Financial Accounting An Introduction to Concepts, Methods and Uses Weil 14th Edition Solutions Manual

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1-1
© 2013 Cengage Learning. All rights reserved. No distribution allowed without express authorization.
Solutions
Financial Accounting An Introduction to
Concepts, Methods and Uses Weil 14th
Edition Solutions Manual
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CHAPTER 1
INTRODUCTION TO BUSINESS ACTIVITIES AND
OVERVIEW OF FINANCIAL STATEMENTS AND
THE REPORTING PROCESS
Questions, Exercises, and Problems: Answers and Solutions
1.1 The first question at the end of each chapter asks the student to review
the important terms and concepts discussed in the chapter. Students may
wish to consult the glossary at the end of the book in addition to the
definitions and discussions in the chapter.
1.2 Setting Goals and Strategies: Although a charitable organization must
obtain sufficient resources to fund its operations, it would not pursue
profits or wealth increases as goals. A charitable organization would direct
its efforts toward providing services to its constituencies.
Financing: A charitable organization may obtain some or all of its
financing from donations (contributions). A charitable organization does
not issue common stock or other forms of shareholders’ equity, nor does it
have retained earnings.
Investing: Similar to business firms, charitable organizations acquire
productive capacity (for example, buildings) to carry out their activities.
Operations: A charitable organization might prepare financial statements
that compare inflows (for example, contributions) with outflows. While
these statements might appear similar to income statements, there would

1-1
Solutions
be no calculation of net income because the purpose of the charitable
organization is to provide services to its constituents, not seek profits.
1.3 The balance sheet shows assets, liabilities and, shareholders’ equity as of
a specific date (the balance sheet date), similar to a snapshot. The income
statement and statement of cash flows report changes in assets and
liabilities over a period of time, similar to a motion picture.

1.4 The auditor evaluates the accounting system, including its ability to
record transactions properly and its operational effectiveness, and also
determines whether the financial reports prepared by the firm’s managers
conform to the requirements of the applicable authoritative guidance. The
auditor provides an audit opinion that reflects his professional
conclusions. For most publicly traded firms in the U.S. the auditor also
provides a separate opinion on the effectiveness of the firm’s internal
controls over financial reporting.
1.5 Management, under the oversight of the firm’s governing board, prepares
the financial statements.
1.6 Employees and suppliers of goods such as raw materials or merchandise
often provide the services or goods before they are paid. The firm has the
benefit of consuming or using the goods or services before it transfers cash
to the employees and suppliers. The length of the financing period is the
number of days between when the employees and suppliers provide goods
and services and when the firm pays cash to those employees and suppliers.
1.7 Accounts receivable represent amounts owed by customers for goods and
services they have already received. The customer, therefore, has the
benefit of the goods and services before it pays cash. The length of the
financing period is the number of days between when the customer
receives the goods and services and when the customer pays cash to the
seller of those goods and services.
1.8 Both kinds of capacity represent investments in long-lived assets, with
useful lives (or service lives) that can extend for several or many years.
They differ in that land, buildings, and equipment represent physical
capital, while patents and licenses represent intangible or intellectual
capital.
1.9 A calendar year ends on December 31. A fiscal year ends on a date that is
determined by the firm, perhaps based on its business model (for example,
many retailers choose a fiscal year end that is close to the end of January).
A firm can choose the calendar year as its fiscal year, and many do. Both
calendar years and fiscal years have 12 months.
1.10 Most firms report the amounts in their financial statements using the
currency of the country where they are incorporated and conduct most of
their business activities. Some firms use a different currency.
Solutions 1-2

1.11 A current item is expected to result in a cash receipt (assets such as accounts
receivable) or a cash payment (liabilities such as accounts payable) within
approximately one year or less. A noncurrent item is expected to generate
cash over periods longer than a year (assets, such as factory buildings that
will be used to produce goods for sale over many years) or use cash over
periods longer than a year (liabilities such as long term debt). Users of
financial statements would likely be interested in this distinction because
the distinction provides information about short- term cash flows
separately from long-term cash flows.
1.12 Historical amounts reflect the amounts at which items entered the firm’s
balance sheet, for example, the acquisition cost of inventory. Historical
amounts reflect economic conditions at the time the firm obtained assets
or obtained financing. Current amounts reflect values at the balance sheet
date, so they reflect current economic conditions. For example, the
historical amount for inventory is the amount the firm paid to obtain the
inventory, and the current amount for inventory is the amount for which
the firm could replace the inventory today.
1.13 An income statement connects two successive balance sheets through its
effect on retained earnings. Net income that is not paid to shareholders as
dividends increases retained earnings. A statement of cash flows connects
two successive balance sheets because it explains the change in cash (a
balance sheet account) from operating, financing, and investing activities.
The statement of cash flows also shows the relation between net income
and cash flows from operations, and changes in assets and liabilities that
involve cash flows.
1.14 The U.S. Securities and Exchange Commission (SEC) is the government
agency that enforces the securities laws of the United States, including
those that apply to financial reporting. The Financial Accounting
Standards Board (FASB) is the private-sector financial accounting
standard setter in the United States. The International Accounting
Standards Board (IASB) is a private-sector financial accounting standard
setter that promulgates accounting standards. More than 100 countries
require or permit the use of IFRS, or standards based on or adapted from
IFRS, for some or all firms in those countries. Neither the FASB nor the
IASB has any enforcement powers.
1.15 U.S. GAAP must be used by U.S. SEC registrants and may be used by other
firms as well. International Financial Reporting Standards (IFRS) may be
used by non-U.S. firms that list and trade their securities in the United
States, and these firms may also use U.S. GAAP.
1-3 Solutions

1.16 The purpose of the IASB’s and FASB’s conceptual frameworks is to guide
standard-setting decisions of the two Boards. For example, the conceptual
framework specifies the purpose of financial reporting and the qualitative
characteristics of financial information that would serve that purpose.
FASB and IASB board members use this conceptual structure as they
consider solutions to accounting issues.
1.17 The accrual basis of accounting is based on assets and liabilities, not on
cash receipts and disbursements. It provides a better basis for measuring
performance because it is based on revenues (inflows of assets from
customers), not cash receipts from customers, and on expenses (outflows of
assets from generating revenues), not cash payments. It matches revenues
with the costs associated with earning those revenues and is not sensitive
to the timing of expenditures.
1.18 (Palmer Coldgate, a consumer products firm; understanding the balance
sheet.) (amounts in millions of US$)
a. Property, plant, and equipment, net = $3,015.2 million.
b. Noncurrent assets = $6,493.5 (= $3,015.2 + $2,272.0 + $844.8 +
$361.5).
c. Long-term debt = $3,221.9 million.
d. Current assets – Current liabilities = $3,618.5 – $3,162.7 = $455.8
million.
e. Yes, the firm has been profitable since its inception. We know this
because its Retained Earnings, $10,627.5 million, is positive. The
firm may have had a loss in one or more prior years; cumulatively, it
has had positive income.
f. Total Liabilities/Total Assets = $7,825.8/$10,112.0 = 77.4%.
g. Total Assets = Total Liabilities + Shareholders’ Equity
$10,112.0 = $7,825.8 + $2,286.2
Solutions 1-4

1.19 (Capcion, a paper and packaging firm; understanding the income
statement.) (amounts in thousands of euros)
a. Cost of goods sold = €1,331,292.1 thousand.
b. Selling and distribution expenses = €172,033.4 thousand.
c. Gross margin percentage = 23.4% (= €405,667.1/€1,736,959.2).
d. Operating profit = €169,418.2 thousand.
Profit before tax = €170,863.9 thousand.
Difference equals €1,445.7 thousand (= €169,418.2 – €170,863.9). The
items that constitute this difference are nonoperating sources of income
(expense).
e. Effective tax rate = €54,289.9/€170,863.9 = 31.8%.
f. Profit = €116,574.0 thousand.
1.20 (Seller Redbud, a retailer; understanding the statement of cash flows.)
(amounts in thousands of US$)
a. Cash inflow from operating activities = $614,536 thousand.
b. Cash inflow from investing activities = $101,698 thousand.
c. Cash used in financing activities = $705,531 thousand outflow.
d. Net cash flow equals $10,703 thousand (= $614,536 + $101,698 –
$705,531).
e. Change in cash balance equals $10,703 thousand (= $224,084 –
$213,381). The increase was attributable to the net cash inflow
during the year of the same amount, $10,703 thousand.
1-5 Solutions

1.21 (EuroTel, a communications firm; balance sheet relations.) (amounts in
millions of euros [€])
Share-
Current Noncurrent Current Noncurrent holders’
Assets + Assets = Liabilities + Liabilities + Equity
€20,000 + €29,402 = €15,849 + ? + €17,154
Noncurrent liabilities total €16,399 million.
1.22 (GoldRan, a mining company; balance sheet relations.) (amounts in
millions of South African rand [R])
Share-
Current Noncurrent Current Noncurrent holders’
Assets + Assets = Liabilities + Liabilities + Equity
R6,085.1 + R49,329.8 = R4,360.1 + R13,948.4 + ?
Shareholders’ equity = R37,106.4 million.
1.23 (GrandRider, an automotive manufacturer; income statement relations.)
(amounts in millions of pounds sterling)
Sales ............................................................................................. £ 7,435
Less Cost of Sales........................................................................ (6,003)
Gross Margin................................................................................ 1,432
Less Other Operating Expenses .................................................. (918)
Loss on Sale of Business ............................................................. (2)
Net Financing Income .................................................................. 221
Profit Before Taxes ...................................................................... 733
Less Tax Expense......................................................................... (133)
Net Income ................................................................................... £ 600
Solutions 1-6

(AutoCo, an automotive manufacturer; income statement
(amounts in millions of US$)
relations.)
Sales ............................................................................................ $ 207,349
Cost of Sales ............................................................................... (164,682)
Other Operating Expenses.......................................................... (50,335)
Net Financing Income ................................................................. 5,690
Net Loss ...................................................................................... $ (1,978)
1.24
1.25 (Veldt, a South African firm; retained earnings relations) (amounts in
millions of South African rand [R])
Retained Retained
Earnings Earnings
at End of Income Dividends = at End of
2012 + for 2013 – Declared 2013
R4,640.9 + R2,362.5 – ? = R5,872.4
Dividends declared = R1,131.0 million.
1.26 (Delvico, an Indian firm; retained earnings relations.) (amounts in
millions of Indian rupees [Rs])
Retained Retained
Earnings Earnings
Start of Net Dividends = End of
Year + Income – Declared Year
Rs26,575 + ? – Rs3,544 = Rs70,463
Net income for the year was Rs47,432 million.
1.27 (BargainPurchase, a retailer; cash flow relations.) (amounts in millions of
US$)
Cash at Cash Flow Cash Flow Cash Flow Cash at
Start from from from End of
of Year + Operations + Investing + Financing = Year
$813 + $4,125 + $(6,195) + $3,707 = ?
Cash at end of year = $2,450 million.
1-7 Solutions

1.28 (Buenco, an Argentinean firm; cash flow relations.) (amounts in millions
of Argentinean pesos [Ps])
Cash at Cash Flow Cash Flow Cash Flow Cash at
End of from from from End of
Year + Operations + Investing + Financing = Year
Ps32,673 + Ps427,182 + ? + Ps(21,806) = Ps101,198
The net cash outflow for investing for the year = Ps(336,851) million.
1.29 (Kenton Limited; preparation of simple balance sheet; current and
noncurrent classifications.) (amounts in pounds sterling)
January 31,
2013
Assets
Cash.............................................................................................. £ 2,000
Inventory ...................................................................................... 12,000
Prepaid Rent ................................................................................ 24,000
Total Current Assets ............................................................... 38,000
Prepaid Rent ................................................................................ 24,000
Total Noncurrent Assets ......................................................... 24,000
Total Assets ............................................................................. £ 62,000
Liabilities and Shareholders’ Equity
Accounts Payable ......................................................................... £ 12,000
Total Current Liabilities......................................................... 12,000
Total Noncurrent Liabilities ................................................... —
Total Liabilities....................................................................... 12,000
Common Stock ............................................................................. 50,000
Total Shareholders’ Equity...................................................... 50,000
Total Liabilities and Shareholders’ Equity ............................ £ 62,000
Solutions 1-8

1.30 (Heckle Group; preparation of simple balance sheet; current and
noncurrent classifications.) (amounts in euros)
June 30,
2013
Assets
Cash........................................................................................... € 720,000
Total Current Assets ............................................................ 720,000
Property, Plant, and Equipment............................................... 600,000
Patent........................................................................................ 120,000
Total Noncurrent Assets ...................................................... 720,000
Total Assets .......................................................................... €1,440,000
Accounts Payable ...................................................................... € 120,000
Total Current Liabilities...................................................... 120,000
Note Payable............................................................................. 400,000
Total Noncurrent Liabilities ................................................ 400,000
Total Liabilities.................................................................... 520,000
Common Stock .......................................................................... 920,000
Total Shareholders’ Equity................................................... 920,000
Total Liabilities and Shareholders’ Equity ......................... €1,440,000
1.31 (Hewston, a manufacturing firm; accrual versus cash basis of accounting.)
(amounts in US$)
a. Net Income = Sales Revenue – Expenses
= $66,387 million– $62,313 million = $4,074 million.
Net Cash Flow = Cash Inflows – Cash Outflows
= $65,995 million– $56,411 million = $9,584 million.
b. Cash collections may be less than revenues for at least two reasons.
First, customers may have purchased on credit and have not yet paid.
Second, the firm may have collected cash from customers who
purchased on credit last year, but cash collections remain less than
cash collected on new credit sales.
c. Cash payments may be less than expenses for at least two reasons.
First, the firm may have received goods and services from suppliers,
but not yet paid for those items (i.e., the amounts are to be paid in the
1-9 Solutions

1.31 c. continued.
next year). Second, the firm may have accrued expenses this year that
will be paid in cash in future periods; an example would be the accrual
of interest expense on a bond that will be paid the next year.
1.32 (DairyLamb, a New Zealand firm; accrual versus cash basis of accounting.)
(amounts in millions of New Zealand dollars)
Calculation of net income:
Revenue ....................................................................................... $ 13,882
Cost of Goods Sold ...................................................................... (11,671)
Interest and Other Expenses ...................................................... (2,113)
Income Before Taxes ................................................................... 98
Tax Expense ................................................................................ (67)
Net Income .................................................................................. $ 31
Calculation of net cash flow:
Cash Receipts from Customers.................................................. $ 13,894
Miscellaneous Cash Receipts..................................................... 102
Total Cash Receipts............................................................. 13,996
Cash Payments to Employees and Creditors ............................ (5,947)
Cash Payments to Milk Suppliers............................................. (6,261)
Cash Payments for Interest Costs ............................................. (402)
Cash Payments for Taxes........................................................... (64)
Total Cash Payments .......................................................... (12,674)
Net Cash Flow ............................................................................ $ 1,322
1.33 (ComputerCo, a Singapore manufacturer; balance sheet relations.)
(amounts in millions of Singapore dollars [$])
The missing items appear in boldface type.
Assets
2013 2012
Current Assets........................................................ $ 170,879 $ 170,234
Noncurrent Assets .................................................. 28,945 17,368
Total Assets ........................................................ $ 199,824 $ 187,602
Solutions 1-10

1.33 continued.
Current Liabilities.................................................. $ 139,941 $ 126,853
Noncurrent Liabilities ............................................ 7,010 7,028
Total Liabilities.................................................. 146,951 133,881
Shareholders’ Equity............................................... 52,873 53,721
Total Liabilities and Shareholders’ Equity ....... $ 199,824 $ 187,602
1.34 (SinoTwelve, a Chinese manufacturer; balance sheet relations.) (amounts
in thousands of US$)
2013 2012
Assets
Current Assets..................................................... $ 4,705,366 $ 3,062,449
Noncurrent Assets ............................................... 2,494,481 2,388,389
Total Assets ..................................................... $ 7,199,847 $ 5,450,838
Current Liabilities............................................... $ 4,488,461 $ 3,527,504
Noncurrent Liabilities ......................................... 1,098,123 789,058
Total Liabilities............................................... 5,586,584 4,316,562
Shareholders’ Equity............................................ 1,613,263 1,134,276
Total Liabilities and Shareholders’ Equity .... $ 7,199,847 $ 5,450,838
1.35 (EastonHome, a consumer products manufacturer; income statement
relations.) (amounts in millions of US$)
2013 2012 2011
Sales .............................................................. $ 13,790 $ 12,238 $ 11,397
Cost of Goods Sold ........................................ (6,042) (5,536) (5,192)
Selling and Administrative Expenses.......... (4,973) (4,355) (3,921)
Other (Income) Expense ................................ (121) (186) (69)
Interest Expense, Net ................................... (157) (159) (136)
Income Tax Expense...................................... (759) (648) (728)
Net Income .................................................... $ 1,738 $ 1,354 $ 1,351
1-11 Solutions

Equipment............................... (4,319) (3,827) (3,365)
Acquisition of Businesses...........
Sale of Property and Equip-
ment ........................................
(26,292) (18,078)
152 185
(1,210)
362
ments....................................... 3,499 6,180 6,375
Other Investing Activities........... (573) 663 (1,131)
Cash Flow from Investing...............
Financing:
Proceeds from Borrowings ..........
(27,533) (14,877)
15,587 1,290
1,031
657
Repayment of Borrowings........... (1,291) (9,510) (2,784)
Sale of Common Stock................ 94 124 174
Dividends Paid............................ (8,132) (7,343) (4,133)
Other Financing Activities ......... 406 58 (288)
Cash Flow from Financing.............. 6,664 (15,381) (6,374)
Change in Cash............................... (1,659) (11,769) 11,326
Cash, Beginning of Year..................
Cash, End of Year............................
29,969 41,738
SEK 28,310 SEK 29,969
30,412
SEK 41,738
Solutions 1-12
1.36 (Yankee Fashion, a clothing retailer; income statement relations.)
2013 2012 2011
Net Revenues ........................................ $ 4,295.4 $ 3,746.3 $ 3,305.4
Cost of Goods Sold ................................ (1,959.2) (1,723.9) (1,620.9)
Selling and Administrative Expenses.. (1,663.4) (1,476.9) (1,377.6)
Operating Income .................................. 672.8 545.5 306.9
Other Income (Expense) ........................ (34.0) (43.8) (2.7)
Interest Income (Expense), Net............. 4.5 1.2 (6.4)
Income Tax Expense.............................. (242.4) (194.9) (107.4)
Net Income ............................................ $ 400.9 $ 308.0 $ 190.4
1.37 (AB Brown, a Swedish firm; statement of cash flows relations.)
Operations:
Statement of Cash Flows
(amounts in millions of Swedish kronor [SEK])
2013 2012 2011
Revenues, Net of Expenses ......... SEK 19,210 SEK 18,489 SEK 16,669
Cash Flow from Operations............ 19,210 18,489 16,669
Investing:
Acquisition of Property and
Sale of Short-Term Invest-

1.38 (Jackson Corporation; statement of cash flows relations.)
JACKSON CORPORATION
Statement of Cash Flows
Operations:
2013 2012 2011
Revenues Increasing Cash........... $ 19,536 $ 19,083 $ 17,233
Expenses Decreasing Cash.......... (16,394) (18,541) (18,344)
Cash Flow from Operations............. 3,142 542 (1,111)
Investing:
Sale of Property, Plant, and
Equipment................................ 332 401 220
Acquisition of Property, Plant,
and Equipment......................... (3,678) (3,640) (1,881)
Other Investing Transactions...... 71 (1,501) 268
Cash Flow from Investing................ (3,275) (4,740) (1,393)
Financing:
Proceeds of Long-Term Borrow-
ing............................................. 836 5,096 3,190
Issue of Common Stock................ 67 37 3
Repayments of Long-Term Debt . (766) (922) (687)
Cash Flow from Financing............... 137 4,211 2,506
Change in Cash................................ 4 13 2
Cash, Beginning of Year................... 117 104 102
Cash, End of Year............................. $ 121 $ 117 $ 104
1-13 Solutions

1.39 (JetAway Airlines; preparing a balance sheet and an income statement.)
a. JETAWAY AIRLINES
Balance Sheet
Sept. 30, Sept. 30,
2013 2012
Assets
Cash............................................................ $ 378,511 $ 418,819
Accounts Receivable................................... 88,799 73,448
Inventories .................................................. 50,035 65,152
Other Current Assets................................. 56,810 73,586
Total Current Assets ............................. 574,155 631,005
Property, Plant, and Equipment (Net) ...... 4,137,610 5,008,166
Other Noncurrent Assets ........................... 4,231 12,942
Total Assets ........................................... $ 4,715,996 $ 5,652,113
Accounts Payable ....................................... $ 157,415 $ 156,755
Current Maturities of Long-Term Debt .... 11,996 7,873
Other Current Liabilities........................... 681,242 795,838
Total Current Liabilities ....................... 850,653 960,466
Long-Term Debt ......................................... 623,309 871,717
Other Noncurrent Liabilities..................... 844,116 984,142
Total Liabilities ..................................... 2,318,078 2,816,325
Common Stock ........................................... 352,943 449,934
Retained Earnings...................................... 2,044,975 2,385,854
Total Shareholders’ Equity .................... 2,397,918 2,835,788
Total Liabilities and Shareholders’
Equity ................................................. $ 4,715,996 $ 5,652,113
Solutions 1-14

1.39 continued.
b. JETAWAY AIRLINES
Income Statement
For the Year Ended: Sept. 30,
2013
Sales ................................................................................. $ 4,735,587
Salaries and Benefits Expense........................................ (1,455,237)
Fuel Expense .................................................................... (892,415)
Maintenance Expense ...................................................... (767,606)
Other Operating Expenses ............................................... (1,938,753)
Interest Expense............................................................... (22,883)
Interest Income................................................................. 14,918
Net Income........................................................................ $ (326,389)
c. Retained Earnings, September 30, 2012 ........................ $ 2,385,854
Plus Net Loss for 2013..................................................... (326,389)
Less Dividends Declared During 2013 (Plug).................. (14,490)
Retained Earnings, September 30, 2013 ........................ $ 2,044,975
1.40 (Block’s Tax and Bookkeeping Services; cash versus accrual accounting.)
(amounts in US$)
a. Income for July 2013:
(1) Cash Basis Accounting
Sales Revenues............................................................... $ 13,000
Rent (Office).................................................................... (6,000)
Rent Equipment ............................................................. (12,000)
Office Supplies Expense ................................................. (370)
Income (Loss) .................................................................. $ (5,370)
(2) Accrual Basis Accounting
Sales Revenues............................................................... $ 44,000
Rent (Office).................................................................... (2,000)
Rent (Equipment)........................................................... (2,000)
Salaries Expense ............................................................ (6,000)
Office Supplies Expense ................................................. (90)
Interest Expense ............................................................. (133)
Income (Loss) .................................................................. $ 33,777
1-15 Solutions

1.40 continued.
b. Cash on Hand:
Beginning Balance, July 1................................................. $ 0
Financing Sources and (Uses):
Jack Block Share Purchase............................................... 40,000
Bank Loan ......................................................................... 20,000
Total Financing Sources................................................ 60,000
Operating Sources and (Uses):
Cash Collected from Customers....................................... 13,000
Office Rent ......................................................................... (6,000)
Equipment Rental............................................................. (12,000)
Office Supplies Expense.................................................... (370)
Net Operating Uses .............................................................. (5,370)
Ending Balance, July 31........................................................ $ 54,630
The ending balance in cash contains the effects of both operating
activities, which have net cash flow of $(5,370), and financing
activities, which have net cash flow of $60,000. The firm is financing
its operating activities with a bank loan and with funds invested by
its owner; both of these sources of funds represent claims on the firm’s
assets, not increases in net assets.
1.41 (Stationery Plus; cash basis versus accrual basis accounting.) (amounts in
US$)
a. Income for November 2013:
Sales................................................................................ $ 23,000
Cost of Merchandise....................................................... (20,000)
Rent................................................................................. (9,000)
Salaries........................................................................... (10,000)
Utilities .......................................................................... (480)
Income (Loss) .................................................................. $ (16,480)
Solutions 1-16

1.41 a. continued.
Sales................................................................................ $ 56,000
Rent................................................................................. (1,500)
Salaries........................................................................... (10,000)
Utilities .......................................................................... (480)
Interest............................................................................ (1,000)
Income (Loss) .................................................................. $ 14,020
b. Income for December 2013:
Sales Made in November, Collected in December ........ $ 33,000
Sales Made and Collected in December ........................
Cost of Merchandise Acquired in November and Paid
in December ................................................................
34,000
(20,000)
Cost of Merchandise Acquired and Paid in December.. (27,500)
Salaries........................................................................... (10,000)
Utilities .......................................................................... (480)
Interest............................................................................ (2,000)
Income (Loss) .................................................................. $ 7,020
Sales................................................................................ $ 62,000
Rent................................................................................. (1,500)
Salaries........................................................................... (10,000)
Utilities .......................................................................... (480)
Interest............................................................................ (1,000)
Income (Loss) .................................................................. $ 15,420
1-17 Solutions

1.42 (ABC Company; relations between net income and cash flows.) (amounts
in US$)
a.
Cash Cash Cash Cash
Balance at Receipts Disbursements
Balance Beginning + from – for Production –
at End of
Month of Month Customers Costs the
Month
January $ 875 $ 1,000 $ 750 $ 1,125
February 1,125 1,000 1,500 625
March 625 1,500 1,875 250
April 250 2,000 2,250 0
b. The cash flow problem arises because of a lag between cash
expenditures incurred in producing goods and cash collections from
customers once the firm sells those goods. For example, cash
expenditures during February ($1,500) are for goods produced during
February and sold during March. Cash is not collected from
customers on these sales, however, until April ($2,000). A growing
firm must generally produce more units than it sells during a period if
it is to have sufficient quantities of inventory on hand for future sales.
The cash needed for this higher level of production may well exceed the
cash received from the prior period’s sales. Thus, a cash shortage
develops.
The difference between the selling price of goods sold and the cost
of those goods equals net income for the period. As long as selling
prices exceed the cost of the goods, a positive net income results. As
the number of units sold increases, net income increases. A firm does
not necessarily recognize revenues and expenses in the same period as
the related cash receipts and expenditures. Thus, cash decreases, even
though net income increases.
c. The income statement and statement of cash flows provide
information about the profitability and liquidity, respectively, of a
firm during a period. The fact that net income and cash flows can
move in opposite directions highlights the need for information from
both statements. A firm without sufficient cash will not survive, even
if it operates profitably. The balance sheet indicates a firm’s asset and
equity position at a moment in time. The deteriorating cash position
is evident from the listing of assets at the beginning of each month.
Examining the cash receipts and disbursements during each month,
however, identifies the reasons for the deterioration.

Solutions 1-18

1.42 continued.
d. Strategies for dealing with the cash flow problem center around (a)
reducing the lag between cash outflows to produce widgets and cash
inflows from their sale, and (b) increasing the margin between selling
prices and production costs.
To reduce the lag on collection of accounts receivable, ABC might:
(1) Provide to customers an incentive to pay faster than 30 days, such
as offering a discount if customers pay more quickly or charge
interest if customers delay payment.
(2) Use the accounts receivable as a basis for external financing, such
as borrowing from a bank and using the receivables as collateral
or selling (factoring) the receivables for immediate cash.
(3) Sell only for cash, although competition may preclude this
alternative.
To delay the payment for widgets, ABC might:
(1) Delay paying its suppliers (increases accounts payable) or borrow
from a bank using the inventory as collateral (increases bank loan
payable).
(2) Reduce the holding period for inventories by instituting a just-in-
time inventory system. This alternative requires ordering raw
materials only when needed in production and manufacturing
widgets only to customer orders. Demand appears to be
sufficiently predictable so that opportunities for a just-in-time
inventory system seem attractive.
To increase the margin between selling price and manufacturing
cost, ABC might:
(1) Negotiate a lower purchase price with suppliers of raw materials.
(2) Substitute more efficient manufacturing equipment for work now
done by employees.
(3) Increase selling prices.
1-19 Solutions

1.42 d. continued.
The cash flow problem is short-term because it will neutralize
itself by June. This neutralization occurs because the growth rate in
sales is declining (500 additional units sold on top of an ever-
increasing sales base). Thus, the firm needs a short-term solution to
the cash flow problem. If the growth rate were steady or increasing,
ABC might consider obtaining a more permanent source of cash, such
as issuing long-term debt or common stock.
1.43 (Balance sheet and income statement relations.)
a. Bushels of wheat are the most convenient in this case with the given
information. This question emphasizes the need for a common
measuring unit.
b. IVAN AND IGOR
Comparative Balance Sheets
(amounts in bushels of wheat)
IVAN IGOR
Assets
Beginning End of Beginning End of
of Period Period of Period Period
Wheat ...................... 20 223 10 105
Fertilizer.................. 2 — 1 —
Ox............................. 40 36 40 36
Plow ......................... — — — 2
Land......................... 100 100 50 50
Total Assets ........ 162 359 101 193
Liabilities and
Owner’s Equity
Accounts Payable .... — 3 — —
Owner’s Equity ........ 162 356 101 193
Total Liabilities
and Owner’s
Equity................ 162 359 101 193
Questions will likely arise as to the accounting entity. One view is
that there are two accounting entities (Ivan and Igor) to whom the
Red-Bearded Baron has entrusted assets and required a periodic
reporting on stewardship. The “owner” in owner’s equity in this case is
the Red-Bearded Baron. Another view is that the Red-Bearded Baron
Solutions 1-20

IVAN AND IGOR Comparative
Income Statement (amounts in
bushels of wheat)
Revenues.............................................................
IVAN
243
IGOR
138
Expenses:
Seed ................................................................ 20 10
Fertilizer......................................................... 2 1
Depreciation on Ox ......................................... 4 4
Plow ................................................................ 3 1
Total Expenses ........................................... 29 16
Net Income.......................................................... 214 122
1.43 b. continued.
is the accounting entity, in which case financial statements that
combine the financial statements for Ivan and Igor are appropriate.
Identifying the accounting entity depends on the intended use of the
financial statements. For purposes of evaluating the performance of
Ivan and Igor, the accounting entities are separate—Ivan and Igor. To
assess the change in wealth of the Red-Bearded Baron during the
period, the combined financial statements reflect the accounting
entity.
c.
Chapter 1 does not expose students to the concept of depreciation. Most
students, however, grasp the need to record some amount of expense
for the ox and the plow.
d. (amounts in bushels of wheat) IVAN IGOR
Owner’s Equity, Beginning of Period...................... 162 101
Plus Net Income ..................................................... 214 122
Less Distributions to Owner.................................. (20) (30)
Owner’s Equity, End of Period ............................... 356 193
1-21 Solutions

1.43 continued.
e. We cannot compare the amounts of net income for Ivan and Igor
without adjustment because the Red-Bearded Baron entrusted them
with different amounts of resources. We must relate the net income
amounts to some base. The possibilities include the following:
IVAN IGOR
Net Income/Average Total Assets ...................... 82.2% 83.0%
Net Income/Beginning Total Assets ................... 132.1% 120.8%
Net Income/Average Noncurrent Assets............. 155.1% 137.1%
Net Income/Beginning Noncurrent Assets ......... 152.9% 135.6%
Net Income/Average Owner’s Equity .................. 82.6% 83.0%
Net Income/Beginning Owner’s Equity ............... 132.1% 120.8%
Net Income (in bushels)/Acre .............................. 10.70 12.20
The purpose of this question is to get students to think about
performance measurement. The instructor may or may not wish to
devote class time at this point discussing which base is more
appropriate.
Solutions 1-22

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Charles Earl of Lennox, and cousin-german of Henry Darnley, father
of King James, died in the Tower of London.’
In the dead of night the daughter of a line of kings was carried
along the black river to Westminster Abbey, and there deposited in
the royal vault beneath the coffin of Mary Queen of Scots. All pomp
and ceremony were forbidden, the Burial Service was read by stealth
as over some felon’s grave, not for any fault of her own, but because
‘to have a great funeral for one dying out of the King’s favour would
have reflected upon the King’s honour.’
A sadder page can scarcely be found in England’s history, and
among many crimes which blacken the fame of James Stuart,
perhaps the slow murder of his unhappy kinswoman is the worst.
The terrible traces of suffering and unmistakable signs of
imbecility exhibited in this portrait, lead to the conjecture that it
must have been painted during her confinement in the Tower.

No. 88.
JAMES DUKE OF YORK, AFTERWARDS
JAMES II., KING OF ENGLAND.
By Sir Peter Lely.
BORN 1633, DEPOSED 1688, DIED 1701.
Full length. Crimson robes. Mantle. Collar and Order of Garter.
HE second son of Charles I. by Henrietta Maria. Married,
first, Anne Hyde, daughter of the Earl of Clarendon,
and, secondly, Maria d’Este of Modena. By his first
marriage he had Mary, married to the Prince of Orange,
afterward William III., and Anne, married to the Prince of
Denmark, who succeeded her sister as Queen. By Mary of Modena
he had Charles, who died young, James, called the Chevalier de St.
George, or the Old Pretender, and three daughters.

S
No. 89.
ELIZABETH LADY NOTT.
Full length. Grey satin dress. Ringlets. Hand resting on table.
HE was the sister of Sir Henry Frederick Thynne and married Sir
William Nott of Richmond, in the county of Surrey.

No. 90.
ROBERT DUDLEY, EARL OF LEICESTER.
By Zucchero.
BORN CIRCA 1532, DIED 1588.
Full length. Gold and white dress. Gorget. George and Garter. Page
holding a helmet and tilting lance. Tent in background.
E was the fifth son of John Dudley, Earl of Warwick,
afterwards Duke of Northumberland, by the daughter
and heir of Sir Henry Guildford. He began life early. In
1551 he was named Gentleman of the Bedchamber and
Master of the Buckhounds to King Edward VI., by whom
he was much esteemed. But it would appear that before, or shortly
after, his appointment he fell in love with Amy, the fair daughter of
Sir John Robsart, over whose sad fate the ‘Wizard of the North’ has
thrown so dazzling a glamour, though, contrary to his version of the
story, it would appear that the marriage was public and took place at
Court. On the death of Edward, and the failure of the scheme
devised by the Duke of Northumberland to place his daughter-in-law,
Lady Jane Grey, on the throne, Lord Robert Dudley was imprisoned
in the Tower on a charge of high treason, and had sentence of death
passed on him, and it was supposed he only escaped sharing his
father’s fate, by pleading guilty. Any way, he was liberated with a
free pardon, and on the marriage of Queen Mary with Philip of
Spain, he ingratiated himself into that Prince’s favour, and ‘was most
serviceable to both King and Queen,’ says Strype, ‘by carrying
messages between them, often riding post to do so.’ To the Princess
Elizabeth he had been playfellow in childhood, and fellow-prisoner in

the Tower, and when she came to the throne she did not forget old
days.
She made him Master of the Horse, Knight of the Garter, and Privy
Councillor, showering upon him grants and estates without number.
Indeed, his influence with her was so great that Secretary Cecil (if
we may credit that arch gossip, De Quadra, the Spanish Ambassador
at the Court of London) wished Lord Robert Dudley in Paradise. The
same writer says that the Queen told him that Lady Robert was very
ill, and some time afterwards ‘che si ha rotto il collo.’ It certainly was
rumoured at Court that but for the slight obstacle of a wife, the
Queen would throw over all her foreign and royal suitors in favour of
this handsome polished minion, as Froude calls him. The tragedy of
Cumnor Hall will ever remain a mystery; but all these reports which
preceded it, and the fact that Lord and Lady Robert had scarcely
ever appeared together in public since their marriage, all went to
strengthen suspicion against the husband.
On the other hand, no sooner did Dudley hear of his wife’s death,
which he said was ‘the most unfortunate thing that could have
happened to him,’ than he caused a searching inquiry to be made,
and he sent down poor Amy’s half-brother to investigate the matter.
On the inquest, these facts transpired: The Lady had insisted on the
household leaving her to go to Abingdon Fair, and on their return she
was found dead at the bottom of a staircase, without any marks of
violence. By some it was suggested she might have been first
suffocated and then placed in that position; others again were of
opinion that she had committed suicide, seeing she had been
overheard to say she prayed God to preserve her from desperation.
But one of her attendants would not tolerate the idea, saying she
was a good and virtuous gentlewoman. The verdict was accidental
death, but the country was full of strange mutterings, the echoes of
which have never died away. A few contemporaneous documents
have lately been found at Longleat which throw some fresh light on
the circumstances of her marriage and domestic life. It does not
appear to have been one of constrained seclusion, as commonly
supposed, nor is there, in the papers alluded to, any indication of

estrangement on the part of her husband, still less anything to
implicate him, as accessory to her violent death, if it really were
such.
In forming opinions on Dudley’s moral character, it is only fair to
remember that many of the stories which were spread to his
prejudice have their origin in a notorious book entitled Leicester’s
Commonwealth, written by men who were his deadliest enemies in
politics and religion, especially ‘Parsons the Jesuit.’ This was
circulated in MS. for many years, a copy being extant at Longleat; but
the Queen and Privy Council published a protest against its slanders.
A gorgeous funeral was decreed to the unhappy Amy at Oxford, and
Dudley was free. We need not recapitulate the well-known story of
Elizabeth’s vacillating conduct with regard to him and her numerous
suitors; how all England believed she was on the point of selecting
him as her husband; of how Mary Queen of Scots mildly remarked
that the Queen of England was about to marry her horsekeeper, who
had murdered his wife to make room for her; of how Elizabeth
turned round and proposed he should marry Mary, saying that if she
herself intended to marry, she should prefer him to all the Princes in
the world; and contrasting him with his brother Lord Warwick, she
said, ‘He is rough, and lacks the delicacy of Robert.’
As far as she ever was in earnest in her constantly fluctuating
matrimonial speculations, Bess really did appear to be so about the
Scotch marriage, as she created her favourite Earl of Leicester
apparently to fit him for a higher position; and she remarked
querulously to Melville, (Mary’s confidential envoy to England,) ‘You
like better yon long lad,’ pointing to Darnley, who bore the sword of
State at the ceremony of Dudley’s elevation to the peerage, and the
poor ‘long lad,’ unfortunately for himself, became Mary’s choice; and
Elizabeth returned to the game of fast-and-loose with Leicester. His
suit, says Froude, was never listened to more favourably than when
it served to interfere with another man’s, but on a sudden she was
informed he was already secretly married to the widow of Walter
Devereux, Earl of Essex.

Already during the lifetime of her noble husband this lady’s name
had been whispered in conjunction with that of Leicester, in no
creditable manner, and their hasty marriage, after the sudden and
mysterious death of Lord Essex, gave rise to many dark suspicions.
Another scandal, too, was afloat; another secret, or pretended
marriage was spoken of between Leicester and the daughter of Lord
Effingham, widow of Lord Sheffield. Lodge tells us that when Dudley
wished to marry Lady Essex, he compelled the unhappy woman to
renounce all claim to the title of his lawful wife, by publicly
espousing Sir Edward Stafford. All this transpired at a later period,
when she came forward in behalf of her son, whom Lady Leicester
persecuted with law-suits after his father’s death. It would appear
that Dudley entertained much affection for the child whom he had
injured, whose legitimacy he now affirmed, now denied, and at his
death bequeathed to him the estates of Kenilworth, which the bad
woman who had supplanted his mother would not allow him to
enjoy in peace. Lettice, Lady Leicester, survived her husband nearly
half a century. Elizabeth always hated her, and would never be
reconciled to her, although she was the mother of Robert Devereux,
Earl of Essex, who succeeded his stepfather in the royal favour. The
Queen stormed and raved on first hearing of the marriage, wept
profusely, and behaved as was her wont. In 1584 she sent Leicester
to the Low Countries in command of the auxiliary forces, and he
joined his gallant nephew, Sir Philip Sidney, at Flushing. He lived in
such state, and took so much upon himself, as to expose him to a
severe reprimand from home. He returned, and went out again to
Zealand with fresh levies, and was restored to greater favour than
ever. In the famous speech she addressed to the troops at Tilbury,
Elizabeth extolled her favourite to the skies, having already named
him to the command of the army raised to oppose the expected
Spanish invasion. It was reported she intended to make him
Viceregent of England, but the mighty solver of many a vexed
question arrested his progress. He died of fever at his house at
Cornbury, county Oxford, on his way to Kenilworth, September 1588.

No. 91.
THOMAS THYNNE (TOM O’ TEN THOUSAND).
By Sir Peter Lely.
SHOT IN HIS COACH, 1682.
Tawny coat. Blue mantle. Full wig. Lace collar.

A
No. 92.
THE HONOURABLE JAMES THYNNE.
By KERSEBOOM.
BORN 1701, DIED 1705.
Full length. A child seated by a fountain, pouring water from a shell.
Loose white shirt. Pink and blue drapery.
YOUNGER son of the first Lord Weymouth. He died at an early
age.

Financial Accounting An Introduction to Concepts, Methods and Uses Weil 14th Edition Solutions Manual

DRAWING ROOM.
TWO PORTRAITS OF CHILDREN OF SIR
JOHN THYNNE.
Attributed to Holbein.

No. 93.
Dressed in a dark brown frock. Sleeves of a lighter material. White pinafore.
Holding in one hand a jewelled cross, in the other, two cherries. Inscription in
background, ‘xv. Maii MDLXXII. ætatis mens. x.’

No. 94.
An infant in a white dress, richly brocaded. Close cap and bourlet or pudding.
Jewelled chain and cross round the neck. Rattle in the left hand. Inscription,
‘viii. Octob. MDLXIIII., ætat. mens. vi.’

No. 95.
FRANCIS THE FIRST, KING OF FRANCE, AND
HIS QUEEN, ELEANOR OF AUSTRIA.
Painter doubtful.
FRANCIS, BORN 1494, DIED 1547. ELEANOR, DIED 1558.
King:—Red and white slashed dress. Feathers and jewels in his cap.
Eleanor:—Blue and white embroidered dress. Slashed cap with jewels and
feathers. Holding the King’s hand, and in her other a Caduceus with bells,
issuing from an artichoke or pine cone. A jester in the background.
E was the son of Charles d’Orleans, Duke of Angoulême,
by Louise de Savoie. He married, first, the Princess
Claude, daughter of Louis XII., and succeeded his father-
in-law on the throne of France. His second wife was
Eleanor of Austria, sister to Charles V., Emperor of
Germany. For many years this picture has been erroneously named
Francis I. and his mistress, but late researches prove the female
portrait to be that of his second wife, Eleanor of Austria, and that it
was painted as a commemoration picture, at the time of the
marriage,—the Caduceus, the emblem of peace, recording that of
Cambray, ‘La Paix des Dames.’
Eleanor of Austria was the daughter of Philip, Archduke of Austria,
by ‘Mad Joan,’ as she was called, (the daughter of Ferdinand and
Isabella of Spain,) and consequently sister to Charles V., Emperor of
Germany.
She was much admired at the Imperial Court, and Frederick,
brother to the Elector Palatine, no sooner saw than he fell in love

with her, and the affection was reciprocal; but Charles, discovering
their intimacy, exiled Frederick, and hastened to give his sister in
marriage.
Emanuel, King of Portugal, surnamed ‘The Fortunate,’ had
governed his kingdom well, but he was ill-calculated to take the
fancy of the beautiful young Princess, still less to drive out the image
of a former lover. He was misshapen, and far advanced in years, but
he treated Eleanor with great consideration. He did not survive his
marriage above two years, leaving his widow with two children. It
may easily be conjectured that the hand of Eleanor, gifted as she
was with a large dower and great personal charms, was eagerly
sought by many illustrious personages, but her brother appeared to
favour the suit of the Connétable de Bourbon.
The wars which intervened, however, changed these projects after
Francis I. had been taken prisoner by Charles V. at the battle of
Pavia, the peace of Cambray was concluded between them, called
frequently ‘La Paix des Dames,’ because negotiated by Margaret of
Austria, the Emperor’s aunt, and Louise of Savoy, the King of
France’s mother, who had been Regent during her son’s absence and
captivity. One stipulation was the union of the fair young widow with
Francis I., and the nuptials were celebrated with great pomp.
Eleanor, indeed, presided at Court as Queen in all the ceremonies,
but neither her mental nor personal charms made much impression
on the heart of the King, who was at that moment entirely
subjugated by his mistress, the Duchesse d’Étampes. This beautiful,
but bad and inordinately ambitious woman, who was designated as
‘La plus belle des sçavantes, et la plus sçavantes des belles,’ had
been one of the Queen-Mother’s maids of honour. The King married
her to an old courtier, and created her Duchesse d’Étampes. She was
of an intriguing spirit, fostered discord, and interfered in political
measures, always working counter to the Queen, who strove to keep
peace, especially between her brother and husband.
The Duchess also hated the Dauphin, (afterwards Henry II.,) and
between her and the famous Diane de Poictiers (already firmly

established in the favour of the Prince) the spirit of rivalry raged
fiercely.
When Henry II. succeeded to the throne the all-powerful Diane
exiled the Duchesse d’Étampes, whose downfall was complete. Amid
all the pomp of the Court, Queen Eleanor had reason to regret her
quiet life at Lisbon, where she was at least admired and respected.
When Francis died, his widow went to reside, first in the
Netherlands, and then in Spain. She died at Talavera, and was
buried in the Escurial.

S
No. 96.
ELEANOR OF AUSTRIA.
BORN 1498, DIED 1558.
Black and white dress and head-dress, both richly ornamented with
pearls and diamonds.
ISTER to Charles V., Emperor of Germany. Married first the King
of Portugal, and secondly the King of France.

No. 97.
MAXIMILIAN EMPEROR OF GERMANY.
By Albert Dürer.
BORN 1459, DIED 1519.
Head. Furred dress and cap. Collar and badge of Golden Fleece.
Gold
diapered background.
HE son of Frederick III., Emperor of Germany, by Eleanor
of Portugal. In his childhood he was nicknamed ‘The
Dumb,’ from the difficulty he had in articulating;
although in after years he was remarkable for the sweet
tone of his voice. A romantic story is told in connection
with him and the beautiful Princess he afterwards married.
Charles the Bold, the last Duke of Burgundy, had been much
struck with the young Archduke (in an interview with the Emperor)
when Maximilian was only fourteen, and made so vivid a description
of his appearance and promising qualities as to interest the fancy of
his fair daughter and influence her future choice. On the death of
her father, Mary, (then Duchess of Burgundy,) finding herself
involved in a war with France, and a series of difficulties with her
Flemish subjects, felt the importance of securing a strong firm spirit,
to protect and counsel her.
Amid the crowd of suitors of all nations who competed for the
hand of the richest heiress in Europe, the fairest Princess in
Christendom, she selected the young Archduke Maximilian.
He began his married life by a war with Louis XI. of France, but it
was not of long duration. His good and beautiful wife survived her

marriage but two years, dying from the effects of a fall from her
horse while engaged in her favourite pastime of hawking; she left a
son and a daughter.
On her death the States of Flanders, regarding the Archduke with
great distrust and jealousy as a foreigner, rose in revolt, and even
disputed with him the guardianship of his own children. Maximilian’s
life, indeed, was one of continual warfare, but though a brave, he
was not considered on the whole a very successful General. He at
one time formed an alliance with France against England, and at
another with England against France: now friendly with, now
opposed to, the Swiss, the Venetians, and others. On succeeding to
the Imperial throne, he married, as his second wife, Bianca Maria,
sister of Galeazzo Sforza, Duke of Milan, who brought him a large
dower.
This match was most distasteful to the proud Germans, who
refused to recognise the ‘Bastard’ as Empress, and threatened that,
in the event of her having children, they should not be recognised as
Princes of the blood-royal. But (perhaps fortunately for herself)
Bianca was childless.
This union with an Italian led Maximilian into further warfare. He
formed an alliance with the Pope, with his brother-in-law the Duke of
Milan, and several States of Italy, to arrest the progress of the King
of France, then marching on Naples, but this undertaking was not
successful in the end. His energetic and ambitious spirit involved
Maximilian, not only in constant wars, but caused him to take part in
all the struggles of the day, religious and political. He was a man of
remarkable vigour, learning, and skill in all martial exercises, but
renowned for his extravagance, which brought him into so many
straits that he gained the nickname of ‘Sans Argent,’ and was often
without the means of defraying the pay of his soldiers. He helped to
form the celebrated League of Cambray, and presided at the Diet of
Worms, etc. etc. He admired the manly and independent spirit of
Luther, and showed himself no ways averse to the reform of Church

abuses, although he did not survive the movement long enough to
take a decided part on either side.
His health was now fast declining, and strange fancies took
possession of his mind. Being dissatisfied with the construction of a
palace he had ordered at Innsprück, he said, ‘I will build myself
another house,’ and sending for a carpenter, told him to make a
coffin with all speed. For four years this ghastly reminder
accompanied him in all his marches and wanderings. Maximilian died
at Wels, in Upper Austria, it is said his death was accelerated by
eating too freely of melon! Finding his end approaching, he prepared
for it, with much calmness; making his will, giving the most eccentric
orders concerning his interment, and joining with fervour in the
prayers for the dying which were being offered up in his presence.
His body was at a later period transferred to Innsprück, where the
Emperor Ferdinand I. erected a magnificent tomb to his memory. It
is of white marble, representing in high relief the principal events of
his most eventful life, while on either side of the mausoleum, noble
statues in bronze of illustrious sovereigns, knights, and dames of all
ages and nations, form a body-guard round Maximilian’s last resting-
place.
He had only two children, Philip, afterwards Emperor of Germany
and King of Castille, in right of his wife, ‘Mad Joan,’ as she was
called, (the only child of Ferdinand and Isabella,) by whom he had
Charles V., and Ferdinand, who both succeeded to the Imperial
throne. Maximilian’s only daughter, Margaret, was sent on the death
of her mother to France, to be educated with the children of Louis
XI., who designed the little heiress as bride for the Dauphin Charles.
The betrothal took place with great pomp and ceremony when
Margaret had attained the advanced age of three years. But in 1491,
Charles, who had then succeeded his father as King of France,
resolving on an alliance with Anne, heiress of Brittany, sent his little
child-wife back to her father, an indignity which Maximilian resolved
to wipe out in French blood.

Margaret afterwards married John Infant of Spain, and secondly
Philibert Duke of Savoy, and she eventually became Governess of the
Netherlands.
Albert Dürer was much esteemed not only by the Emperor
Maximilian, but by his successors Charles and Ferdinand.

L A R G E U P P E R C O R R I D O R.

No. 98.
THOMAS WENTWORTH, EARL OF STRAFFORD.
After Vandyck.
BORN 1594, EXECUTED 1641.
In armour. Holding a baton.
HE eldest son of Sir William Wentworth, of Wentworth
Wodehouse, county York, by Anne Atkinson, of Stowel,
county Gloucester. Educated at home, and afterwards at
Cambridge, where he gained an excellent reputation for
conduct and study. His father dying when Thomas was
twenty-one, he found himself at that early age the Master of
Wentworth, of large estates and property, the husband ‘of a fair
wife,’ (the daughter of Francis Earl of Cumberland,) and the guardian
of a flock of young relatives, yet he found time not only for the
diligent pursuit of study, but for the relaxations of ‘hunting, hawking,
and fishing;’ in fact, for all the varied business and pleasures of a
country life.
But he was not long allowed to remain in the privacy of
Wentworth, being elected member for York, and Custos Rotulorum.
This was in the place of Lord Savile, who had been compelled to
resign for misconduct. But Sir Thomas had not held the office long
before the Duke of Buckingham requested him to retire, that Savile
might be reinstated, a proposition which so nettled his high spirit
that he couched an indignant refusal in terms that made a lifelong
enemy of the haughty favourite.
Sir Thomas was for some time a silent member in the House of
Commons, although warmly espousing the Liberal side in politics,

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