Define in own words please

CHAPTER 6 – Accounting for Merchandising Businesses

1. Asset turnover
2. Cost of merchandise sold – (5 points extra – if you can tell me what this is also known as) You will hear this acronym more often than Cost of merchandise sold…
3. Credit memo
4. Credit terms
5. Debit memo
6. FOB (free on Board) destination
7. FOB (free on board) shipping point
8. Gross profit
9. Operating income
10. Invoice
11. Purchases discounts
12. Purchases returns and allowances
13. Sales discounts
14. Trade discounts
15. Administrative expenses (general expenses)

a company purchases inventory during the year in four batches, with unit and price amount shown below:

Batch 1 - 9,500 units @ $2.10 per unit
Batch 2 - 4,300 units @ $2.08 per unit
Batch 3 - 3,600 units @ $2.04 per unit
Batch 4 - 7,200 units @ $2.01 per unit

10,800 units were sold after Batch 2 was purchased, while 3,400 units were sold after Batch 3 was purchased.

1. calculate cost of goods sold and ending inventory under the LIFO method, using the perpetual inventory system.

2. Calculate cost of goods sold and ending inventory under the lifo method, using the periodic inventory system

Prepare a horizontal analysis of the balance sheet data for Nike, using 2019 as a base. (Show the amount of increase or decrease as well.)

b. Prepare a vertical analysis of the balance sheet data for Nike for 2020.

Prepare horizontal and vertical analyses.

E13.6 (LO 2) Here are the comparative income statements of Delaney Corporation.

Multiple-Step Income Statement and Report Form of Balance Sheet

The following selected accounts and their current balances appear in the ledger of Kanpur Co. for the fiscal year ended June 30, 2019:

1. Prepare a multiple-step income statement.

2. Prepare a statement of owner's equity.

3. Prepare a balance sheet, assuming that the current portion of the note payable is $14,200.

4. Which type of income statement shows intermediate balances?

I think that I know some of these answers but I am concerned that I am getting the wrong answers.

Coverall Inc. produces and sells a unique type of case for a standard-size tablet computer that is guaranteed waterproof but still allows for regular functionality of the tablet. The company has just opened a new plant to manufacture these cases, and the following cost and revenue data have been provided for the first month of the plant’s operation in the form of a worksheet:

Since the new case is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the month.

Prepare a contribution format income statement for the month. (Do not leave any empty spaces; input a 0 wherever it is required.)

Ogilvy Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:

The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Ogilvy produced 69,000 units and sold 69,000 units. During its second year of operations, it produced 69,000 units and sold 65,400 units. In its third year, Ogilvy produced 69,000 units and sold 72,600 units. The selling price of the company’s product is $59 per unit.

Required:

1. Assume the company uses super-variable costing:

a. Compute the unit product cost for Year 1, Year 2, and Year 3.

b. Prepare an income statement for Year 1, Year 2, and Year 3.

2. Assume the company uses a variable costing system that assigns $18 of direct labor cost to each unit produced:

a. Compute the unit product cost for Year 1, Year 2, and Year 3.

b. Prepare an income statement for Year 1, Year 2, and Year 3.

3. Reconcile the difference between the super-variable costing and variable costing net operating incomes in Years 1, 2, and 3.

Tami Tyler opened Tami’s Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler’s personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University.

Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter.

At this point, Ms. Tyler is manufacturing only one product—a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:

Required:

1. Complete the following:

a. Compute the unit product cost under absorption costing.

b. What is the company’s absorption costing net operating income (loss) for the quarter?

c. Reconcile the variable and absorption costing net operating income (loss) figures.

3. During the second quarter of operations, the company again produced 32,000 units but sold 35,000 units. (Assume no change in total fixed costs.)

a. What is the company’s variable costing net operating income (loss) for the second quarter?

b. What is the company’s absorption costing net operating income (loss) for the second quarter?

c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.

P. 5-1

Transactions may have significantly different impacts on a government's budget, governmental funds statements, and government‐wide statements.

A school district prepares its budget on a cash basis. It is contemplating the changes or actions that follow. For each, indicate the impact that the change would have (1) on year‐ending June 30 2020, general fund expenditures or transfers and (2) on year‐ending June 30, 2020, government‐wide expenses (e.g., “increase expenditures by $X” or “no impact”). Provide a brief explanation of your response, indicating that you are aware of the relevant financial reporting issue.

1. Owing to a special discount offered by a supplier, the district will purchase $100,000 of supplies in June 2020 that they otherwise would not have purchased until July 2020. They will not, however, have to pay for the supplies until July. The district accounts for supplies on a consumption basis.
2. In fiscal 2020, the district increases the number of vacation days to which employees are entitled to take, thereby increasing the cost of vacation leave that employees earned in 2020 but will take in subsequent fiscal years by $250,000. The vacation days vest; they can be taken as termination benefits.
3. The district increased the number of sick days to which employees are entitled to take, thereby increasing the cost of sick days that employees earned in 2020 but will take in future years by $150,000. The sick leave can be taken only as employees are sick; it cannot be paid for as a termination benefit.
4. In 2020, the district established a sabbatical leave program for certain categories of teachers. Teachers will be granted one year of leave after each seven years of service. Teachers granted the leave will have to spend it engaging in various specified activities, such as research, aimed at improving their teaching. Teachers will first be eligible to take the leave in 2027. The district estimates that one‐seventh of the cost will be $1,500,000.
5. The district delayed from June to July the approval of a grant of $50,000 to a local health clinic that provides examinations to low‐income students. The funds are to be paid out of resources budgeted for the fiscal year ending June 30, 2020, and are intended for use by the clinic in that same period.
6. The district delayed from June to July purchasing, and paying for, 10 school buses at a cost of $750,000. The buses are expected to last for 10 years and have no salvage value. The district charges depreciation on a straight‐line basis and takes a full year's depreciation in the year of acquisition.
7. The district is required to transfer 50 percent of any annual surplus from the general fund to a “rainy day” fund (a special revenue fund). Usually the transfer based on the surplus of the fiscal previous year is made in December. The district proposes to delay the transfer that would ordinarily be made in December 2020 until July 2021, thereby decreasing its cash outlay for fiscal year 2020 by $3 million

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question 3. P13-12A The income statement and unclassified statement of financial position for E-Perform, Inc. follow:

Additional information:

1. Prepaid expenses and accrued liabilities relate to operating expenses.
2. An unrealized gain on held for trading investments of $14,000 was recorded.
3. New equipment costing $85,000 was purchased for $25,000 cash and a $60,000 long-term bank loan payable.
4. Old equipment having an original cost of $57,500 was sold for $1,500.
5. Accounts payable relate to merchandise creditors.
6. Some of the bank loan was repaid during the year.
7. A dividend was paid during the year.
8. Operating expenses include $46,500 of depreciation expense and a $7,500 loss on disposal of equipment.

Instructions

(a) Prepare the statement of cash flows, using the direct method.

(b) E-Perform's cash position more than doubled between 2017 and 2018. Identify the primary reason(s) for this significant increase.

C. Adidas Inc. had the following balance sheet on September 30, 2019 (in thousands):

Consider the following transactions that occurred during the first half of October 2019 (in thousands):

1. Inventories were acquired for cash, P160.

2. Inventories were acquired on open account, P190.

3. Unsatisfactory shoes acquired on open account in June were returned for full credit, P40.

4. Equipment of P120 was acquired for a cash downpayment of P30 plus a 6-month promissory note of P90.

5. To encourage wider displays, special store equipment was sold on account to Makati area stores for P400. The equipment had cost P400 in the preceding month.

6. Sarah G. starred in a movie and as a favor to an Adidas executive, she agreed to display Adidas shoes in a basketball scene. No fee was paid by Adidas.

7. Cash was disbursed to reduce accounts payable, P170.

8. Collected cash on account, P180.

9. Borrowed cash from a bank, P500.

10. Sold additional common stock for cash to new investors, P900.

• Prepare an analysis showing the effects of the October transactions on the financial position of Adidas.

• Prepare a balance sheet as of October 15, 2019.

High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant’s operation:

Management is anxious to assess the profitability of the new camp cot during the month of May.

Required:

1. Assume that the company uses absorption costing.

a. Determine the unit product cost.

b. Prepare an income statement for May.

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

b. Prepare a contribution format income statement for May.

Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,070 units at $35; purchases, 7,920 units at $37; expenses (excluding income taxes), $193,500; ending inventory per physical count at December 31, current year, 1,670 units; sales, 8,320 units; sales price per unit, $77; and average income tax rate, 36 percent.

1. Compute cost of goods sold and prepare income statements under the FIFO, LIFO, and average cost inventory costing methods. (Round your final answers to nearest whole dollar. Do not round your intermediate calculations.)

2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)?

3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling?

1. Nineteen Measures of The ability of a firm to pay its debts as they come due.Solvency and The ability of a firm to earn income.Profitability

   The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $61 on December 31, 2016.

   Blige Inc.
   Comparative Retained Earnings Statement
   For the Years Ended December 31, 2016 and 2015
   			2016		2015
   Retained earnings, January 1			$1,943,600		$1,645,700
   Add net income for year			432,000		337,100
   Total			$2,375,600		$1,982,800
   Deduct dividends
   	On preferred stock		$7,000		$7,000
   	On common stock		32,200		32,200
   		Total	$39,200		$39,200
   Retained earnings, December 31			$2,336,400		$1,943,600

   Blige Inc.
   Comparative Income Statement
   For the Years Ended December 31, 2016 and 2015
   	2016		2015
   Sales	$2,575,110		$2,369,100
   Sales returns and allowances	12,810		8,330
   Sales	$2,562,300		$2,360,770
   Cost of goods sold	995,720		916,060
   Gross profit	$1,566,580		$1,444,710
   Selling expenses	$503,840		$626,030
   Administrative expenses	429,190		367,670
   Total operating expenses	933,030		993,700
   Income from operations	$633,550		$451,010
   Other income	33,350		28,790
   	$666,900		$479,800
   Other expense (interest)	176,000		96,800
   Income before income tax	$490,900		$383,000
   Income tax expense	58,900		45,900
   Net income	$432,000		$337,100

   Blige Inc.
   Comparative Balance Sheet
   December 31, 2016 and 2015
   			Dec. 31, 2016		Dec. 31, 2015
   Assets
   Current assets
   	Cash		$535,350		$428,450
   	Temporary investments		810,260		709,990
   	Accounts receivable (net)		489,100		459,900
   	Inventories		365,000		277,400
   	Prepaid expenses		101,274		85,690
   		Total current assets	$2,300,984		$1,961,430
   Long-term investments			912,176		248,553
   Property, plant, and equipment (net)			2,860,000		2,574,000
   Total assets			$6,073,160		$4,783,983
   Liabilities
   Current liabilities			$676,760		$770,383
   Long-term liabilities
   	Mortgage note payable, 8%, due 2021		$990,000		$0
   	Bonds payable, 8%, due 2017		1,210,000		1,210,000
   		Total long-term liabilities	$2,200,000		$1,210,000
   Total liabilities			$2,876,760		$1,980,383
   Stockholders' Equity
   Preferred $0.7 stock, $40 par			$400,000		$400,000
   Common stock, $10 par			460,000		460,000
   Retained earnings			2,336,400		1,943,600
   	Total stockholders' equity		$3,196,400		$2,803,600
   Total liabilities and stockholders' equity			$6,073,160		$4,783,983

   Required:

   Determine the following measures for 2016, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

   5. The relationship between sales and accounts receivable, computed by dividing the average accounts receivable by the average daily sales.Number of days' sales in receivables		days
   6. The relationship between the volume of goods sold and inventory, computed by dividing the cost of goods sold by the average inventory.Inventory turnover
   7. The relationship between the volume of sales and inventory, computed by dividing average inventory by the average daily cost of goods sold.Number of days' sales in inventory		days
   8. The ratio of fixed assets to long-term liabilities provides a measure of whether note-holders or bondholders will be paid.Ratio of fixed assets to long-term liabilities
   9. The ratio of liabilities to stockholders' equity measures how much of the company is financed by debt and equity.Ratio of liabilities to stockholders' equity
   10. A ratio that measures creditor margin of safety for interest payments, calculated as income before income tax + interest expense divided by interest expense.Number of times interest charges are earned
   11. A ratio that measures the risk that preferred dividends will not be paid if earnings decrease, calculated by dividing net income by the amount of preferred dividends.Number of times preferred dividends are earned
   12. Ratio that measures how effectively a company uses its assets, computed as sales divided by average total assets.Ratio of sales to assets
   13. A measure of profitability of assets, without regard to the portion of assets financed by creditors or stockholders.Rate earned on total assets		%
   14. A measure of profitability computed by dividing net income by average stockholders' equity.Rate earned on stockholders' equity		%
   15. A measure of profitability computed by dividing net income, reduced by preferred dividend requirements, by average common stockholders' equity.Rate earned on common stockholders' equity		%
   16. The profitability ratio of net income available to common shareholders to the number of common shares outstanding.Earnings per share on common stock	$
   17. The ratio of the market price per share of common stock, at a specific date, to the annual earnings per share.Price-earnings ratio
   18. Measures the extent to which earnings are being distributed to common shareholders.Dividends per share of common stock	$
   19. A ratio, computed by dividing the annual dividends paid per share of common stock by the market price per share at a specific date, that indicates the rate of return to stockholders in terms of cash dividend distributions.Dividend yield

Presented below are data taken from the records of Vaughn Company. December 31, 2017 December 31, 2016 Cash $15,100 $8,100 Current assets other than cash 85,300 60,300 Long-term investments 10,000 53,000 Plant assets 337,500 213,900 $447,900 $335,300 Accumulated depreciation $20,000 $40,400 Current liabilities 40,400 21,900 Bonds payable 74,600 –0– Common stock 253,700 253,700 Retained earnings 59,200 19,300 $447,900 $335,300 Additional information: 1. Held-to-maturity securities carried at a cost of $43,000 on December 31, 2016, were sold in 2017 for $33,700. The loss (not unusual) was incorrectly charged directly to Retained Earnings. 2. Plant assets that cost $49,900 and were 80% depreciated were sold during 2017 for $7,900. The loss was incorrectly charged directly to Retained Earnings. 3. Net income as reported on the income statement for the year was $56,800. 4. Dividends paid amounted to $5,520. 5. Depreciation charged for the year was $19,520. Prepare a statement of cash flows for the year 2017 using the indirect method.