Explore BrainMass

Explore BrainMass

    Financial accounting for Pepsi Co

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Unit 3 Assignment Questions
    Problem 6-5 pg 318
    Internal Control
    At Morris Mart Inc., all sales are on account. Mary Morris-Manning is responsible for mailing invoices to customers, recording the amount billed, opening mail, and recording the payment. Mary is very devoted to the family business and never takes off more than one or two days for a long weekend. The customers know Mary and sometimes send personal notes with their payments. Another clerk handles all aspects of accounts payable. Mary's brother, who is president of Morris Mart, has hired an accountant to help with expansion.
    1. List some problems with the current accounts receivable system.
    2. What suggestions would you make to improve internal control?
    3. How would you explain to Mary that she personally is not the problem?
    Problem 7-3 pg. 355 Accounts Receivable Turnover for Coca-Cola and PepsiCo
    The following information was summarized from the 2006 annual report of The Coca-Cola Company
    In millions
    Trade accounts receivable, less allowances of $63 and $72, respectively
    December 31, 2006 $2,587
    December 31, 2005 2,281
    Net operating revenues for the year ended December 31
    2006 24,088
    2005 23,104

    The following information was summarized from the 2006 annual report of PepsiCo:
    In millions
    Accounts and notes, receivable, net
    December 30, 2006 $3,725
    December 31, 2005 3,261
    Net revenue for the year ended:
    December 30, 2006 35,137
    December 31, 2005 32,562
    1. Calculate the accounts receivable turnover ratios for Coca-Cola and PepsiCo for 2006.
    2. Calculate the average collection period, in days, for both companies for 2006. Comment on the reasonableness of the collection periods for these companies considering the nature of their business.
    3. Which company appears to be performing better? What other information should you consider in determining how these companies are performing?

    Problem 7-7 pg.356 Effects of Changes in Receivable Balances on Statement of Cash Flows
    Stegner Inc. reported net income of $130,000 for the year ended December 31, 2008. The following items were included on Stegner's balance sheets at December 31, 2008 and 2007:
    12/31/08 12/31/07
    Cash $105,000 $110,000
    Accounts receivable 223,000 83,000
    Notes receivable 95,000 100,000
    Stegner uses the indirect method to prepare its statement of cash flows. Stegner does not have any other current assets or current liabilities and did not enter into any investing or financing activities during 2008.
    1. Prepare Stegner's 2008 statement of cash flows.
    2. Draft a brief memo to the owner to explain why cash decreased during a profitable year.

    © BrainMass Inc. brainmass.com June 4, 2020, 2:47 am ad1c9bdddf


    Solution Summary

    The expert provides financial accounting for Pepsi Co. The effects of changes in receivable balances on the statement of cash flows are examined.