analysis of return on total assets*
Current Year
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Financial and Managerial Accounting, 6th Edition
896
Comparative Analysis (Concluded)
3. Current Year Analysis: Apple has the higher return on total assets
(19.3%) compared to Google (12.6%), the higher profit margin (21.7% vs.
21.6% for Google) and the higher total asset turnover (0.89 vs. 0.58 for
Google). Of the two companies, Apple’s return on total assets is