Financial Accounting, 10/e 5-21
P5–3.
Req. 1
EXQUISITE JEWELERS
Balance Sheet
December 31, Current Year
Assets
Current Assets
Cash ………………………………………………………………… $ 58,000
Accounts receivable ……………………………………………. 71,000
Liabilities
Current Liabilities
Accounts payable ………………………………………………. $ 52,500
Stockholders’ Equity
Contributed Capital
Common stock, par $1 per share, 100,000 shares ….. 100,000
P5-3. (continued)
Req. 2
P5–4.
BARNARD CORPORATION
Statement of Stockholders’ Equity
For the Year Ended December 31, Current Year
Common Stock
Retained
Total
Stockholders’
Shares
Amount
Earnings
Equity
Balances as of
Financial Accounting, 10/e 5-23
P5-5.
AEROPOSTALE, INC.
Consolidated Income Statement
For Year Ended March 31, Current Year
(In Thousands Except Per Share Amounts)
Net revenue
$2,342,260
Cost of goods sold
1,733,916
Gross profit
608,344
Other selling, general and administrative expenses
494,829
Operating income
113,515
Interest expense
Income before income taxes
113,098
Provision for income taxes
43,583
Net income
Earnings per share:
Basic earnings per share
$0.86
Weighted average shares outstanding
81,208
P5-6.
(a) JORDAN SALES COMPANY
Income Statement
For the Year Ended March 31, 2019
Sales revenue …………………………………………………………. $99,000
Cost of goods sold……………………………………………………. 33,000
Gross profit ……………………………………………………….…….. 66,000
P5-6. (continued)
(b) JORDAN SALES COMPANY
Balance Sheet
March 31, 2019
Assets
Current Assets:
Cash ………………………………………………………………… $58,000
Accounts receivable ……………………………………………. 49,000
Liabilities
Current Liabilities:
Accounts payable ………………………………………………. $22,000
Stockholders’ Equity
Contributed Capital:
Capital stock (33,000 shares, par $1) ……………………. 33,000
P5-7.
Transaction
Gross Profit
Operating Income
Return on Assets
a.
b.
NE
–
NE
NE
d.
NE
NE
–
The effects of the transactions can be seen by making the related journal entries and
using A, L, SE, R, and E to denote asset, liability, shareholders’ equity, revenue, and
expense, respectively.
a.* Accounts receivable (+A) ………………………………………………… 400
$50.
b. Research and development expense (+E, –SE) …………………. 100
Cash (–A) ……………………………………………………………. 100
P5-8.
Transaction
Total Asset
Turnover
Return on Assets
Gross Profit
Percentage
a.
–
–
NE
b.
–
NE
d.
–
–
NE
The effects of the transactions can be seen by making the related journal entries and
using A, L, SE, R, and E to denote asset, liability, shareholders’ equity, revenue, and
expense, respectively.
a. Cash (+A) …………………………………………………………………….. 3,000
Notes payable (+L) ………………………………………………… 3,000
*Note that net income goes up by $200 as does ending assets. As a consequence,
average assets ((beginning + ending)/2) increases by only one-half of that amount or
$100. So ROA increases. Also, since the gross margin percentage on this sale was
Financial Accounting, 10/e 5-27
P5-9.
NEWELL RUBBERMAID INC.
Consolidated Statement of Operations
For the Year Ended December 31, 2011
(dollars in thousands)
Net Sales ………………………………………………………………..
$ 5,864.6
Cost of Products Sold ……………………………………………….
3,659.4
Gross Profit ……………………………………………………………..
2,205.2
Operating Expenses:
Selling, General, and Administrative Expenses ……..
$1,515.3
Other Expense …………………………………………………
1,948.0
Operating Income ……………………………………………………..
257.2
Interest and Other Non-Operating Expense ………….
104.7
Income from Continuing Operations before Income Taxes
152.5
Income Tax Expense ……………………………………….
17.9
Income from Continuing Operations …………………………...
Net Income …………………………………………………………….
ALTERNATE PROBLEMS
AP5-1.
Req. 1
TANGOCO
Balance Sheet
December 31, Current Year
Assets
Current Assets
Cash ………………………………………………………………… $ 48,800
Accounts receivable ……………………………………………. 71,820
Liabilities
Current Liabilities
Accounts payable ………………………………………………. $ 58,800
Stockholders’ Equity
Contributed Capital
Common stock, par $1 per share, 100,000 shares ….. 100,000
AP5-1. (continued)
Req. 2
Net book value (sometimes called book value or carrying value) is the amount of cost
less any contra accounts (offsets).
AP5-2.
MESA INDUSTRIES
Statement of Stockholders’ Equity
For the Year Ended December 31, Current Year
Common Stock
Retained
Total
Stockholders’
Shares
Amount
Earnings
Equity
Balances as of
AP5-3.
(a) DYNAMITE SALES
Income Statement
For the Year Ended August 31, 2018
Sales revenue …………………………………………………………. $81,000
Cost of goods sold……………………………………………………. 27,000
Gross profit ……………………………………………………….…….. 54,000
AP5-3. (continued)
(b) DYNAMITE SALES
Balance Sheet
August 31, 2018
Assets
Current Assets:
Cash ………………………………………………………………… $47,700
Accounts receivable ……………………………………………. 38,320
Liabilities
Current Liabilities:
Accounts payable ………………………………………………. $16,225
Stockholders’ Equity
Contributed Capital:
Capital stock (29,000 shares, par $1) ……………………. 29,000
Paid-in capital …………………………..……………………….. 4,500
Req. 1.
Transaction
Operating Income
(Loss)
Net Income
Return on Assets
a.
NE
+
+
b.
NE
d.
NE
The effects of the transactions can be seen by making the related journal entries and
using A, L, SE, R, and E to denote asset, liability, shareholders’ equity, revenue, and
expense, respectively.
a. Cash (+A) ………………………………………………………………………. 7
Interest income (+R) …………………………..………………… 7
Req. 2.
Assuming that next period Avon’s total assets increase by 5%, but Avon earns 20%
more income as during the current period, Avon’s ROA will increase over that earned in