Analysis Case 3–14
Balance sheet information
• LO3–2 through LO3–4
Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended January 30, 2016, are available in the Connect library. This material also is available under the Investor Relations link at the company’s website (www.target.com).
Real World Financials
Required:
1. What categories does the company use to classify its assets? Its liabilities?
2. Why are investments shown as a current asset?
3. Explain the current liability “Accrued and other current liabilities.”
4. What purpose do the disclosure notes serve?
5. What method does the company use to
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
INTERMEDIATE ACCT VOL.2>CUSTOM<
- Working capital and current ratio Current assets and current liabilities for Brimstone Company follow: 2019 2018 Current assets 1,586,250 1,210,000 Current liabilities 705,000 550,000 a.Determine the working capital and current ratio for 2019 and 2018. b.Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?arrow_forwardInvestment reporting O'Brien Industries Inc. is a hook publisher. The comparative unclassified balance sheets for December 31, Year 2 and Year 1 follow. Selected missing balances are shown by letters. Brien Industries Inc. Balance Sheet December 31, Year 2 and Year 1 Dec. 31, Year 2 Dec 31, Year 1 cash 233,000 220,000 Accounts receivable (net) 136,530 138,000 Available for sale investments (at cost)Note 1 a 103,770 Less valuation allowance for available-for-sale investments b. 2,500 Available for-sale investments (fair value) c 101,270 Interest receivable d Investment in Jolly Roger Co. stockNote 2 e. 77,000 Office equipment (net) 115,000 130,000 Total assets f. 666,270 Accounts payable 69.400 65,000 Common stock 70.000 70,000 Excess of issue price over par 225,000 225,000 Retained earnings g 308,770 Unrealized gain (loss) on available for-sale investments h. (2,500) Total liabilities and Stockholders equity i. 666,270 Note 1. Investments are classified as available for sale. The investments at cost and fair value on December 31, Year 1, are as follows: No. of Shares Cost per Share Total Cost Total Fair Value Bernard Co. stock 2,250 17 38,250 37,500 Chadwick Co. stock 1,260 52 65,520 63,770 103,770 101,270 Note 2. The investment in Jolly Roger Co. stock is an equity method investment representing 30% of the outstanding .shares of Jolly Roger Co. The following selected investment transactions occurred during Year 2: May 5. Purchased 3,080 shares of Gozar Inc. at 30 per share including brokerage commission. Gozar Inc. is classified as an available-for-sale security. Oct. 1. Purchased 40,000 of Nightline co. 6%, 10-Year bonds at 100. The bonds are classified as available for sale. The bonds pay interest on October 1 and April 1. 9. Dividends of 12,500 are received on the Jolly Roger co. investment. Dec. 31 Jolly Roger co. reported a total net income of 112,000 for year 2. O'Brien industries Inc. recorded equity earnings for its share of Jolly Roger co. net income. 31. Accrued three months of interest on the Nightline bonds. 31. Adjusted the available-for-sale investment portfolio to fair value, using the following fair value per-share amounts: Available-for-Sale Investments Fair Value Bernard Co. stock 15,40 per share Chadwick Co. stock 46,00 per share Gozar Inc. stock 32,00 per share Nightline Co. bonds 98 per 100 of face amount Dec. 31. Closed the OBrien Industries Inc. net income of 146,230. O'Brien Industries Inc. paid no dividends during the year. Instructions Determine the missing letters in the unclassified balance sheet. Provide appropriate supporting calculations.arrow_forwardChapter 7 p. 514 Problem Set A PA3 The following transactions occurred for Donaldson Inc. during the month of July. Jul. 1 Sold 50 items to Palm Springs Inc. and offered terms of 2/10, n/30, $4,000 on July 1, and issued invoice #12 on account number #312Jul. 5 Sold 20 thing-a-jigs to Miami Inc. for $2,150 cash on July 5, and issued invoice #13Jul. 8 Sold 30 what-is to Smith Mfg. for $5,000 and offered terms of 2/10, n/30; issued invoice #14 on account number #178Jul. 9 Received payment from Palm Springs Inc.Jul. 22 Received payment from Smith Mfg. after expiration of the discount period A. Record the transactions for Donaldson Inc. in the proper special journal and subsidiary ledger. SALES JOURNAL Page 22 Date Account Invoice No. Ref. DR Accts. Receivable CR Sales DR COGS CR Merchandise Inventory 2019 Jul. 1 Palm Springs Inc. (312) 12 2,000.00 Jul. 8 Smith Mfg (178) 14 2,500.00 ASH RECEIPTS…arrow_forward
- Q.2.2Prepare the individual account of L. Simpson in the debtors ledger of Towel Talk for February 2021. (Round off to the nearest rand)arrow_forwardQ 2 (12 marks) Gideon Corp. is a reinsurance and financial services company. Gideonstrongly believes in evaluating the performance of its stand-alone divisions using financialmetrics such as ROI and residual income. For the year ended December 31, 2019, Gideon’sCFO received the following information about the performance of the property/casualtydivision:Sales Revenues $ 900 000Operating Income 225 000Total Assets 1 500 000Page 2 of 3Current Liabilities 300 000Debt (Interest rate: 5%) 400 000Common Equity (book value) 500 000For the purposes of divisional performance evaluation, Gideon defines investment as totalassets, and income as operating income (that is, income before interest and taxes). The firmpays a flat rate of 25% in taxes on its income.Required:1. What was the net income after taxes of the property/casualty division? (4 marks)2. What was the division’s ROI for the year? (4 marks)3. Based on Gideon’s required rate of return of 8%, what was the property/casualtydivision’s…arrow_forwardQ.2.1) Open, post to and balance the debtors control account in the general ledger of Towel Talk for February 2021. (Round off to the nearest rand)arrow_forward
- Q.2.1 Open, post to and balance the debtors control account in the general ledger of Dumbledore Magic World for May 2019. The balance brought down on 1 May 2019 was R 71 821.20arrow_forwardProblem 4-5 EFN [LO2] The most recent financial statements for Assouad, Inc., are shown here: Income Statement Balance Sheet Sales $ 11,900 Current assets $ 6,000 Current liabilities $ 3,600 Costs 8,500 Fixed assets 10,600 Long-term debt 5,100 Taxable income $ 3,400 Equity 7,900 Taxes (24%) 816 Total $ 16,600 Total $ 16,600 Net income $ 2,584 Assets, costs, and current liabilities are proportional to sales. Long-term debt and equity are not. The company maintains a constant 45 percent dividend payout ratio. As with every other firm in its industry, next year’s sales are projected to increase by exactly 17 percent. What is the external financing needed? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)arrow_forwardNineteen measures of solvency and profitability The comparative financial statements of Bettancort Inc. are as follows. The market price of Bettancort Inc. common stock was 71.25 on December 31, 2016. Bettancort Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Retained earnings. January 1......................................... 2,655,000 2,400,000 Add net income for year............................................. 300,000 280,000 Total............................................................... 2,955,000 2,680,000 Deduct dividends: On preferred stock................................................ 15,000 15,000 On common stock................................................. 10,000 10,000 Total........................................................... 25,000 25,000 Retained earnings. December 31..................................... 2,930,000 2,655,000 Bettancort Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Sales...................... 1,200,000 1,000,000 Cost of goods sold............ 500,000 475,000 Gross profit............... 700,000 525,000 Selling expenses.......... 240,000 200,000 Administrative expenses...... 180,000 150,000 Total operating expenses.. 420,000 350,000 Income from operations.. 280,000 175,000 Other income............. 166,000 225,000 446,000 400,000 Other expense (Interest)... 66,000 60,000 Income before income tax 380,000 340,000 Income tax expense....... 80,000 60,000 Net income............... 300,000 280,000 Bettancort Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2016 and 2015 Dec.31, 2016 Dec. 31, 2015 Assets Current Assets: Cash.................................... 450,000 400,000 Marketable securities.................... 300,000 260,000 Accounts receivable (net)................. 130,000 110,000 Inventories.............................. 67,000 58,000 Prepaid expenses........................ 153,000 139,000 Total current assets..................... 1,100,000 967,000 Long-term investments.................... 2,350,000 2,200,000 Property, plant and equipment (net)....... 1,320,000 1,118,000 Total assets............................... 4,770,000 4,355,000 Liabilities Current liabilities.......................... 440,000 400,000 Long-term liabilities: Mortgage note payable, 8.8%, due 2021... 100,000 0 Bonds payable, 9%, due 2017............. 1,000,000 1,000,000 Total long term liabilities............... 1,100,000 1,000,000 Total liabilities............................ 1,540,000 1,400,000 Stockholders' equity Preferred stock 0.90, 10 par.. 200,000 200,000 Common stock. 5 par..................... 100,000 100,000 Retained earnings......................... 2,930,000 2,665,000 Total stockholders equity............... 3,230,000 2,955,000 Total liabilities and stockholders' equity..... 4,770,000 4,355,000 Instructions Determine the following measures for 2016, rounding to one decimal place: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders equity 10. Number of times interest charges are earned 11. Number of times preferred dividends are earned 12. Ratio of sales to assets 13. Rate earned on total assets 14. Rate earned on stockholders' equity 15. Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yieldarrow_forward
- Nineteen measures of solvency and profitability The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel Inc. common stock was 119.70 on December 31, 2016. Stargel Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Retained earnings, January 1................ 5,375,000 4,545,000 Add net income for year......................... 900,000 925,000 Total..................................... 6,275,000 5,470,000 Deduct dividends: On preferred stock............................................. 45,000 45,000 On common stock.............................................. 50,000 50,000 Total........................................................ 95,0000 95,000 Retained earnings, December 3................................... 6,180,000 5,375,000 Stargel Inc. Comparative Income Statement For the Year Ended December 31, 2016 and 2015 2016 2015 Sales..................... 10,000,000 9,400,000 Cost of goods sold......... 5,350,000 4,950,000 Gross profit............... 4,650,000 4,450,000 Selling expenses.......... 2,000,000 1,080,000 Administrative expenses... 1,500.000 1,410,000 Total operating expenses 3,500,000 3,290,000 Income from operations ... 1,150,000 1,160,000 Other income............. 150,000 140,000 1,300,000 1,300,000 Other expense (interest). 170,000 150,000 Income before income tax 1,130,000 1,150,000 Income tax expense....... 230,000 225,000 Net income............... 900,000 925,000 Stargel Inc. Comparative Income Statement For the Year Ended December 31, 2016 and 2015 Dec.31, 2016 Dec. 31, 2015 Assets Current Assets: Cash.................................... 500,000 400,000 Marketable securities.................... 1,010,000 1,000,000 Accounts receivable (net)................. 740,000 510,000 Inventories.............................. 1,190000 950,000 Prepaid expenses........................ 250,000 229,000 Total current assets..................... 3,690,000 3,089,000 Long-term investments.................... 2,350,000 2,300,000 Property, plant and equipment (net)....... 3,740,000 3,366,000 Total assets............................... 9,780,000 8,755,000 Liabilities Current liabilities.......................... 900,000 880,000 Long-term liabilities: Mortgage note payable, 8.8%, due 2021... 200,000 0 Bonds payable, 9%, due 2017............. 1,500,000 1,500,000 Total long term liabilities............... 1,700,000 1,500,000 Total liabilities............................ 2,600,000 2,380,000 Stockholders' equity Preferred stock 0.90, 10 par.. 500,000 500,000 Common stock. 5 par..................... 500,000 500,000 Retained earnings......................... 6,180,000 5,375,000 Total stockholders' equity............... 7,180,000 6,375,000 Total liabilities and stockholders' equity..... 9,780,000 8,755,000 Instructions Determine the following measures for 2016, rounding to one decimal place, except per share amounts, which should be rounded to the nearest penny: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days salts in receivables 6. Inventory turnover 7. Number of days sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to .stockholders' equity 10. Number of times interest charges are earned 11. Number of times preferred dividends are earned 12. Ratio of sales to assets 13. Rate earned on total assets 14. Rate earned on stockholders' equity 15. Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yieldarrow_forwardQ. 6 You are examining a company’s balance sheet and find that it has a total assets of $@0,572, a cash balance of $2,208, inventory of $4,913, current liabilities of $5,829 and accounts receivable of $2,727. What is the company’s net working capital? A. $894 B. $1,811 C. $5,807 D. $14,743 E. $4,019arrow_forwardQ 16 Question 16 A CREDIT balance is not the normal for which account listed below? Select one: a. Retained Earnings b. Service Revenue c. Unrealized Losses d. Prepaid Expensearrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Financial & Managerial AccountingAccountingISBN:9781285866307Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCorporate Financial AccountingAccountingISBN:9781337398169Author:Carl Warren, Jeff JonesPublisher:Cengage Learning