QUESTIONS:

Multiple Choice (1.5 points each)

Use Wendy’s Company’s adjusted trial balance to answer the next two questions. It was prepared BEFORE closing entries. All amounts are in millions of dollars. Wendy’s fiscal year ended on December 29, 2019.

1. Wendy’s journal entry to close the revenue and expense accounts includes a:
1. Debit to Sales for \$1,709 million.
1. Debit to Advertising expense for \$338 million.
1. Debit to Retained earnings for \$137 million.
1. Credit to Retained earnings for \$429 million.
• The Retained Earnings balance shown on Wendy’s December 29, 2019 balance sheet (i.e., ENDING Retained earnings) is: ________.
• \$429 million.
• \$470 million.
• \$566 million.
• \$662 million.

Use the following information from The Boeing Company’s financial statements for the fiscal year ended December 31, 2019 to answer the next four questions. Assume Wages payable will be paid within a year and Unearned revenue will be earned within a year. Accounts are listed in alphabetical order. All amounts are in millions of dollars.

• Calculate Boeing’s Total Current Assets as of December 31, 2019.
• \$103,321 million
• \$102,229 million
• \$98,961 million
• \$25,607 million
• Calculate Boeing’s Total Current Liabilities as of December 31, 2019.
• \$116,654 million
• \$98,404 million
• \$97,312 million
• \$45,761 million
• Calculate Boeing’s Total Assets as of December 31, 2019.
• \$133,625 million
• \$151,875 million
• \$152,967 million
• \$172,309 million
• Calculate Boeing’s Net Income or Net Loss for the year ended December 31, 2019.
• Net Income of \$50,915 million
• Net Loss of \$5,264 million
• Net Income of \$382 million
• Net Loss of \$636 million
• Which of the following statements is TRUE?
• A perpetual inventory tracking system provides updated balances for “Cost of Goods Sold” throughout the accounting period.
• A multi-step income statement shows a subtotal for “Gross Profit.”
• When goods are sold FOB shipping point, the buyer pays for shipping costs.
• All of the above statements are true.
• None of the above statements are true.
• Gaze Company uses periodic inventory system. On January 27, 2021, the company purchased light fixtures for \$500,000 on account, terms 2/10, n/30. Gaze’s journal entry to record the purchase should include a:
• Credit to Inventory for \$490,000.
• Debit to Purchases for \$500,000.
• Debit to Inventory for \$500,000.
• Credit to Accounts Payable for \$490,000.
• On February 1, 2021, Venti Corporation sold merchandise to a customer for \$8,000 on credit, FOB destination, cost of the merchandise sold was \$5,500, terms 3/10, n/30. Venti uses perpetual inventory system. What account(s) should Venti Corporation debit on February 1?
• Inventory for \$5,500.
• Accounts Receivable for \$7,760.
• Cash for \$7,760 and Inventory for \$240.
• Accounts Receivable for \$8,000.

Problem (36.5 points)

The Walt Disney Company’s financial statements say: “we are a diversified worldwide entertainment company with operations in the following business segments: Media Networks; Parks, Experiences and Products; Studio Entertainment; and Direct-to-Consumer & Interactive (DTCI). In October 2020, the Company announced a strategic reorganization of our media and entertainment businesses to accelerate the growth of our direct-to-consumer (DTC) strategy.”

Below are the account balances (all normal) for The Walt Disney Company as of October 3, 2020 after adjusting journal entries but before closing entries. The accounts are listed in alphabetical order. All amounts are in millions of U.S. dollars. The Company’s fiscal year ends on the Saturday closest to September 30. Fiscal 2020, ended on October 3, 2020, and fiscal 2019 ended on September 28, 2019. There was no new investment by stockholders during fiscal 2020 (Hint: read this as no change in Common Stock).

Required:

Prepare the following for fiscal 2020 for Disney:

Part (a):  Prepare Disney’s Income Statement for the year ended October 3, 2020 (7.5 points).

Part (b):  Prepare Disney’s Statement of Stockholders’ Equity for the year ended October 3, 2020 (4 points).

Part (c): Prepare Disney’s Classified Balance Sheet as of October 3, 2020 (15.5 points).

Short questions:

1. What were the net earnings reported on Disney’s fiscal 2020 income statement?

2. What is the Retained Earnings balance shown on Disney’s October 3, 2020 balance sheet?

3. How much did Disney pay to stockholders during the fiscal year ended October 3, 2020?

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