Case NO: 2

Microsoft is the leading developer of software in the world. To continue to be successful Microsoft must generate new products, which requires signifi

Microsoft is the leading developer of software in the world. To continue to be successful Microsoft must generate new products, which requires significant amounts of cash. The following is the current asset and current liability information from Microsoft’s current balance sheets (in millions). Following the Microsoft data is the current asset and current liability information from Oracle’s current balance sheets (in millions). Oracle is another major software developer.

\r\n

\"\"

\r\n

 

\r\n

Part 1 (Cash and Cash Equivalents)

\r\n

Instructions

\r\n

(a) What is the definition of a cash equivalent? Give some examples of cash equivalents. How do cash equivalents differ from other types of short-term investments?

\r\n

(b) Calculate (1) the current ratio and (2) working capital for each company for 2011 and discuss your results.

\r\n

(c) Is it possible to have too many liquid assets?

\r\n

Part 2 (Accounts Receivable)

\r\n

Microsoft provided the following disclosure related to its accounts receivable.

\r\n

\"\"

\r\n

 

\r\n

Instructions

\r\n

(a) Compute Microsoft’s accounts receivable turnover for 2011 and discuss your results. Microsoft had sales revenue of $69,943 million in 2011.

\r\n

(b) Reconstruct the summary journal entries for 2011 based on the information in the disclosure.

\r\n

(c) Briefly discuss how the accounting for bad debts affects the analysis in Part 2 (a).

0  reviews

Suggestions based on the Question and Answer that you are currently viewing

Snider Corporation, a publicly traded company, is preparing the interim financial data which it will issue to its shareholders at the end of the first

Snider Corporation, a publicly traded company, is preparing the interim financial data which it will issue to its shareholders at the end of the first quarter of the 2014–2015 fiscal year. Snider’s financial accounting department has compiled the following summarized revenue and expense data for the first quarter of the year. Sales revenue $60,000,000 Cost of goods sold 36,000,000 Variable selling expenses 1,000,000 Fixed selling expenses 3,000,000 Included in the fixed selling expenses was the single lump-sum payment of $2,000,000 for television advertisements for the entire year. Instructions (a) Snider Corporation must issue its quarterly financial statements in accordance with IFRS regarding interim financial reporting. (1) Explain whether Snider should report its operating results for the quarter as if the quarter were a separate reporting period in and of itself, or as if the quarter were an integral part of the annual reporting period. (2) State how the sales revenue, cost of goods sold, and fixed selling expenses would be reflected in Snider Corporation’s quarterly report prepared for the first quarter of the 2014–2015 fiscal year. Briefly justify your presentation. (b) What financial information, as a minimum, must Snider Corporation disclose to its shareholders in its quarterly reports?

(0)

The benefits of buying with AnswerDone:

Guaranteed quality through customer reviews

Access to High-Quality Documents

Our platform features a wide range of meticulously curated documents, from solved assignments and research papers to detailed study guides. Each document is reviewed to ensure it meets our high standards, giving you access to reliable and high-quality resources.

Quick and easy check-out

Easy and Secure Transactions

We prioritize your security. Our platform uses advanced encryption technology to protect your personal and financial information. Buying with AnswerDone means you can make transactions with confidence, knowing that your data is secure

Focus on what matters

Instant Access

Once you make a purchase, you’ll have immediate access to your documents. No waiting periods or delays—just instant delivery of the resources you need to succeed.

$1.49  0x  sold
    (0)
  Add to cart