Kelly Tough, president of Tu-Rock Industries Inc., believes that reporting operating cash flow per share on the income statement would be a useful addition to the company’s just completed financial statements. Please read a transcript of the discussion which took place between Kelly Tough and Tu-Rock controller, Tripp Kelso, in January, after the close of the fiscal year. Kelly: I have been reviewing our financial statements for the last year. I am disappointed that our net income per share has dropped by 10% from last year. This is not going to look good to our shareholders. Isn’t there anything we can do about this? Tripp: What do you mean? The past is the past, and the numbers are in. There isn’t much that can be done about it. Our financial statements were prepared according to generally accepted accounting principles, and I don’t see much leeway for significant change at this point. Kelly: No, no. I’m not suggesting that we “cook the books.” But look at the cash flow from operating activities on the statement of cash flows. Kelly: The cash flow from operating activities has increased by 20%. This is very good news—and, I might add, useful information. The higher cash flow from operating activities will give our creditors comfort. Tripp: Well, the cash flow from operating activities is on the statement of cash flows, so I guess users will be able to see the improved cash flow figures there. Kelly: This is true, but somehow I feel that this information should be given a much higher profile. I don’t like this information being “buried” in the statement of cash flows. You know as well as I do that many users will focus on the income statement. Therefore, I think we ought to include an operating cash flow per share number on the face of the income statement—someplace under the earnings per share number. In this way users will get the complete picture of our operating performance. Yes, our earnings per share dropped this year, but our cash flow from operating activities improved! And all the information is in one place where users can see and compare the figures. What do you think? Tripp: I’ve never really thought about it like that before. I guess we could put the operating cash flow per share on the income statement, under the earnings per share. Users would really benefit from this disclosure. Thanks for the idea—I’ll start working on it. Kelly: Glad to be of service. How would you interpret this situation? Is Tripp behaving in an ethical and professional manner?

 

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Ken, a research chemist, has been promised a fellowship with a stipend of $10,000 to do research on synthetic fuel oil. Under the terms of the fellowship, Ken is free to use the money as he sees fit. Ken decides to build his own laboratory, so he will not have to rent one. He hires a carpenter who begins working on shelving and cabinets in the laboratory. Then Ken receives a telegram saying the fellowship has been canceled. No reason is given for the cancellation. If Ken sues, will he be able to collect the money from the foundation which promised the fellowship? Explain your answer using legal terminology.

 

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Ken Corporation is in the process of preparing its annual financial statements for the fiscal year ending, December 31, 2012. The company sells widgets to various manufactures and stores in the area. They are publicly traded. The inventories are valued at Lower cost or market. Inventory is done on the LIFO basis. The company also had a loss in inventory at yearend of $ 300,000, due to obsolescence.Property, Plant and Equipment: Are classified in the following major categories: Land, office buildings, furniture and fixtures, equipment, and leasehold improvements. All fixed assets are carried per U.S. Gaap requirements for cost. The depreciation methods used depend on the type of asset, and when it was acquired. The following are straight line: Office buildings, furniture and fixtures, and equipment. Leasehold improvements are depreciated using the sum of year’s method.Kens Corporation plans to present the inventory and fixed amounts in its December 31, 2012 balance sheet as shown below:

 

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Ken, Keith and Brandy form a limited partnership to operate a lawn care business. Brandy invests the start-up capital and is a limited partner. Ken and Keith are general partners who operate the business on a daily basis. While mowing the lawn of a wealthy physician, a rock is thrown into an imported stained glass window valued at over $20,000.00. The physician sues Ken, Keith and Brandy, claiming that they are personally liable for the debts of their partnership. Which, if any, partners could have personal assets at risk and which, if any, would not.

Running Head: LIMITED PARTNERSHIP VS. GENERAL PARTNERSHIP Limited Partnership vs. General PartnershipStudent NameInstitution 1 LIMITED PARTNERSHIP VS. GENERAL PARTNERSHIP 2 Limited Partnership…

 

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Kendra Gorman capital as of December 31, 2014, assuming that assets increased by 225,000 and assuming that assets decreased by 300,000 and liabilities by 90,000 during 2014

Kendra Gorman, capital, as of December 31, 2013= $775000b. Kendra Gorman, capital, as of December 31, 2014, assuming that assetsincreased by $225,000 and liabilities increased by $110,000 during…

 

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