The comparative segment revenues for Yum! Brands, a global quick-serve restaurant company, are as follows:

The comparative segment revenues for Yum! Brands, a global quick-serve restaurant company,  are as follows:

Recent Year (in millions) Prior Year  (in millions) China$   6,909 $   6,934 KFC2,948 3,193 Pizza Hut1,145 1,148 Taco Bell1,988 1,863 India115 141 Total$13,105 $13,279

a. Provide a horizontal analysis of the segment revenues using the prior year as the base year. Round whole percents to one decimal place.

b. Provide a vertical analysis of the segment revenues for both years. Round whole percents to one decimal place.

c. What conclusions can be drawn from your analyses?

Answer:

a. Horizontal analysis:

Amount Percent

China$ 6,909 $ 6,934 $ (25) –0.4%

KFC 2,948              3,193            (245)           –7.7%

Pizza Hut1,145              1,148            (3)               –0.3%

Taco Bell1,988              1,863            125            6.7%

India115                 141               (26)             –18.4%

Total revenues $13,105 $13,279 $(174) –1.3%

b. Vertical analysis:

China$ 6,909 52.7% $ 6,934 52.2%

KFC 2,948              22.5% 3,193 24.0%

Pizza Hut1,145              8.7% 1,148 8.6%

Taco Bell1,988              15.2% 1,863 14.0%

India115                 0.9% 141 1.1%

Total revenues $13,105 100.0% $13,279 99.9%

*The sum is less than 100% due to rounding errors in the percentage calculations.

c. The total revenues have declined by 1.3% between the two years. The largest 

declines occurred in the KFC (−7.7%) and India (−18.4%) segments. These 

declines more than offset the increase in the Taco Bell segment. Thus, overall, 

there was a small decline in revenue. The vertical analysis indicates that China 

represents the largest segment as a percent of revenues (52.7%), followed by 

KFC (22.5%) and Taco Bell (15.2%). The KFC segment dropped significantly as a 

percent of revenues between the two years (24.0% vs. 22.5%), while Taco Bell 

grew as a percent of total revenues between the two years (14.0% vs. 15.2%).  

Twenty-First Century Fox, Inc. is one of the world’s largest entertainment companies that includes Twentieth Century Fox films

Twenty-First Century Fox, Inc. is one of the world’s largest entertainment companies that includes Twentieth Century Fox films, Fox Broadcasting, Fox News, the FX, and various satellite properties. The company provided revenue disclosures by its major product segments in the notes to its financial statements as follows:

Major Product Segments For a Recent Year (in millions) Cable Network Programming$13,773 Television4,895 Filmed Entertainment9,525 Direct Broadcast Satellite Television 2,112 Total revenues of major segments $30,305

a. Provide a vertical analysis of the product segment revenue. Round whole percents to one decimal place.

b. Are the revenues of Twenty-First Century Fox, Inc. diversified or concentrated within a product segment? Explain.

Answer:

a.

Twenty-First Century Fox, Inc.

Major Product Segments

Cable Network Programming $13,773 45.4%

Television4,895 16.2%

Filmed Entertainment9,525 31.4%

Direct Broadcast Satellite Television 2,112 7.0%

Total revenues$30,305 100.0%

b. Twenty-First Century Fox, Inc. is moderately diversified. The Cable Network 

Programming segment has the largest percent of revenues to total revenues at 

45.4%. This segment represents almost half the revenues of the company. 

However, Television and Filmed Entertainment have a percent of revenues to  

total revenues of over 16% and 31%, respectively. Thus, these are significant 

segments suggesting a degree of diversification when all three are considered 

together.

The Direct Broadcast Satellite Television segment is the smallest segment with 

revenues equal to 7% of total revenues and thus provides some minor additional

diversification.

Starbucks Corporation reported the following geographical segment revenues for a recent and a prior fiscal year:

Starbucks Corporation reported the following geographical segment revenues for a recent and a prior fiscal year:

Recent Year (in millions, rounded) Prior Year  (in millions, rounded) Americas $13,293 $11,980 EMEA*1,217 1,295 China/Asia Pacific 2,396 1,130 Channel Development** 1,731 1,546 Other526 497 Total$19,163 $16,448 *Europe, Middle East, and Africa **Sells packaged coffee and teas globally

a. Prepare a horizontal analysis of the segment data using the prior year as the base year. Round whole percents to one decimal place.

b. Prepare a vertical analysis of the segment data. Round whole percents to one decimal place.

c. What conclusions can be drawn from your analyses?

Answer:

a. Horizontal analysis:

Amount Percent

Americas $13,293 $11,980 $1,313 11.0%

EMEA 1,217           1,295 (78) –6.0%

China/Asia Pacific 2,396           1,130           1,266 112.0%

Channel Development 1,731           1,546           185 12.0%

Other526              497              29 5.8%

Total revenues $19,163 $16,448 $2,715 16.5%

b. Vertical analysis:

Amount Percent Amount Percent

Americas $13,293 69.4% $11,980 72.8%

EMEA 1,217           6.4% 1,295 7.9%

China/Asia Pacific 2,396           12.5% 1,130           6.9%

Channel Development 1,731           9.0% 1,546           9.4%

Other526              2.7% 497              3.0%

Total revenues $19,163 100.0% $16,448 100.0%

c. The horizontal analysis indicates that the total revenues of Starbucks increased by more than 16% (16.5%) from the prior year to the recent year. This increase is explained by continued consumer preference for Starbucks coffee and aggressive Asian expansion. Revenues increased by 112% in China/Asia Pacific versus 11% in the Americas. This was a noticeable difference in growth. Apparently, there are more store openings in China/Asia Pacific than in the Americas. EMEA actually declined slightly (−6%) between the two years, indicating a maturing market. The vertical analysis indicates that the percent of Americas’ revenues to total revenues decreased from 72.8% in the prior year to 69.4% in the recent year. In this same period, the percent of China/Asia Pacific to total revenues increased from 6.9% in the prior year to 12.5% in the recent year. This again confirms significant growth in China. Channel Development grew by 12% and nearly maintained its percent of total revenues between the two years. Both analyses indicate that China/Asia Pacific has been the primary engine for Starbucks’ growth.

For each of the following companies, determine what they primarily sell and whether their e-commerce strategy is primarily business-to-consumer (B2C)

For each of the following companies, determine what they primarily sell and whether their e-commerce strategy is primarily business-to-consumer (B2C), business-to-business (B2B), or both. Use the Internet to investigate each company’s site in conducting your research.

a. Amazon.com

b. Dell Inc.

c. DuPont

d. Intuit Inc.

e. L.L. Bean, Inc.

f. W.W. Grainger, Inc.

Answer:

a. Amazon.com B2C. Sells books, DVDs, and other products to individual consumers.

b. Dell Inc. B2C and B2B. Sells computer products to both  individuals and corporations. Its site separates individual and corporate sales.

c. DuPont B2B. Specialty chemicals. DuPont Direct® is its B2B web application.

d. Intuit Inc. B2C and B2B. Arranges its site for both individuals and businesses because its products are divided this way.

e. L.L. Bean, Inc. B2C. Consumer clothes e-retailer.

f. W.W. Grainger, Inc. B2B. Sells maintenance, repair, and operating supplies to manufacturing companies.

Most computerized accounting systems use electronic forms to record transaction information, such as the invoice form illustrated

Most computerized accounting systems use electronic forms to record transaction information, such as the invoice form illustrated at the top of Exhibit 7 in this chapter.

a. Identify the key input fields (spaces) in an electronic invoice form.

b. What accounts are posted from an electronic invoice form?

c. Why aren’t special journal totals posted to control accounts at the end of the month in an electronic accounting system?

Answer:

a. In the electronic invoice form from QuickBooks

fields for data input can be identified as follows:

1. Customer name and address

2. Date and invoice number 

3. Description of item sold

4. Amount of revenue

b. The customer Accounts Receivable is debited, and Fees Earned is credited.

A computerized accounting system does not require posting to a separate 

accounts receivable control account. In this case, the total accounts receivable 

reported on the balance sheet is merely the sum of the balances of the individual 

customer account balances. That is, the accounts receivable account summarizes 

the customer accounts automatically.

c. Controlling accounts are not posted at the end of the month in a computerized 

accounting system. Transactions are recorded through data input into electronic 

forms, into electronic special journals, or for infrequent transactions, by an 

electronic general journal. Balances of affected accounts are automatically posted

and updated from the information recorded on the form. If desired, the computer

can provide a printout of the monthly transaction history for a particular account, 

which provides the same information as a journal. In addition, the controlling 

account is not posted separately. In a manual system, separate posting to the  

controlling account provides additional control by reconciling the controlling 

account balance against the sum of the individual customer account balances. 

However, in a computerized accounting system, there are no separate postings to 

a controlling account because the computer is not going to make posting or 

mathematical errors. Therefore, there is no need for the additional control provided 

by posting a journal total to a controlling account.

Apple Inc.’s iTunes® provides digital products, such as music, video, and software, which can be downloaded to portable devices such as the iPhone® and iPad iTunes

Apple Inc.’s iTunes® provides digital products, such as music, video, and software, which can be downloaded to portable devices such as the iPhone® and iPad iTunes are made with credit cards that are on file with the credit card processing company. Such transactions are considered cash transactions. Once the purchases are made, consumers can download the requested digital products to their portable devices for their enjoyment and the charges will show up on their credit card bills.

a. What kind of e-commerce application is described by Apple iTunes?

b. Assume you purchased 12 songs for $1.25 each on iTunes. Provide the journal entry generated by Apple’s e-commerce application. 

c. If a special journal were used, what type of special journal would be used to record this sales transaction?

d. If an electronic form were used, what type of electronic form would be used to record this sales transaction?

e. Would it be appropriate for Apple to use either special journals or electronic forms for sales transactions from iTunes? Explain.

Answer:

a. iTunes is an example of a B2C, or business-to-consumer, e-commerce application. The B, or business, is Apple. The C, or consumers, would mostly be individuals who purchase digital products from the download store.

b. Cash 15

            Fees Earned 15

            

c. The cash receipts journal would be used to record debits to Cash from cash sales or collections on account.

d. The electronic invoice form could be used for either transactions on account, as illustrated in the chapter, or for cash sales. The invoice form used for sales on account is different from the one used for cash sales. The latter invoice form 

makes a debit to Cash, rather than a debit to a customer account.

e. Sales made on B2C e-commerce transactions are computerized transactions, so a special journal is inappropriate. On an e-commerce site, the consumer 

inputs the transaction information on the web page; thus, there is no need for a separate electronic form for reentering the same information to record the sale. Essentially, the e-commerce application is the form that originates the sales transaction inside the accounting system. Accounting transactions flow directly from the shopping cart information directly into the accounting system.

The following cash receipts journal headings have been suggested for a small service firm. List the errors you find in the headings.

The following cash receipts journal headings have been suggested for a small service firm. List the errors you find in the headings.

CASH RECEIPTS JOURNAL Page 12 Date Account Credited Post. Ref. Fees Earned Cr. Accts. Rec. Cr.

Answer:

1. The Cash column is for debits (not credits).

2. The Other Accounts column is for credits (not debits).

3. A better order of columns would be to place the Other Accounts Cr. column 

to the left of the Fees Earned Cr. column.

A recommended and corrected cash receipts journal is as follows:

Page 12 Date Cash Dr. 

Pinnacle Consulting Company makes most of its sales and purchases on credit. It uses the five journals described in this chapter

Pinnacle Consulting Company makes most of its sales and purchases on credit. It uses the five journals described in this chapter (revenue, cash receipts, purchases, cash payments, and general). Identify the journal most likely used in recording the postings for selected transactions indicated by letter in the T accounts, as follows:

CashPrepaid Rent a. 10,940 b. 6,500 e. 1,200 Accounts Receivable Accounts Payable c. 11,790 a. 10,940 b. 6,500 d. 7,400 Office Supplies Fees Earned d. 7,400c. 11,790 Rent Expense e. 1,200

Answer:

Cash receipts journal: (a)

Cash payments journal: (b)

Revenue journal: (c)

Purchases journal: (d)

General journal: (e)

After Bunker Hill Assay Services Inc. had completed all postings for March in the current year (20Y4)

After Bunker Hill Assay Services Inc. had completed all postings for March in the current year (20Y4), the sum of the balances in the following accounts payable ledger did not agree with the $36,600 balance of the controlling account in the general ledger:

NAME  C. D. Greer and Son ADDRESS 972 S. Tenth Street

Date Item Post. Ref. Debit Credit Balance 20Y4 Mar.  17 P303,750 3,750 27 P3112,000 15,750 NAME  Carbon Supplies Inc. ADDRESS 1170 Mattis Avenue Date Item Post. Ref. Debit Credit Balance 20Y4 Mar.     1 Balance ✓8,300 9 P307,000 14,000 12J7 300 13,700 20 CP23 5,8007,900 NAME  Cutler and Powell ADDRESS 717 Elm Street Date Item Post. Ref. Debit Credit Balance 20Y4 Mar. 1 Balance ✓6,100 18 CP23 6,100  — 29 P317,800 7,800 NAME  Hudson Bay Minerals Co. ADDRESS 1240 W. Main Street Date Item Post. Ref. Debit Credit Balance 20Y4 Mar. 1 Balance ✓4,750 10 CP22 4,750  — 17 P303,700 3,700 25J7 3,0001,700 NAME  Valley Power ADDRESS 915 E. Walnut Street Date Item Post. Ref. Debit Credit Balance 20Y4 Mar. 5 P303,150 3,150

Assuming that the controlling account balance of $36,600 has been verified as correct, (a) determine the error(s) in the preceding accounts and (b) prepare a listing of accounts payable creditor balances (from the corrected accounts payable subsidiary ledger).

Answer:

a. Two errors were made in balancing the accounts in the subsidiary ledger:

(1) The Carbon Supplies Inc. transaction of March 9 should have resulted in a balance of $15,300 instead of $14,000, and the account balance at March 12 should have been $15,000 instead of $13,700. The account balance at March 20 should have been $9,200 instead of $7,900.

(2) The Hudson Bay Minerals Co. transaction of March 25 should have resulted in a balance of $700 instead of $1,700. 

b.

C. D. Greer and Son$15,750

Carbon Supplies Inc.9,200

Cutler and Powell7,800

Hudson Bay Minerals Co.700

Valley Power3,150

Total accounts payable$36,600

Happy Tails Inc. has a September 1, 20Y4, accounts payable balance of $620, which consists of $320 due Labradore Inc. and $300 due Meow Mart Inc

Happy Tails Inc. has a September 1, 20Y4, accounts payable balance of $620, which consists of $320 due Labradore Inc. and $300 due Meow Mart Inc. Transactions related to purchases and cash payments completed by Happy Tails Inc. during the month of September 20Y4 are as follows:

Sept. 

4. Purchased pet supplies from Best Friend Supplies Inc. on account, $295.

6. Issued Check No. 345 to Labradore Inc. in payment of account, $320.

13. Purchased pet supplies from Poodle Pals Inc. on account, $790.

18. Issued Check No. 346 to Meow Mart Inc. in payment of account, $300.

19. Purchased office equipment from Office Helper Inc. on account, $2,510.

23. Issued Check No. 347 to Best Friend Supplies Inc. in payment of account from purchase made on September 4.

27. Purchased pet supplies from Meow Mart Inc. on account, $450.

30. Issued Check No. 348 to Jennings Inc. for cleaning expenses, $80.

a. Prepare a purchases journal and a cash payments journal to record these transactions. The forms of the journals are similar to those used in the text. Place a check mark (✓) in the Post. Ref. column to indicate when the accounts payable subsidiary ledger should be posted. Happy Tails Inc. uses the following accounts:

Cash 11

Pet Supplies 14

Office Equipment 18

Accounts Payable 21

Cleaning Expense 54

b. Prepare a listing of accounts payable creditor balances on September 30, 20Y4. Verify that the total of the accounts payable creditor balances equals the balance of the accounts payable controlling account on September 30, 20Y4.

c. Why does Happy Tails Inc. use a subsidiary ledger for accounts payable?

Answer:

a.

 20Y4

 Sept. 49

139

19918 2,510

279

302,510

Page 22

 20Y4

 Sept. 6 345 Labradore Inc. 9 320

18 346 Meow Mart Inc. 9 300

23 347 Best Friend Supplies Inc. 9 295

30 348 Cleaning Expense 5480

30995

(11)

b.

Meow Mart Inc.$ 450

Poodle Pals Inc.790

Office Helper Inc. 2,510

Total accounts payable$3,750

The total of the creditor accounts on September 30, 20Y4, $3,750, equals the 

balance of the accounts payable controlling account, shown as follows:

Sept. 30 915  Sept. 1 Bal.

c. Happy Tails Inc. uses a subsidiary ledger for accounts payable to track its credit 

purchases and payments to the individual supplier. This is needed so that it knows

how much it owes to each individual supplier. Without the subsidiary ledger, Happy 

Tails Inc. would have difficulty accurately paying suppliers for the amount owed in a

timely manner.

Transactions related to purchases and cash payments completed by Wisk Away Cleaning Services Inc. during the month of May 20Y5 are as follows:

Transactions related to purchases and cash payments completed by Wisk Away Cleaning Services Inc. during the month of May 20Y5 are as follows:

May 

1. Issued Check No. 57 to Bio Safe Supplies Inc. in payment of account, $345.

3. Purchased cleaning supplies on account from Brite N’ Shine Products Inc., $200.

8. Issued Check No. 58 to purchase equipment from Carson Equipment Sales, $2,860.

12. Purchased cleaning supplies on account from Porter Products Inc., $360.

15. Issued Check No. 59 to Bowman Electrical Service in payment of account, $145.

18. Purchased supplies on account from Bio Safe Supplies Inc., $240.

20. Purchased electrical repair services from Bowman Electrical Service on account, $110.

26. Issued Check No. 60 to Brite N’ Shine Products Inc. in payment of May 3 invoice.

31. Issued Check No. 61 in payment of salaries, $5,600.

Prepare a purchases journal and a cash payments journal to record these transactions. The forms of the journals are similar to those illustrated in the text. Place a check mark (✓) in the Post. Ref. column to indicate when the accounts payable subsidiary ledger should be posted. Wisk Away Cleaning Services Inc. uses the following accounts:

Cash 11

Cleaning Supplies 14

Equipment 18

Accounts Payable 21

Salary Expense 51

Electrical Service Expense 53

Answer:

 20Y5

 May 39

129

189

20953 110

31110

Page 41

 20Y5

 May 1 57 Bio Safe Supplies Inc. 9 345

8 58 Equipment182,860

15 59 Bowman Electrical Service 9 145

26 60 Brite N' Shine Products Inc. 9 200

31 61 Salary Expense 515,600

319,150

(11)

The cash payments and purchases journals for Outdoor Artisan Landscaping follow. The accounts payable control account has a June 1, 20Y1

The cash payments and purchases journals for Outdoor Artisan Landscaping follow. The accounts payable control account has a June 1, 20Y1, balance of $2,230, consisting of an amount owed to Augusta Sod Co.

CASH PAYMENTS JOURNAL Page 31 Date Ck. No. Account Debited Post.  Ref. Other Accounts Dr. Accounts Payable Dr. Cash Cr. 20Y1 June  4 203 Augusta Sod Co. ✓ 2,230 2,230 5 204 Utilities Expense 54 440 440 15 205 Home Centers Lumber Co. ✓ 5,210 5,210 24 206 Nu Lawn Fertilizer ✓ 910 910 30440 8,350 8,790 (✓) (21) (11) PURCHASES JOURNALPage 22 Date Account Credited Post.   Ref. Accounts Payable Cr. Landscaping Supplies Dr. Other Accounts   Dr. Post. Ref. Amount 20Y1 June  3 Home Centers Lumber Co. ✓ 5,210 5,210 7 Concrete Equipment Co. ✓ 6,700 Equipment 18 6,700 14 Nu Lawn Fertilizer ✓ 910 910 24 Augusta Sod Co. ✓ 6,450 6,450 29 Home Centers Lumber Co. ✓ 8,430 8,430 3027,700 21,0006,700 (21) (14)(✓)

Prepare a schedule of the accounts payable creditor balances and determine that the total agrees with the ending balance of the accounts payable controlling account.

Answer:

Augusta Sod Co.$ 6,450

Concrete Equipment Co.6,700

Home Centers Lumber Co.8,430

Nu Lawn Fertilizer0

Total accounts payable$21,580

Note:  The account balances are determined by subtracting the debits from the credits

for each account.

Balance, June 1, 20Y1$ 2,230

Total credits (from purchases journal)27,700

Total debits (from cash payments journal)(8,350)

Balance, June 30, 20Y1$21,580

The purchases journal for Newmark Exterior Cleaners Inc. follows. The accounts payable account has a March 1, 20Y2,

The purchases journal for Newmark Exterior Cleaners Inc. follows. The accounts payable account has a March 1, 20Y2, balance of $580 for an amount owed to Nicely Co. No payments were made on creditor invoices during March.

PURCHASES JOURNALPage 16 Date Account Credited Post. Ref. Accts. Payable Cr. Cleaning Supplies Dr. Other Accounts Dr. Post. Ref. Amount 20Y2 Mar.   4 Enviro-Wash Supplies Inc. 690 690

15 Nicely Co.325 325 20 Office Mate Inc. 3,860 Office Equipment 3,860 26 Enviro-Wash Supplies Inc. 385 385 315,260 1,4003,860

a. Prepare a T account for the accounts payable creditor accounts.

b. Post the transactions from the purchases journal to the creditor accounts and determine their ending balances.

c. Prepare T accounts for the accounts payable control and cleaning supplies accounts. 

Post control totals to the two accounts, and determine their ending balances. Cleaning Supplies had a zero balance at the beginning of the month.

d. Prepare a schedule of the creditor account balances to verify the equality of the sum of the accounts payable creditor balances and the accounts payable controlling account balance.

e. How might a computerized accounting system differ from the use of a purchases journal in recording purchase transactions?

Answer:

a. and b.

 Mar. 4 690  Mar. 1 Bal. 580

26 38515 325

31 Bal. 1,07531 Bal. 905

Mar. 20 3,860

c.

 Mar. 1 Bal. 580 Mar. 31 1,400

31 5,260 31 Bal. 1,400

31 Bal. 5,840

d.

Enviro-Wash Supplies Inc.

Nicely Co. 

Office Mate Inc.

Total accounts payable

The total in the schedule above agrees with the T account balance for the 

accounts payable control account in (c).

e. A computerized system would likely use an electronic form specially designed 

for recording purchase transactions. The transaction details would be input 

into the form fields and submitted. Once submitted, the transaction would be 

saved and automatically posted as a debit to an appropriate asset account and 

a credit to the individual creditor accounts payable account. No control totals 

would be posted to a controlling account.