Apple Unit 1 Flashcards
Assume that on September 29, 2019, the first day of fiscal 2020, Apple paid $20 million of cash for advertising that will appear in the American Airlines magazine throughout fiscal 2020. What Balance Sheet and Income Statement line items would be affected by this transaction, by how much, and in what direction?
DR Prepaid Expense 20 mil CR Cash (20) mill
Assume that on January 15, 2020, Apple paid $10 million for computer components purchased on account in the prior year. What Balance Sheet and Income Statement line items would be affected by this transaction, by how much, and in what direction?
DR AP (10) mil CR Cash (10) mil
Assume that on April 20, 2020 Apple sold iPhones to Verizon on account for $13 million. What Balance Sheet and Income Statement line items would be affected by this transaction (revenue part of the transaction only), by how much, and in what direction? Keep this simple and assume there is only one deliverable or performance obligation—the phones.
DR AR 13 mil
CR Net Sales: Products 13 mil
Assume that the phones sold to Verizon in the previous example cost Apple $9 million to acquire and assemble. What Balance Sheet and Income Statement line items would be affected by this transaction (expense part of the transaction only), by how much, and in what direction?
DR Cost of Sales: Products 9 mil CR Inventories (9) mil
Assume that on May 10, 2020 Verizon pays Apple $13 million for the purchase of iPhones on April 20, 2020. What Balance Sheet and Income Statement line items would be affected by this transaction, by how much, and in what direction?
DR Cash 13 mil CR AR (13) mil
What is the net effect of this iPhone sale to Verizon on Income before provision for income taxes on Apple’s Income Statement? Did it increase or decrease, and by how much?
Sales: Products 13 mil
Cost of Sales: Products (9) mill
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Income before provision for income taxes = 4 mil
Assume that on November 21, 2020 Apple receives an advance payment of $17 million from Johnson & Johnson for customized Apple products for their research department. Apple will complete delivery sometime in early 2021. What Balance Sheet and Income Statement line items would be affected by payment of this advance, by how much, and in what direction?
DR Cash 17 mil
CR Deferred Rev 17 mil
Now assume that Apple delivers the products on February 4, 2021, and that they have recorded no revenue for this transaction prior to that date. What Balance Sheet and Income Statement line items would be affected by the delivery of the products, by how much, and in what direction? Again, to keep things simple, assume that there is only one deliverable or performance obligation in this arrangement.
DR Deferred Rev (17) mil
CR Net Sales: Products 17 mil
Assume that the Apple rents a warehouse in Dallas for which the rent is $55,000 per month and is due on the fifth day of the following month. Also assume that Apple records this expense in the accounting system on the last day of each month. Using April 30, 2020 as an example, what line items in Apple’s Balance Sheet and Income Statement would be affected by recording this expense for the month of April, by how much, and in what direction?
DR Rent Exp 55,000
CR Rent Payable 55,000
Now assume that Apple paid its April 2020 rent accounted for above, on May 4, 2020. What line items in Apple’s Balance Sheet and Income Statement would be affected by recording this payment, by how much, and in what direction?
DR Rent Payable (55,000) CR Cash (55,000)
Assume that Apple has temporary office space in Austin. The rent on this space is $80,000 for six months and the contract requires that they pay the rent in advance. Assume they paid six months of rent on June 1, 2020. What line items in Apple’s Balance Sheet and Income Statement would be affected by recording this payment for rent on June 1, 2020, by how much, and in what direction?
DR Prepaid Exp 80,000 CR Cash (80,000)
Now assume that Apple records expense for using the Austin office space in the previous example for the month of June 2020 on June 30, 2020. What line items in Apple’s Balance Sheet and Income Statement would be affected by recording this use of the warehouse, by how much, and in what direction?
DR Rent Exp 13,333*
CR Prepaid Exp (13,333)
