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When LoanMax loans cash to individuals with a 25% monthly interest rate, does it have a receivable or a payable AND is it an ethical practice?

Car title lenders are considered to be predatory lenders, since they charge high rates of interest to those individuals who can least afford it. Various laws in recent years have attempted to curb the high interest rates and these practices. Car title lenders still operate and some would argue that they fill a need in […]

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8 revenue recognition exercises for introductory financial accounting featuring LL Bean

In 2015, FASB updated the revenue recognition standards. While most of the impact of the revised revenue standard will impact Intermediate Accounting coverage, some changes will also need to be made to update introductory financial accounting coverage. Using hypothetical examples featuring LL Bean, I have developed a set of classroom exercises (and solutions) that can […]

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How would an investor account for the receipt of a cash dividend from Microsoft?

Microsoft Corp. announced its dividend for the first quarter of 2016 on December 2, 2015. The press announcement on December 2, 2015, read: “Microsoft Corp. on Wednesday announced that its board of directors declared a quarterly dividend of $0.36 per share. The dividend is payable March 10, 2016, to shareholders of record on Feb. 18, […]

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How would an investor classify an Anheuser-Busch 5 year, 2.65% bond it intends to hold to maturity?

With over 200 beer brands, Anheuser-Busch InBev is the largest beer company in the world (source: Wikipedia.) Its brands include Budweiser, Labatt Blue, Rolling Rock, and Michelob. Anheuser-Busch is in the process of buying SABMiller.  Its purchase of SABMiller will add several beer brands to the Anheuser-Busch portfolio, including Coors and Miller. To finance its […]

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When would L.L. Bean recognize sales revenue from the sale of its backordered Bean boots?

L.L. Bean operates two factories that produce its popular Bean boots (also known as “duck boots”) in its home state of Maine.  Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At […]

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How does Square account for the amounts it loans to small businesses?

Square, the mobile payments company, allows small businesses to take credit cards by swiping customer credit cards using a small square device attached to the audio jack found on mobile devices. Since its founding in 2009 and the launch of its first app in 2010, Square has found its way into many small businesses – […]

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What does Coca-Cola’s Form 10-k communicate about its accounts receivable?

The Coca-Cola Company (KO), like other U.S. publicly-held companies, files its financial statements in an annual filing called a Form 10-K with the Securities & Exchange Commission (SEC). Coca-Cola has several assets that are listed on its balance sheet.  Let’s look at what is reported on Coca-Cola’s Form 10-K regarding its accounts receivable. See the […]

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What does Coca-Cola’s Form 10-K communicate about its short-term investments?

Coca-Cola is firmly entrenched in our history and culture.  On February 28, 2015, a Coca-Cola exhibition will open at the High Museum of Art in Atlanta.  The exhibition will feature paintings, photographs, and other items related to Coke’s iconic curved bottle. The exhibition will run through October 4, 2015. (Fun fact: Coca-Cola is sold in […]

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How are General Motors’ financial statements affected by borrowers not making auto-loan payments?

Borrowers who took out new car loans during 2014 are missing payments at the highest level since the recession. Regulators and analysts are beginning to be concerned about the quality of car loans, worrying that borrowers have taken on more debt than they can handle. Overall auto-loan delinquencies are higher now than one year ago, […]

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