E2-3.

a
Stockholders equity of Campbell Soup at the year end of 20Y1:
Assets
=
Liabilities
$
6,862.00
=
$
5,774.00
E2-3.b and c
New total assets

332
6,530.00

142
5,632.00

New Stockholders' Equity

898.00

Increase or (decrease) in stockholders' Equity

(190.00)

6,862.00

Stockholders' Equity
$
1,088.00

New total liabilities

+
+

5,774.00

E2-3.d
Accounting equation balance
Assets
$

6,530.00

=
=

Liabilities
$
5,632.00

E2-10
Transactions:
1. Received cash from issuance of capital stock, $100,000.
2. Paid rent for April, $4,200.
3. Paid advertising expense, $3,000
4. Received cash for providing delivery services, $27,000.
5. Purchased supplies for cash, $2,500.
6. Billed customers for delivery services on account, $81,200.
7. Paid creditors on account, $8,300.
8. Received cash from customers on account, $25,600.
9. Determined that the cost of supplies on hand was $900;
therefore, $1,600 of supplies had been used during the month.
10. Paid dividends, $3,000

Course: Accounting for executives

+
+

Stockholders' Equity
$
898.00

Impacts:
Increase in an asset, increase in stockholders equity.
Decrease in an asset, decrease in stockholders equity
Decrease in an asset, decrease in stockholders equity
Increase in an asset, increase in stockholders equity.
Increase in an asset, decrease in another asset.
Increase in an asset, increase in stockholders equity.
Decrease in an asset, decrease in a liability.
Increase in an asset, decrease in another asset.
Decrease in an asset, decrease in stockholders equity
Decrease in an asset, decrease in stockholders equity

Chapter: 2

E2-12
it is not correct to say that the business incurred a net loss of $8,000 during the month.
The income statement indicate a net income of $32,000 so the net gain for the month is $32,000
The $40,000 cash paid for dividents transaction does not affect the income statement of the month. Infact, this transaction
will affect the cashflow statemetn of the company. It results in a net cash outflow of $40,000.
E2 - 17
Income statement for the month ending April 30, 20Y9
No
Description
Revenues:
1 Sales commission

2
3
4
5
6

Operating expenses:
Salaries expense
Utilities expense
Rent expense
Interest expense
Miscellaneous expense
Total operating expenses:

7 Net income of the month

E2 - 18
Retained earnings statement as of April 30, 20Y9
1 Retain earning, 1st Apr 20Y9
2 Increase
3 decrease
4 Retain earning, 30st Apr 20Y9

Course: Accounting for executives

Amount:

$
$
$
$
$

145,000.00

(100,000.00)

45,000.00

$
$
$
$

45,000.00
(10,000.00)
35,000.00

(75,000.00)
(15,000.00)
(5,000.00)
(2,000.00)
(3,000.00)

Chapter: 2

E2 - 19
Balance sheet as of April 30, 20Y9
Assets
1 Cash
2 Land
Total assets

$
$
$

53,000.00
42,000.00
95,000.00

Liabilities
3 Notes payables

35,000.00

Stockholders' Equity
5 Capital stock
6 Retained earnings
Total stockholders' equity

$
$
$

25,000.00
35,000.00
60,000.00

95,000.00

Total liabilites and stockholders' equity

P2 - 3.1
Income statement for the year ending May 20Y8
No
Description
Revenues:
1 Fees earned

2
3
4
5
6

Amount:
$

515,000.00

(257,000.00)

Net income before taxes

258,000.00

Taxes expense

(28,000.00)

Net income after taxes

230,000.00

Operating expenses:
Salaries expense
Utilities expense
Rent expense
Interest expense
Miscellaneous expense
Total operating expenses:

Course: Accounting for executives

$
$
$
$
$

(155,000.00)
(52,000.00)
(36,000.00)
(3,000.00)
(11,000.00)

Chapter: 2

P2 - 3.2
Retained earnings statement for the year ending May 20Y8
Opening balance
Increase
Decrease
Closing balance

$
$
$
$

100,000.00
230,000.00
(40,000.00)
290,000.00

P2 - 3.3
Balance sheet as of May 31, 20Y8
Assets
1 Cash
2 Land
Total assets

$
$
$

145,000.00 $
240,000.00 $
385,000.00 $

62,000.00
98,000.00
160,000.00

Liabilities
3 Notes payables

40,000.00 $

30,000.00

Stockholders' Equity
5 Capital stock
6 Retained earnings
Total stockholders' equity

$
$
$

55,000.00 $
290,000.00 $
345,000.00 $

30,000.00
100,000.00
130,000.00

$
$

385,000.00
-

160,000.00
-

515,000
(285,000.00)

Total liabilites and stockholders' equity

Check
P2 - 3.4
Cash flow statement for the year ending May 20Y8
Cash flows from operating activities
Cash received from customers
Cash paid out for expenses
Net cash flows from operating activities

May 31, 20Y8

$
$
$

(142,000.00)

(5,000.00)

25,000.00
10,000.00
(40,000.00)

Net increase / (decrease) in cash

June 1, 20Y7 cash balance
May 31, 20Y8 cash balance
Check

Course: Accounting for executives

$
$

230,000.00

Cash flows from investing activities

Cash paid out for purchase of land
Cash flows from financing activities
Cash received from sale of capital stock
Cash received from note payable
Cash paid as dividends
Net cash flows from financing activities

May 31, 20Y7

$
$
$
$

Chapter: 2

83,000.00
62,000.00
145,000.00
-

FA2 - 4.1 and 2

Common-sized income statement
Description
Sales
Cost of sales
Gross profit
Operating expenses
Operating income

<1>:

$
$
$
$
$

Normal income statement

Year 2
Year 1
16,658.00 $
14,880.00
(10,613.00) $
(8,927.00)
6,045.00 $
5,953.00
(3,482.00) $
(3,482.00)
2,563.00 $
2,471.00

Common-sized income statement

Year 2
Year 1
100.0%
100.0%
-63.7%
-60.0% <1>
36.3%
40.0%
-20.9%
-23.4% <2>
15.4%
16.6% <3>

In year 2, the ratio of the Cost of sales (COS) to sales is 63.7%, which is higher than that ratio of year 1. Since COS accounts for a significant
expences of General Mills Inc. (more than 60% of sales), the increase in COS will severely impact the gross profit margin and net oprating
income of the company.
The potential cause for the increase in COS relatively to sales maybe due to the increases in prices of raw materials, or significant
maintenance cost occured in year 2

<2>

In contrary to the COS, the ratio of operating expenses to sales of year 2 of 20.9% is reduced from the year 1's ratio of 23.4%. The major
elements of operaing expenses are Selling and General & Admin expenses. While selling expenses are normally variable costs, the General
and Admin expenses are fixed costs. Many companies apply cost reduction programs to reduce the operating expenses. Since sellings
expenses are needed to developed new customers or keep loyral customer, the targets of cost reuduction are fixed General and Admin
expenses.
Those cost reduction discussed above may be applied by General Mill Inc., to improve the operating income <3>

Case 2 -2
The difference in the two bank balances, $45,000 ($100,000 $65,000), may not be pure profit from an accounting perspective. To
determine the accounting profit for the 6-month period, the revenues for the period would need to be matched with the related expenses.
The revenues minus the expenses would indicate whether the business generated net income (profit) or a net loss for the period. Using only
the difference between the two bank account balances ignores such factors as amounts due from customers (receivables), liabilities
(accounts pay-able) that need to be paid for wages or other operating expenses, additional investments that Dr. Turner may have made in
the business during the period, or dividends paid during the period.
Some businesses that have few, if any, receivables or payables may use a cash basis of accounting. The cash basis of accounting ignores
receivables and pay-ables because they are assumed to be insignificant in amount. However, even with the cash basis of accounting,
additional investments during the period and any dividends during the period have to be considered in determining the net
income (profit) or net loss for the period

Course: Accounting for executives

Chapter: 2

Case 2 -4
1. At what price did Apples stock last trade?
Apple's stock (ticket: APPL) was closed at $112.34 on September 2nd, 2015. With this closing price, AAPL's stock increased 4.29% in
comparision to its' previous closing price
2. What is the 52-week range of Apples stock?
52-week range of Apple's stock: 92.00 - 134.54
3. When was the last time Apples stock hit a 52-week high?
1-Apr-15
4. Over the last six months, has there been any insider selling or buying of apple's stock
Insider Transactions:
Net Share Purchase Activity
Insider Purchases - Last 6 Months
Shares
Purchases
Sales
Net Shares Purchased (Sold)

Trans

N/A

1,502,020

13

-1,502,020

13

3.02M

N/A

-33.10%

N/A

Total Insider Shares Held

% Net Shares Purchased (Sold)

5. Who is the chief executive officer of Apple Inc., and how old is the president?
Mr. Timothy D. Cook , 54, Chief Exec. Officer and Director
6. What was the salary of the president of Apple Inc.?
Pay
9.22M USD

Mr. Timothy D. Cook , 54

Chief Exec. Officer and Director

Exercised
-

7. What is the annual dividend of Apples stock?

AAPL Stock Dividend Data
Dividend Yield

Annual Payout Payout Ratio

1.85%
Technology Average 4.66%

$2.08
22.8%
Paid Quarterly EPS $9.13

Course: Accounting for executives

Dividend Growth
2 yrs
Since 2013

Chapter: 2

8. How many current broker recommendations are strong buy, buy, hold, sell,
or strong sell? What is the average of the broker recommendations?
Recommendation Trends
Strong Buy
Buy
Hold
Underperform
Sell

Current Month
15
21
12
1
0

Last Month
16
20
12
1
0

Recommendation Summary*
Mean Recommendation (this week):
Mean Recommendation (last week):
Change:
*: (Strong Buy) 1.0 - 5.0 (Sell)

Two Months Ago

16
20
12
1
0

Three Months Ago

16
20
12
1
0

1.9
2
-0.1

9. What is the net cash flow from operations for this year?
Period Ending (Quarterly)
Total Cash Flow From Operating Activities

Period Ending (Annual)

Total Cash Flow From Operating Activities

All numbers in thousands

27-Dec-14
27-Sep-14
33,722,000.00 $ 13,250,000.00

27-Jun-15
14,988,000.00 $

28-Mar-15
19,081,000.00 $

27-Sep-14
59,713,000.00 $

All numbers in thousands

28-Sep-13
29-Sep-12
53,666,000.00 $
50,856,000.00

10. What is the operating margin for this year?

Period Ending
Total Revenue
Operating Income or Loss
Operaing margin

Course: Accounting for executives

$
$

27-Sep-14
28-Sep-13
182,795,000.00 $ 170,910,000.00 $
52,503,000.00 $ 48,999,000.00 $
28.72%
28.67%

Chapter: 2

29-Sep-12
156,508,000.00
55,241,000.00
35.30%