Chapter 9, Problem 9.1FSC

Financial Statement Case 9-1

Use Target Corporation’s Fiscal 2015 Annual Report and the Note 9 data on “Credit Card
Receivables Transaction” to answer the following questions. Visit
http://www.pearsonhighered.com/Horngren to view a link to Target Corporation’s annual report.

Requirements

1. How much accounts receivable did Target report on its balance sheet as of January 30, 2016? As of January 31, 2015?
2. Target accepts customer payments via Target brand credit cards. Refer to Note 9, “Credit Card Receivables Transaction.” How does Target account for these credit card sales?
3. Refer to Note 9. What are the advantages to Target in handling Target brand credit card transactions as it does? What are Target’s responsibilities concerning these credit cards?
4. Compute Target’s acid-test ratio as of January 30, 2016 and January 31, 2015. Did the ratio improve or deteriorate? For each date, if all the current liabilities came due immediately, could Target pay them?