P2–5. (continued)
Req. 5
P2–6. (dollars in millions)
Activity
Type of
Activity
(a) Borrowed from banks
F
(b) Purchased investments
I
(f) Declared dividends (does not affect cash flows)
ALTERNATE PROBLEMS
AP2–1.
Balance
Sheet
Classification
Debit or
Credit
Balance
(1)
Prepaid Expenses
CA
Debit
(2)
Inventories
CA
Debit
(3)
Accounts Receivable
CA
Debit
(4)
Long-Term Debt
(5)
Cash and Equivalents
CA
Debit
(6)
Goodwill (an intangible asset)
(7)
Accounts Payable
CL
(8)
Income Taxes Payable
CL
(9)
Property, Plant, and Equipment
Debit
(10)
Retained Earnings
(11)
Additional Paid-in Capital
(12)
Short-Term Borrowings
CL
(13)
Accrued Liabilities
(14)
Common Stock
AP2–2.
Req. 1
Req. 2 (On next page)
Req. 3
Req. 4
(a) Total assets = $35,000 + $2,000 + $85,000 + $107,000 + $510,000 = $739,000
Req. 5
Current
=
Current Assets
=
$35,000 + $2,000
=
$37,000
=
0.219
Ratio
Current Liabilities
$169,000
$169,000
AP2–2. (continued)
Req. 2
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Notes
Receivable
Long-Term
Investments
Equipment
Buildings
Short-Term
Notes
Payable
Long-Term
Notes
Payable
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Beg.
120,000
70,000
310,000
=
140,000
60,000
20,000
200,000
80,000
(a)
+110,000
=
+110,000
+30,000
=
+27,000
+100,000
=
+10,000
+10,000
=
(e)
=
=
=
(h)
=
(i)
=
+35,000
+510,000
=
+170,000
+30,000
AP2–3. (dollars in thousands)
Req. 1 and 2
Cash and Cash
Equivalents
Accounts
Receivable
Inventories
Beg.
57,701
Beg.
12,293
Beg.
149,483
(a)
1,020
3,400
(b)
(e)
(d)
4,020
2,980
(e)
12,293
149,483
(g)
1,830
(f)
Beg.
23,621
54,841
23,621
Property, Plant
and Equipment
Intangible
Assets
Long-Term
Investments
Beg.
270,198
Beg.
45,128
Beg.
7,330
(f)
11,230
4,020
(d)
(b)
3,400
(e)
2,980
277,408
48,528
10,310
Other Assets
Accounts
Payable
Unearned
Revenue
Beg.
2,468
16,961
Beg.
62,960
Beg.
310
(g)
2,158
16,961
62,960
Payable
Dividends
Payable
43,793
Beg.
Beg.
300
(h)
43,793
300
Beg.
29,273
Beg.
Beg.
9,400
(f)
(a)
29,273
506
Beg.
(a)
Beg.
635,179
635,179
(h)
657,545
* Reported as a reduction in Stockholders’ Equity (similar to Chipotle in Exhibit 2.2).
AP2–3. (continued)
Req. 3
Req. 4
Ethan Allen Interiors Inc.
Trial Balance
At September 30
(in thousands of dollars)
Debit
Credit
Cash and cash equivalents
54,841
Accounts receivable
12,293
Inventories
149,483
Prepaid expenses and other current assets
23,621
Property, plant and equipment
277,408
Intangible assets
48,528
Other assets
Accounts payable
16,961
Unearned revenue
62,960
Accrued expenses payable
43,793
Dividends payable
Long-term debt (current portion, $2,731)
Other long-term liabilities
29,273
Common stock
Additional paid-in capital
Treasury stock
Retained earnings
657,545
AP2–3. (continued)
Req. 5
Ethan Allen Interiors Inc.
Balance Sheet
At September 30
(in thousands of dollars)
Assets
Current assets
Cash and cash equivalents
$ 54,841
Accounts receivable
12,293
Inventories
149,483
Prepaid expenses and other current assets
23,621
277,408
48,528
10,310
Total Assets
$578,642
Liabilities
Current liabilities
Accounts payable
$ 16,961
Unearned revenue
62,960
Accrued expenses payable
Dividends payable
300
Current portion of long-term debt
126,745
Total Liabilities
177,026
Stockholders’ Equity
Common stock ($0.01 par value)
506
Additional paid-in capital
378,744
Treasury stock
(635,179)
Retained earnings
657,545
Total Stockholders’ Equity
401,616
Total Liabilities and Stockholders’ Equity
$578,642
Req. 6
AP2–4. (dollars in thousands)
Transaction
Type of Activity
Effect on Cash
(a)
F
+1,020
(c)
(h)
CONTINUING PROBLEM
CON2–1.
Req. 1
Debit
Credit
a.
Cash (+A) ………………………………………………….
25,000
Equipment (+A) ………………………………………….
36,000
Common stock (+SE)…………………….
200
Additional paid-in capital (+SE)…………
60,800
b.
Land (+A)…………………………………………
18,000
Buildings (+A)……………………………………..
72,000
Cash (−A)………………………………….
Notes payable (noncurrent) (+L)…..……
80,000
c.
Equipment (+A)………………………………….
6,500
Cash (−A)………………………………….
Notes payable (current) (+L)…………….
receptionist for a promise to pay cash for the service by PPSS.
e.
Notes payable (noncurrent) (−L)…..…………...
1,000
Cash (−A)…………………………………
1,000
f.
Short-term investments (+A)……………………
5,000
Cash (−A)………………………………….
5,000
when delivered – an exchange of promises is not a transaction).
CON2–1. (continued)
Req. 2
Cash
Short-term Investments
Equipment
Beg.
0
Beg.
0
Beg.
0
(a)
25,000
10,000
(b)
(f)
5,000
(a)
36,000
2,500
(c)
5,000
(c)
6,500
1,000
(e)
42,500
5,000
(f)
6,500
Land
Beg.
0
Beg.
0
(b)
18,000
(b)
72,000
18,000
72,000
Beg.
Beg.
4,000
(c)
(e)
1,000
80,000
(b)
4,000
79,000
Beg.
Beg.
(a)
60,800
(a)
60,800
CON2–1. (continued)
Req. 3
Penny’s Pool Service & Supply, Inc.
Trial Balance
March 31
Debit
Credit
Cash
$ 6,500
Short-term investments
5,000
Land
Buildings
Notes payable (current)
Notes payable (noncurrent)
Common stock
Additional paid-in capital