SOLUTION MANUAL FOR j j
FINANCIALjACCOUNTINGjFORjMANAGERSj1STjEDITIONjBYjWAYNEjTHOMASjAND
jDAVIDjSPICELANDjANDjMARKjNELSON
CHAPTER 1 j
A FRAMEWORK FOR FINANCIAL ACCOUNTING
j j j j
jREAL WORLD PERSPECTIVES
j j
RWP1-1jEDGARjNikej(ticker:jNKE)
Requirementj1
a. $23,717jmillion
b. $9,040jmillion
c. Totaljliabilitiesj=jTotaljassetsj–jtotaljshareholder’sjequity
$23,717j–j$9,040j=j$14,677jmillion
Requirementj2
a. $39,117jmillion.jRevenuejincreasedjfromjthejpreviousjyear.
b. $4,029jmillion.jNetjincomejincreasedjfromjthejpreviousjyear.
Requirementj3
a. Operatingjcashjflowj=j$5,903jmillion.jOperatingjcashjflowjwasjmorejpositive
thanjthejpreviousjyear.
b. Investingjcashjflowj=j−$264jmillion.jInvestingjcashjflowjwentjfromjpositivejtojne
gativejfromjthejpreviousjyear.
c. Financingjcashjflowj=j−$5,293jmillion.jFinancingjcashjflowjwasjmorejnegative
thanjthejpreviousjyear.
RWP1-2jEDGARjNetflixjIncj(ticker:jNFLX)
Requirementj1
a. Averagejpayingjmembershipjincreasedjbyj23%jandjaveragejmonthlyjrevenuejper
payingjmembershipjincreasedjbyj5%.
b. $2,795,434j/j$20,156,447j=j13.9%
c. $2,652,462,j13%jofjrevenues
Requirementj2
a. $9,801,215j/j$24,504,567j=j40%
b. $33,141jmillion
©McGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjfurtherjdistributionjpermittedjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC
SolutionsjManual,j Chapterj5 5-1
,©McGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjfurtherjdistributionjpermittedjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC
5-2 FinancialjAccountingjforjManagers
,Requirementj3
a. $20,723,441.j Long-termjdebtjwentjupjfromjthejpreviousjyear.
b. $736,969
Requirementj4
9%
Requirementj5
a. Ernstj&jYoungjLLP
b. Yes
RWP1-3jEDGARjGeneraljMillsjInc.j(ticker:jGIS)
Requirementj1
FirstjQuarter.
Requirementj2
Augustj26,j2018.j Thejsamejquarterjofjlastjyearjisjusedjasjthejcomparisonjquarter.
Requirementj3
Thejquarterlyjreportjincludesj15jnotes.
RWP1-4jEDGARjNordstromjInc.j(ticker:jJWN)
Requirementj1
ThejCOVID-19jpandemic.
Requirementj2
OnjMarchj23,j2020,jthejCompanyjannouncedjthatjitjwouldjbejtakingjseveraljstepsjinjanjabundancejofjca
utionjtojproactivelyjstrengthenjitsjfinancialjflexibilityjandjnavigatejthroughjthisjunprecedentedjsituatio
n.jSpecifically,jthejCompanyjsuspendedjitsjquarterlyjdividendjbeginningjinjthejsecondjquarterjofj2020,
jdrewjdownj$800jmillionjonjitsjRevolvingjCreditjFacility,jtargetedjfurtherjreductionsjofjmorejthanj$50
0jmillionjinjoperatingjexpenses,jcapitaljexpenditures,jandjworkingjcapital,jandjsuspendedjsharejrepurc
hases.
©McGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjfurtherjdistributionjpermittedjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC
SolutionsjManual,j Chapterj5 5-3
, RWP1-5jFinancialjAnalysis:jAmericanjEagle
($jinjthousands)
Requirementj1
Totaljassets =j$3,328,679
Totaljliabilities
=j$2,080,826j
Stockholders’jequity =j$1,247,853
Assets = Liabilities + Stockholders’jEquity
$3,328,679 = $2,080,826 + $1,247,853
Requirementj2
ConsolidatedjStatementsjofjOperations
Requirementj3
Netjsales =j$4,308,212
Netjincome =j$191,257
Requirementj4
Inflows Outflows
Investingjactivities Salejofjavailable-for-sale Capitaljexpendituresjfor
investments propertyjandjequipment
Financingjactivities Netjproceedsjfromjstockj Repurchasejofjcommonjstock
optionsjexercised
Requirementj5
Thejcompany’sjauditorjisjErnstj&jYoungjLLP.
Thejauditorjstates,j―WejhavejauditedjthejaccompanyingjconsolidatedjbalancejsheetsjofjAmericanjEagl
ejOutfitters,jInc.j(thejCompany)jasjofjFebruaryj1,j2020jandjFebruaryj2,j2019,jthejrelatedjconsolidatedjst
atementsjofjoperations,jcomprehensivejincome,jstockholders’jequityjandjcashjflowsjforjeachjofjthejthre
ejyearsjinjthejperiodjendedjFebruaryj1,j2020,jandjthejrelatedjnotesj(collectivelyjreferredjtojasjthej―cons
olidatedjfinancialjstatements‖).jInjourjopinion,jthejconsolidatedjfinancialjstatementsjpresentjfairly,jinjal
ljmaterialjrespects,jthejfinancialjpositionjofjthejCompanyjatjFebruaryj1,j2020jandjFebruaryj2,j2019,jandj
thejresultsjofjitsjoperationsjandjitsjcashjflowsjforjeachjofjthejthreejyearsjinjthejperiodjendedjFebruaryj1,j2
020,jinjconformityjwithjU.S.jgenerallyjacceptedjaccountingjprinciples.‖
©McGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjfurtherjdistributionjpermittedjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC
5-4 FinancialjAccountingjforjManagers
FINANCIALjACCOUNTINGjFORjMANAGERSj1STjEDITIONjBYjWAYNEjTHOMASjAND
jDAVIDjSPICELANDjANDjMARKjNELSON
CHAPTER 1 j
A FRAMEWORK FOR FINANCIAL ACCOUNTING
j j j j
jREAL WORLD PERSPECTIVES
j j
RWP1-1jEDGARjNikej(ticker:jNKE)
Requirementj1
a. $23,717jmillion
b. $9,040jmillion
c. Totaljliabilitiesj=jTotaljassetsj–jtotaljshareholder’sjequity
$23,717j–j$9,040j=j$14,677jmillion
Requirementj2
a. $39,117jmillion.jRevenuejincreasedjfromjthejpreviousjyear.
b. $4,029jmillion.jNetjincomejincreasedjfromjthejpreviousjyear.
Requirementj3
a. Operatingjcashjflowj=j$5,903jmillion.jOperatingjcashjflowjwasjmorejpositive
thanjthejpreviousjyear.
b. Investingjcashjflowj=j−$264jmillion.jInvestingjcashjflowjwentjfromjpositivejtojne
gativejfromjthejpreviousjyear.
c. Financingjcashjflowj=j−$5,293jmillion.jFinancingjcashjflowjwasjmorejnegative
thanjthejpreviousjyear.
RWP1-2jEDGARjNetflixjIncj(ticker:jNFLX)
Requirementj1
a. Averagejpayingjmembershipjincreasedjbyj23%jandjaveragejmonthlyjrevenuejper
payingjmembershipjincreasedjbyj5%.
b. $2,795,434j/j$20,156,447j=j13.9%
c. $2,652,462,j13%jofjrevenues
Requirementj2
a. $9,801,215j/j$24,504,567j=j40%
b. $33,141jmillion
©McGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjfurtherjdistributionjpermittedjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC
SolutionsjManual,j Chapterj5 5-1
,©McGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjfurtherjdistributionjpermittedjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC
5-2 FinancialjAccountingjforjManagers
,Requirementj3
a. $20,723,441.j Long-termjdebtjwentjupjfromjthejpreviousjyear.
b. $736,969
Requirementj4
9%
Requirementj5
a. Ernstj&jYoungjLLP
b. Yes
RWP1-3jEDGARjGeneraljMillsjInc.j(ticker:jGIS)
Requirementj1
FirstjQuarter.
Requirementj2
Augustj26,j2018.j Thejsamejquarterjofjlastjyearjisjusedjasjthejcomparisonjquarter.
Requirementj3
Thejquarterlyjreportjincludesj15jnotes.
RWP1-4jEDGARjNordstromjInc.j(ticker:jJWN)
Requirementj1
ThejCOVID-19jpandemic.
Requirementj2
OnjMarchj23,j2020,jthejCompanyjannouncedjthatjitjwouldjbejtakingjseveraljstepsjinjanjabundancejofjca
utionjtojproactivelyjstrengthenjitsjfinancialjflexibilityjandjnavigatejthroughjthisjunprecedentedjsituatio
n.jSpecifically,jthejCompanyjsuspendedjitsjquarterlyjdividendjbeginningjinjthejsecondjquarterjofj2020,
jdrewjdownj$800jmillionjonjitsjRevolvingjCreditjFacility,jtargetedjfurtherjreductionsjofjmorejthanj$50
0jmillionjinjoperatingjexpenses,jcapitaljexpenditures,jandjworkingjcapital,jandjsuspendedjsharejrepurc
hases.
©McGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjfurtherjdistributionjpermittedjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC
SolutionsjManual,j Chapterj5 5-3
, RWP1-5jFinancialjAnalysis:jAmericanjEagle
($jinjthousands)
Requirementj1
Totaljassets =j$3,328,679
Totaljliabilities
=j$2,080,826j
Stockholders’jequity =j$1,247,853
Assets = Liabilities + Stockholders’jEquity
$3,328,679 = $2,080,826 + $1,247,853
Requirementj2
ConsolidatedjStatementsjofjOperations
Requirementj3
Netjsales =j$4,308,212
Netjincome =j$191,257
Requirementj4
Inflows Outflows
Investingjactivities Salejofjavailable-for-sale Capitaljexpendituresjfor
investments propertyjandjequipment
Financingjactivities Netjproceedsjfromjstockj Repurchasejofjcommonjstock
optionsjexercised
Requirementj5
Thejcompany’sjauditorjisjErnstj&jYoungjLLP.
Thejauditorjstates,j―WejhavejauditedjthejaccompanyingjconsolidatedjbalancejsheetsjofjAmericanjEagl
ejOutfitters,jInc.j(thejCompany)jasjofjFebruaryj1,j2020jandjFebruaryj2,j2019,jthejrelatedjconsolidatedjst
atementsjofjoperations,jcomprehensivejincome,jstockholders’jequityjandjcashjflowsjforjeachjofjthejthre
ejyearsjinjthejperiodjendedjFebruaryj1,j2020,jandjthejrelatedjnotesj(collectivelyjreferredjtojasjthej―cons
olidatedjfinancialjstatements‖).jInjourjopinion,jthejconsolidatedjfinancialjstatementsjpresentjfairly,jinjal
ljmaterialjrespects,jthejfinancialjpositionjofjthejCompanyjatjFebruaryj1,j2020jandjFebruaryj2,j2019,jandj
thejresultsjofjitsjoperationsjandjitsjcashjflowsjforjeachjofjthejthreejyearsjinjthejperiodjendedjFebruaryj1,j2
020,jinjconformityjwithjU.S.jgenerallyjacceptedjaccountingjprinciples.‖
©McGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjfurtherjdistributionjpermittedjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC
5-4 FinancialjAccountingjforjManagers
