Expand Your Critical Thinking 4-57

Comparative Analysis Problem: Amazon.com, Inc. vs. Wal-Mart Stores, Inc.

CT4.3 Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements
of Wal-Mart Stores, Inc. are presented in Appendix E. The complete annual reports of Amazon and
Wal-Mart, including the notes to the financial statements, are available at each company’s respective
website.

Instructions
a. Based on the information contained in these financial statements, determine the following for
Amazon at December 31, 2015, and Wal-Mart at January 31, 2016.
1. Total current assets.
2. Net amount of property and equipment (fixed assets), net.
3. Total current liabilities.
4. Total equity.
b. What conclusions concerning these two companies can be drawn from these data?

Real-World Focus
CT4.4 Most companies have established home pages on the Internet, but each might offer different
types of information.

Instructions
Examine the home pages of any two companies and then answer the following questions.
a. What type of information is available?
b. Is any accounting-related information presented?
c. Would you describe the home page as informative, promotional, or both? Why?

Decision-Making Across the Organization

CT4.5 Whitegloves Janitorial Service was started 2 years ago by Jenna Olson. Because business
has been exceptionally good, Jenna decided on July 1, 2020, to expand operations by acquiring an
additional truck and hiring two more assistants. To finance the expansion, Jenna obtained on July 1,
2020, a $25,000, 10% bank loan, payable $10,000 on July 1, 2021, and the balance on July 1, 2022.
The terms of the loan require the borrower to have $10,000 more current assets than current liabilities
at December 31, 2020. If these terms are not met, the bank loan will be refinanced at 15% interest. At
December 31, 2020, the accountant for Whitegloves Janitorial Service prepared the balance sheet shown
below.

Whitegloves Janitorial Service

Balance Sheet
December 31, 2020

Assets Liabilities and Owner’s Equity

Current assets Current liabilities
Cash $ 6,500 Notes payable $10,000
Accounts receivable 9,000 Accounts payable 2,500
Supplies 5,200 Total current liabilities 12,500
Prepaid insurance 4,800 Long-term liability
Total current assets 25,500 Notes payable 15,000
Property, plant, and equipment Total liabilities 27,500
Equipment (net) 22,000 Owner’s equity
Delivery trucks (net) 34,000 Owner’s capital 54,000
Total property, plant, and
equipment 56,000
Total assets $81,500 Total liabilities and owner’s equity $81,500