Daily Archives: May 14, 2022

Use of Account Balances as a Basis for Adjustments Lewis and Associates has been in the termite inspection and treatment business for five years. The following is a list of accounts for Lewis on June 30, 2017. It reflects the recurring transactions for the month of June but does not reflect any month-end adjustments:

The following additional information is available: a. Lewis rents a warehouse with office space and prepays the annual rent of $4,800 on May 1 of each year. b. The asset account Equipment represents the cost of treatment equipment, which has an estimated useful life of ten years and an estimated salvage value of $200. c. Chemical inventory on hand equals $1,300. d. Wages and salaries owed but unpaid to employees at the end….

Comparing Two Companies in the Same Industry: Chipotle and Panera Bread Refer to the financial information for Chipotle and Panera Bread reproduced at the back of the book for the information needed to answer the following questions.

Required

1. Locate the note in each company’s annual report included in its Form 10-K for the 2015 year in which it discusses revenue recognition. How does each company describe the point at which it recognizes revenue from customers? Are there any significant differences in the organizations’ revenue recognition policies?

2. What dollar amount does Chipotle report for accounts receivable on its most recent balance sheet? What percent of the company’s total current assets are comprised of accounts receivable? What is the dollar amount of Panera Bread’s trade accounts receivable on….

Completing Financial Statements, Computing Ratios, Comparing Accrual versus Cash Income, and Evaluating the Company’s Cash Needs

Mountain Home Health Inc. provides home nursing services in the Great Smoky Mountains of Tennessee. When contacted by a client or referred by a physician, nurses visit the patient and discuss needed services with the physician. Mountain Home Health earns revenue from patient services. Most of the revenue comes from billing insurance companies, the state of Tennessee, or the Medicare program. Amounts billed are recorded in the Billings Receivable account. Insurance companies, the state government, and the federal government do not fully fund all procedures. For example, the state of Tennessee pays an average 78% of billed amounts. Mountain Home Health has already removed the uncollectible amounts from the Billings Receivable account….

Making Business Decisions: Analyzing The Hershey Company’s Accounts Receivable Turnover Ratio You are considering making a loan to The Hershey Company. The following information is from the financial statements included in Form 10-K for fiscal years 2014 and 2013 (in thousands of dollars)

The following information is from the financial statements included in Form 10-K for fiscal years 2014 and 2013 for Tootsie Roll Industries, Inc. (in thousands of dollars):

Required Part A. The Ratio Analysis Model A lender must assess how well a company is managing its accounts receivable before making a loan. The accounts receivable turnover ratio tells us how many times in a year a company collects its receivables. Replicate the five steps in the Ratio Analysis Model on pages 320–321 to analyze….