- Which of the following potentially limits the usefulness of the balance sheet?
Multiple Choice
All of the other answer choices represent potential limitations of the balance sheet.
Many items in the balance sheet reflect estimates and judgments of management.
Property, plant, and equipment are recorded at their book values rather than fair values.
Many valuable resources of the company are not recorded as assets.
2. Listed below are year-end account balances ($ in millions) taken from the records of Symphony Stores.
| Debit | Credit | |
| Accounts receivable | $ 665 | |
| Building and equipment | 934 | |
| Cash | 46 | |
| Interest receivable | 34 | |
| Inventory | 26 | |
| Land | 151 | |
| Notes receivable (long-term) | 476 | |
| Prepaid rent | 36 | |
| Supplies | 9 | |
| Trademark | 58 | |
| Accounts payable | $ 670 | |
| Accumulated depreciation | 80 | |
| Additional paid-in capital | 484 | |
| Dividends payable | 20 | |
| Common stock (at par) | 14 | |
| Income tax payable | 56 | |
| Notes payable (long-term) | 780 | |
| Retained earnings | 293 | |
| Deferred revenue | 38 | |
| TOTALS | $ 2,435 | $ 2,435 |
What would Symphony report as total assets?
Top of Form
Multiple Choice
$1,556 million
$2,361 million
$2,355 million
$2,441 million
- Listed below are year-end account balances ($ in millions) taken from the records of Symphony Stores.
| Debit | Credit | |
| Accounts receivable | $ 677 | |
| Building and equipment | 932 | |
| Cash | 47 | |
| Interest receivable | 49 | |
| Inventory | 33 | |
| Land | 158 | |
| Notes receivable (long-term) | 474 | |
| Prepaid rent | 38 | |
| Supplies | 12 | |
| Trademark | 53 | |
| Accounts payable | $ 642 | |
| Accumulated depreciation | 64 | |
| Additional paid-in capital | 485 | |
| Dividends payable | 27 | |
| Common stock (at par) | 11 | |
| Income tax payable | 61 | |
| Notes payable (long-term) | 829 | |
| Retained earnings | 322 | |
| Deferred revenue | 32 | |
| TOTALS | $ 2,473 | $ 2,473 |
What would Symphony report as total shareholders’ equity?
Multiple Choice
$791 million
$845 million
$818 million
$1,647 million
- A subsequent event for an entity with a December 31, 2024, year-end would notinclude a(n):
Multiple Choice
major uncertainty on December 31, resolved in January 2025.
acquisition of another company in January 2025.
issuance of bonds in January 2025.
change in the estimated useful lives of equipment in January 2025.
- Recent financial statement data for Harmony Health Foods (HHF) Incorporated is shown below.
| Current liabilities | $ 192 | Income before interest and taxes | $ 129 |
| 10% Bonds, long-term | 390 | Interest expense | 39 |
| Total liabilities | 582 | Income before tax | 90 |
| Shareholders’ equity | Income tax | 23 | |
| Common stock | 210 | Net income | $ 67 |
| Retained earnings | 299 | ||
| Total shareholders’ equity | 509 | ||
| Total liabilities and equity | $ 1,091 |
HHF’s debt to equity ratio is:
Note: Round your answer to 2 decimal places.
Top of Form
Multiple Choice
0.54.
0.77.
1.14.
1.87.
Bottom of Form
Explanation
- The December 31, 2024, post-closing trial balance ($ in thousands) for Libby Corporation is presented below:
| Debits | Credits | |
| Cash | 27,000 | |
| Long-term investments | 64,000 | |
| Accounts receivable | 39,000 | |
| Allowance for uncollectible accounts | 8,000 | |
| Prepaid insurance | 3,500 | |
| Inventory | 145,000 | |
| Land | 54,000 | |
| Buildings | 185,000 | |
| Accumulated depreciation–buildings | 59,000 | |
| Equipment | 146,000 | |
| Accumulated depreciation–equipment | 39,000 | |
| Patents (unamortized balance) | 4,000 | |
| Accounts payable | 42,000 | |
| Notes payable, due 2025 | 74,000 | |
| Interest payable | 14,500 | |
| Bonds payable, due 2041 | 165,000 | |
| Common stock (no par), 31,000 shares authorized, issued, and outstanding |
217,000 | |
| Retained earnings | 49,000 | |
| Totals | 667,500 | 667,500 |
Required:
Prepare a classified balance sheet for Libby Corporation on December 31, 2024.
Note: Enter your answers in the order of their liquidity. Negative amounts should be entered by a minus sign. Enter your answers in thousands of dollars.