Critical Thinking Problem 13.2 (Static) Classified Balance Sheet LO 13-3Brandon Marchand is the owner of Divine Jewels, a store specializing in gold, platinum, and special stones, During the past year, inresponse to increased demand, Brandon doubled his selling space by expanding into the vacant building space next door to his store.This expansion has been expensive because of the need to increase inventory and to purchase new store fixtures and equipment,including carpeting and state-of-the-art built-in fixtures. Brandon notes that the company's cash position has decreased and he isworjed about future demands on cash to finance the growth,Brandon presents you with a statement showing the assets, liabilities, and his equity for year-end 20XÔ0 and 20X1, and asks youropinion on the company's ability to pay for the recent expansion. He did not have income and expense data available at the time. Hecommented that he had not made any new investment in the business in the past two years and was not financially able to do sopresently. The information presented is shown below:December 31, 20X0December 31, 20X1AssetsCashAccounts ReceivableInventoryPrepaid Expenses,Store Fixtures and Equipment$150,00045,000105,0006,000180,000$ 40,00091,500234,0009,000395,000$486,000$769,500Total AssetsLiabilities and Owners EquityLiabilitiesNotes Payable (due in 4 years)Accounts PayableSalaries PayableTotal LiabilitiesOwner's EquityBrandon Marchand, Capital$.90,000132,00018,000$250,000176,00019,500$240,000$445,500246,000324,000$486,000$769,500Total Liabilities and Owner's EquityRequired:Prepare classified balance sheets for Divine Jewels for December 31, 20X0, and December 31, 20X1. (Ignore depreciation.)DIVINE JEWELSK Prev1 of 1Next

A classified balance sheet organizes assets and liabilities into important subgroups, while an…

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Brandon Marchand is the owner of I Fornonse to increased demand Bra

Financial Reporting, Financial Statement Analysis and Valuation

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ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter5: Risk Analysis

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EXERCISE 1–4 Ethics and the Manager Richmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a large-scale remodeling of its stores to attract a more upscale clientele. Before finalizing these plans, two stores were remodeled as a test. Linda Perlman, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports, Perlman discovered a sizable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it would diminish the financial results and their bonuses. Required: 1. According to the IMA’s Statement of Ethical Professional Practice, would it be ethical for…
Chapter 1Managerial Accounting: An OverviewEthics and the ManagerRichmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a large-scale remodelling of its stores to attract a more upscale clientele.Before finalizing these plans, two stores were remodelled as a test. Linda Perlman, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports, Perlman discovered a sizable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it would diminish the financial results and their bonuses.Required:1. According to the IMA’s Statement of Ethical Professional…
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Ethics in Action Lucas Hunter, president of Simmons Industries Inc., believes that reporting operating cash flow per share on the income statement would be a useful addition to the companys just completed financial statements. The following discussion took place between Lucas Hunter and Simmons' controller, John Jameson, in January, after the close of the fiscal year: Lucas: Ive been reviewing our financial statements for the last year. I am disappointed that our net income per share has dropped by 10% from last year. This won't look good to our shareholders. Is there anything we can do about this? John. What do you means? The past is the past, and the numbers are in. There isnt much that can be done about it Our financial statements were prepared according to generally accepted accounting principles, and I dont see much leeway for significant change at this point. Lucan No, no. Ive not suggesting that we cook the books. But look at the cash flow from operating activities on the statement of cash flows. The cash flow from operating activities has increased by 20%. This is very good newsand. I might add, useful information. The higher cash flow from operating activities will give our creditors comfort. John. Well, the cash flow from operating activities is on the statement of cash flows, so I guess users will be able to see the improved cash flow figures there Lucas: This is true, but somehow I think this information should be given a much higher profile. I don't like this information being buried in the statement of cash flows. You know as well as I do that many users will focus on the income statement Therefore. I think we ought to include an operating cash flow per share number on the face of the income statementsomeplace under the earnings per share number In this way, users will get the complete picture of our operating performance. Yes, our earnings per share dropped this year, but our cash flow from operating activities improved! And all the information is in one place where users can see and compare the figures. What do you think? John I've never really thought about it like that before I guess we could put the operating cash flow per share on the income statement, underneath the earnings per share amount. Users would really benefit from this disclosure. Thanks for the ideaI'll start working on it. Lucas: Glad to be of service. How would you interpret this situation? Is John behaving in an ethical and professional manner?
Problem 3-21 Profit Margin [LO4] In response to complaints about high prices, a grocery chain runs the following advertising campaign: “If you pay your child $4 to go buy $100 worth of groceries, then your child makes twice as much on the trip as we do.” You’ve collected the following information from the grocery chain’s financial statements: ($ in millions) Sales $ 640.0 Net income 12.8 Total assets 370.0 Total debt 240.0 a. What is the profit margin for the child as a percentage of what they spend and the profit margin for the store? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the store's ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
i need Part B solution Part A here solution Computation of net income: Net sales 680,400 Less: cost of goods sold (327,600) Gross profit 352,800 Less: administrative expense (126,000) Less: selling expense (100,800) Operational income 126,000 Discontinued operations (loss before income tax) (50,400) Income before tax 75,600 Less: income tax (30%) (22,680) Net income 52,920 Hence, net income for 2022 is calculated as €52,920.