Question

a. Compute the percentage change in sales, operating profit, net cash flow less capital expenditures b. Evaluate Kellogg's performance. Which trend seems most favorable? Which trend seems least favorable? What are the implications of these trends for Kellogg's sustainable performance objec Instructions and net earnings from year to year for the years presented tives? Explain Accounting, Analysis, and Principles The Amato Theater is nearing the end of the year and is preparing for a meeting with its bankers to discuss the renewal of a loan. The accounts listed below appeared in the December 31, 2020, trial balance Debit Credit $ 6,000 192,000 Prepaid Advertising Equipment Accumulated Depreciation-Equipment Notes Payable Uneared Service Revenue Ticket Revenue Advertising Expense Salaries and Wages Expense Interest Expense $ 60,000 90,000 17,500 360,000 18.680 67,600 1,400 Additional information is available as follows 1. The equipment has an estimated useful life of 16 years and a salvage value of $40.000 at the end of that time. Amato uses the straight-line method for depreciation 2. The note payable is a one-year note given to the bunk January 31 and bearing interest at 10%. Ierest is calculated on a monthly basis. 3. Late in December 2020, the theater sold 350 coupon dicket books at S50 each. Two hundred of these ticket books have been used by year-end. The cash received was recorded as Unearned Service Revenue. 4. Advertising paid in advance was $6,000 and was deb to Prepaid Advertising. The company has used $2,500 of the advertising as of December 31, 2020 5. Salaries and wages accrued but unpaid at December 31, 2020, were $3,500. Accounting Prepare any adjusting journal entries necessary for the year ended December 31, 2020. Analysis Determine Amato's income before and after recording the adjusting entries. Use your analysis to explain why Amato's bankers should be willing to wait for Amato to complete its year-end adjustment process before making a decision on the loan renewal. Principles Although Amato's bankers are willing to wait for the adjustment process to be completed before they receive financial information, they would like to receive financial reports more frequently than annually or even quarterly. What trade-offs, in terms of relevance and faithful representation, are inherent in pre paring financial statements for shorter accounting time periods?

Answer 1

Please consider the following attachment for adjusting journal entries-

*Adjusting Joumal Entry for Amato Theater a Great Debit $5750 Depreciation Expenses $5,150 Accumulated depreciation (92.000.-60.00 - 400D (To depreciation for the year Provided) 16 year Interest & 750 Expenses Payable Intereat + $750 90000 10% ( (To Interest on Note booked for a monthie december 3 $ 10.000 Uneomed Service Revenue senvie Revenue (To wed coupon's booked as $10.000 [ 195c6 x 200 revenue) $ 2500 Advertising expenses pospaid advertising (To Advertising used $2800 booked as expenses) sy $3,500 Salaries 8 Lowpes Expenses salaries & wages payable ( To provision $3.500 expenses provided

The bankers should wait for adjusting entries because without the adjustment clear financial performance and position can't be determined.

Please comment for any explanation or query.

Thanks