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Book/movie review
22/08/2022
1)
Present below are data from Shore Co.: 2011 2012 Credit Sales $800,000 $1,000,000 Allowance for doubtful accounts (Jan 1) 8,000 ? Allowance for doubtful accounts (Dec 31) ? ? Collection of accounts written off in prior years 10,000 0 Customer accounts written off 20,000 24,000 Accounts receivable (Jan 1) ? 300,000 Accounts receivable (Dec 31) 300,000 500,000 (a) (3 Points) Shore Co. collected $680,000 from customer account receivables during 2011. What should be the balance in Accounts Receivable at Jan 1, 2011? (b) (3 Points) For 2011, Shore Co. provides for doubtful accounts based on 5% of credit sales. What is the balance in Allowance for Doubtful Accounts at Dec 31, 2011? (c) (4 Points) For 2012, doubtful accounts are 4% of the ending balance of accounts receivable, determine (i) the balance in Allowance for doubtful Accounts at Dec 31, 2012, and (ii) bad debt expense to be reported for 2012. Record journal entry for part (ii).
2)
P3. (10 Points) The panel below reports cash flows and earnings for Wal-Mart from 1988 to 1996 (in millions of dollars, except per share numbers):
|
|
1988 |
1989 |
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
|
Cash from operations |
536 |
828 |
968 |
1,422 |
1,553 |
1,540 |
2,573 |
3,410 |
2,993 |
|
Cash investments |
627 |
541 |
894 |
1,526 |
2,150 |
3,506 |
4,486 |
3,792 |
3,332 |
|
Free cash flow |
(91) |
287 |
74 |
(104) |
(597) |
(1,966) |
(1,913) |
(382) |
(339) |
|
Net Income |
628 |
837 |
1,076 |
1,291 |
1,608 |
1,995 |
2,333 |
2,681 |
2,740 |
|
EPS |
0.28 |
0.37 |
0.48 |
0.57 |
0.70 |
0.87 |
1.02 |
1.17 |
1.19 |
(3 Points) What can you tell from the EPS data? Perform a horizontal analysis to support your view.
(2 Points) What is the definition of free cash flow? How do we use free cash flow in financial statement analysis?
(2 Points) Why would Wal-Mart have such negative free cash flows?
(3 Points) What explains the difference between Wal-Mart’s cash flows and earnings? Any implications for Wal-Mart’s financial position and performance?
3)
P2. (10 points)
. Presented below are data for Cars Corp (in millions)
2013 2014
Balance Sheet:
Assets, January 1 $4,560 ?
Liabilities, January 1 ? $2,736
Stockholders’ Equity, Jan. 1 ? 2,750
Dividends 7 6
Common Stock 608 650
Stockholders’ Equity, Dec. 31 2,750 2,166
Income Statement:
Cost of goods sold $100
Dividend revenue 5
Sales return 10
Income tax expense 12
Operating expenses 46
Sales revenue 200
Net Income ? ?
Compute the following items:
(a) (2 Points) The ending balance of Assets for 2013;
(b) (2 Points) The amount of gross profit in Cars’s multiple-step income statement for 2013;
(c) (2 Points) Net income for 2013;
(d) (2 Points) The beginning balance of Stockholders’ Equity for 2013;
(e) (2 Points) Net income for 2014;
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