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

Exploring the Variety of Random
Documents with Different Content

he looked up at me with that same pity in his blue eyes that had
made me feel so strangely a week ago. A disturbed feeling, half
pleasure, half pain, stole over me, and as I rode up the steep lane in
the dusk, under the arching ash and pine trees, the memory of the
squire's face made me feel things less entirely dead and dreary in
the midst of those vain and endless self-torturings, those angry
struggles, those heart-sickening hopes and fears.

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

CHAPTER XXXVI.
The reply to my letter came on the morrow from Frank Forrester.
What a day it was! I recollect it well. All the summer had gone in
one terrible storm of wind. Alas! Reuben had been only too just in
his sad prophecy: the red sunset upon the citadels of cloud had
meant mischief indeed.
The gale had burst that very night. Before midnight the wind was
tearing up across the marsh like some live thing, rending the air with
its threatening voice, almost rending the earth with its awful tread,
as it swept, grieving, muttering, moaning, and rushed at last with a
wild shriek upon us—a restless, relentless, revengeful foe. Even to
me, strong and hearty girl, whom not even trouble and heartache,
that was sore enough in those days, could keep from the
constraining sleep of a healthy youth—even to me that night the
voice of the wind was appalling.
I lay in bed waiting and listening for its grim footsteps as they
sped across the dark waste without, distant at first and almost faint,
growing nearer and nearer, louder and louder, till with a yell, as of
fierce triumph, the maniac burst against the windows, as though it
would rend the house in pieces for its sport. Afar the sullen roar of
the sea mingled with the lash of the pitiless gusts breaking, baffled,
upon the distant beach, only to renew its unwearied attack with
ceaseless, weary persistence.
I got up and looked out of the window. There was a cold moon
shining faintly in a gray sky, where the clouds hurried wildly about as
though seeking to escape some fierce pursuer; it gave a veiled
feeble light, in which the near farm buildings looked like
unsubstantial things that the wind might lift in its unseen hands and
scatter like dead leaves upon the ground; in the phantom whiteness
the black trees waved helpless, beseeching arms, bowing themselves

to earth beneath the mighty grasp of that great, invisible strength;
one could almost fancy it might pass into shape, so near and terrible
seemed its personality as it advanced, sure and strong, across the
wide, dim distance that was only marsh-land to me who knew that it
was not sea.
Some one stirred in the house. It was father; he was coming up-
stairs; he was still dressed; he had been sitting up all this time with
those papers of his. I upbraided him for it, and said it was enough to
give him his death of cold, but he seemed scarcely to hear me. His
face was very pale.
"It's a rough night, a very rough night, Meg," he said, sorrowfully.
"Oh yes, father, it is," answered I, sympathetically, thinking of the
hops that this would be the ruin of. But he made no allusion to
them, he only said: "Those poor creatures down in the huts will have
a bad time of it. And so many children too! They will be frightened,
poor lambs."
And then after a pause he added: "Little David Jarrett was very
weak when I called this afternoon, Meg. I'm afraid he'll not last out
this gale. I think he would like me to go round and see him."
"Not now, father, not to-night?" I cried. But he did not answer, and
I remember that it was with the greatest difficulty that I persuaded
him to go to bed.
In the morning I was sorry that I had done so. The little lad was
dead.
We were all seated at breakfast. The gale still raged outside; the
garden was strewn with boughs of fruit-trees and blossoms of roses
that the wind had ruthlessly torn from their stems; even from the
distance of our hill we could see the white storm-crests upon the
bosom of the laboring sea, and the snow of the foam as it dashed
against the strong towers upon the coast.
Mother sat silently pouring the tea and looking anxiously across at
father, who was eating no breakfast; Joyce alone was much the

same as usual, for I—well I don't know what I looked like—I felt
wretched. The post had brought me the reply to my letter to Frank
Forrester, and it was not what I wanted.
I sat moody and miserable. And to us all sitting there—very unlike
the bright family that we generally were—came a messenger with
the news—little David Jarrett had passed away in the night. I can
see father's face now; not sad, no: grave, and with a strange drawn
look upon it that I could not understand. His eyes shone out very
dark and deep from the white face that almost looked like
parchment; the shaggy eyebrows and strong tufts of gray hair a
mockery of strength upon it. But this is as it rises up before me now
in terrible reality; then I saw nothing, I guessed nothing. Oh, father,
father, that the old days might come back once more!
He said nothing, he gave no outward sign of trouble; he got up
and went out, and we cleared away the breakfast-things. We were
not given to expressing ourselves.
I took Frank's letter out of my pocket and read it over and over
again; it was very short—there was scarcely anything in it, and yet I
read it over and over again. He thanked me for writing; it was very
kind of me to write; he was sorry his friends had been so anxious
about him; it had been a needless "scare," there never had been
much amiss, and he was all right again now. He was sorry his friend
Thorne had lost the election. What did my father think of it? He was
afraid it would be a long while before he should get time to come to
Marshlands again. That was all.
No wonder I read it over and over again to try and find something
more in it than was there! There were only two sentences that
meant anything at all, and they made my heart wild with anger.
"What did my father think of it?" And "he was afraid it would be a
long while before he should find time to come to Marshlands again."
They were insulting, heartless sentences. Yes, even as I look back
upon it now, with all the bitterness of the moment passed, I think
they were that. As if he—who had been honored by my dear father's

intimate friendship, who knew his views as few of his friends knew
them—should not have known better than I "what my father thought
of it." If he ever found time to come to Marshlands again perhaps he
would find out. Not a word of Joyce in it—not a stray hint, not a
hidden allusion! Was it possible, was it really possible, that a man
could seem to love so bravely, and could forget in a few short
months? Were the squire's warnings just after all? Forget, forget? I
repeated the word to myself, to me it seemed so impossible that one
should ever be able to forget. At that time I don't believe I even
thought it possible that one should live without the thing that one
most craved for.
I sat there on the low window-seat, crushing the letter in my
hand, looking out at the wild clouds that hurried across the sky,
looking out at the havoc that the gale had made, and thinking
perhaps of another havoc than the havoc wrought by the wind. But
it was all Joyce's fault, I said to myself; she might have prevented it
if she had liked. Why had she not prevented it?
Some one came into the room. I crushed the letter into my pocket
and started up.
It was Trayton Harrod. He wore that same harassed, preoccupied
look that I had noticed in him before; it maddened me, though I
might have known well enough why he was preoccupied—there was
anxiety enough on the farm.
"Where's your father?" asked he, quickly.
"He's out," I answered, shortly.
"I wanted him particularly," said Harrod again.
"Well, he's out," repeated I. "He has gone to Mrs. Jarrett's. The
little boy died last night."
"Oh, I'm sorry, very sorry," said he. "I know he was very fond of
the child." And then, after a minute, he added, "But it's really very
important that I should see your father at once, Miss Margaret.
Could you not go across and tell him so?"

"No," said I, ungraciously. "I don't think I could; I shouldn't like to
disturb him." And then, half penitently, I added, "Can't I help you?"
He smiled, but gravely. "No," answered he; "I'm afraid this time
your father must decide for himself."
"Is it ruin?" I asked, after a minute. "I suppose so."
He started and looked at me sharply. "What do you mean?" he
asked. "No, I sincerely hope it's nothing of the kind."
"Oh," answered I, "I was afraid there wasn't a chance after this
gale of anything but ruin to the whole crop."
"You mean the hops," replied he, as if relieved; and it did not
strike me at the time to wonder what he could have thought I
meant. "I'm afraid it's a bad lookout for them. That's why I want to
see your father at once. It must, I fear, alter some arrangements I
have made. I must telegraph." He paused a moment, thinking; then
he added, "Is the squire expected here to-day, do you know?"
I flushed. "Not that I know of," said I; "but how should I know?
He never comes to the Grange now."
I jerked out these sentences foolishly, incoherently.
"No, I know he has not been here quite so often of late," said he.
"I've noticed it, and I've been sorry. But he'll come back. Never fear,
he'll come back," smiled he, looking at me.
The heat in my face grew to fire. "I don't care whether he comes
back or not," stammered I.
"No, no, of course not," answered Harrod, quickly, as though he
were afraid he had said a foolish thing; "but I care very much. I
have pinned my faith on the squire."
Something rose, choking, in my throat. How dared he say that he
had pinned his faith on the squire! In what way had he done so;
what did he mean?

"I want to have a long talk with you one of these days," he added,
gravely.
I looked at him. I think my face must have grown white. I could
not make my lips form the words, but I suppose my eyes spoke
them, for he added, "About many things." And then after a pause
again: "There's something I think squire may be able to do that I
haven't been able to do. I want you to ask him."
He spoke in his most hard voice; evidently it cost him a pang to
have to say that he had not been able to do that something. "Of
course it would be in a different way," he said, half to himself, "and
the old man is proud; but it's the only chance." And then he added,
"And he would do anything for you."
My eyes must have flamed, for he stopped.
"I shouldn't think of asking the squire anything—no, not anything
at all," said I, trying to speak plainly. "I don't understand you."
"Well," said he, as if that settled the question, "anyhow, I must
get a word with your father this morning. Do you think you can help
me?"
"No," repeated I, my voice trembling, "I can't. You had better ask
Joyce. She will be able to do any of these things that you want, I
dare say."
He did not reply. He just turned his back and went out. I think it
was all there was for him to do. And as I stood there, looking after
him, with my heart swelling big, and Frank's letter crushed in my
hand, Joyce passed across the lawn to the parlor porch.
In a moment, unbidden, unsuspected, like a watercourse broken
from its banks, a great anger surged up in my heart towards her.
She came gliding into the room with her usual quiet, graceful gait,
and went up to the old bureau to get a china bowl that stood there
and wanted washing. She fetched it and was going out again, but I
stopped her. "Joyce, I want to speak to you," I said.

I suppose there was something in my voice that betrayed my
feelings, for as she turned and stood there with the bowl in her hand
her face wore just the faintest expression of alarm.
"What is it?" she asked.
"I have had a letter from Frank Forrester," said I. Her face flushed
slightly.
"Oh, Meg!" said she.
"Yes," answered I, defiantly; "I wrote to him. There was no reason
why, because you were heartless, I should be heartless too. I have
no reason for being so prudent. I wrote to him."
Joyce flushed a little deeper, but she did not answer a word to my
cruel and unjust accusations; she was always patient and gentle.
"What did he say?" she asked, presently.
"What could he say?" I said, scornfully. "He thanks me for writing;
but I ask you how much he can have cared for my writing when the
person whom he supposed loved him didn't care to know whether
he was dead or alive?"
"That's nonsense, Meg," said Joyce, quietly. "He knew very well
that I cared; he knew very well why I didn't write. Why should he
expect me to break my word?"
"Why?" cried I, vehemently. "Because if you had had a grain of
feeling in you, you must have broken your word; you couldn't have
helped yourself. But you haven't a grain of feeling in you. You are as
cold as ice. People might love you till they burned themselves up for
loving you, but they would never get a spark to fly out of you in
return. I suppose you think you loved Frank. Why else should you
have said you would marry him? Was it because he was a
gentleman, and you were only a farmer's daughter? No; I never
imagined that," I added, confidently, seeing that she made a
movement of horror. "You're too much of a Maliphant. It must have
been because you loved him as much as you can love anybody. And
you'll be faithful to him—oh yes, you're too proud to be fickle! You'll

hold on silently to the end, just as you said you would hold on! But,
good gracious me, does it never occur to you to think that perhaps
such milk-and-water stuff might put a man out of heart? He may
wait and wait for the ice to melt, but, upon my word, I don't think it
would be so very astonishing if, at last, the fire went out with the
waiting!"
I stopped, panting, and waited for what she would say. She lifted
her eyes to my face—her dark-blue limpid eyes; there was no anger
in them, only surprise and distress.
"Oh, Meg," she said, sadly, "do you know that I think you
sometimes make up things in your own mind as you want them to
be, and then you're angry because they're not like that. Can't you be
different?"
"No," said I; "of course I can't be different any more than you can
be different. We've got to make the best of one another as we are."
"Well, then, let's make the best of one another, Meg," said Joyce,
gently. "We have always done it before, let us do it now."
"I can't make the best of you, Joyce," answered I, half appeased,
"when I see you so cold towards the man whom you have sworn to
love. I can't. I know you can't be different—people never become
different—but, oh, you do make me angry."
"I'm sorry," said Joyce, penitently. "Don't be angry. Perhaps you
don't quite understand, although you think you understand so well. I
am proud, and I don't think I am fickle; but I am not cold either."
Why should her words have poured oil upon the flame which her
gentleness but two minutes before had allayed? I don't know, but
they maddened me.
"You're one or the other," I said. "You are cold, or you are fickle." I
went up to her and took hold of her by the wrist—the left wrist, for
the right hand still held the blue bowl. "Which is it?" I said, in a low
voice; "which is it?"

Her face grew very pale, but she neither winced nor struggled.
"Don't, Meg," she said.
"Yes, I will," cried I, fiercely. "Which is it, tell me?"
"It's neither," repeated she.
"I tell you you lie!" cried I. "You are as cold as ice. Frank knows it;
Frank feels it. It is killing his love for you. Ah, go away; for pity's
sake, go away, or I don't know what I shall say!"
I flung her hand away from me and rushed towards the door; but
the sudden movement had jerked the bowl that she held out of her
other hand; it fell onto the floor and was smashed into many pieces.
I turned round. Joyce had stooped down and was tenderly picking
up the fragments. She had self-control enough to make me no
reproach—she was always self-controlled; but the bowl was mother's
best blue bowl. The sight of her there, with her concerned face,
irritated me beyond endurance. Was there nothing in the world that
was worse to break than a blue bowl? I went back to her again and
stood over her, watching her with hands that trembled and heart
that beat to very pain.
"If you are not heartless," I said, in a low voice; "if you can care
for anybody's feelings as much as you care when the china is
broken, who is it that you can feel for? You didn't seem to care very
much when we thought that Frank had broken his back. Whom do
you care for, then?"
I felt my lips tremble with anger, and for one moment I hated her.
Oh that I should have to write it down! My own sister, who had been
all the world to me two months ago! But it was true. Even through
all the crystallizing, cooling mists of distance, I can recall the horrible
feeling yet: I knew that—for one moment—I hated her.
"What do you mean?" said she, below her breath, trying to draw
back.
"Ah, I can see very well how it might be," continued I, hurrying
my words one on top of the other breathlessly—"how you might

persuade yourself that you were true to him, and persuade yourself
that you were doing a fine honorable thing keeping so strictly to
your bargain with mother, when all the time it was because you
never wanted to see him, and didn't care whether he loved you or
not, and cared very much more whether somebody else loved you—
somebody else who, but for you, might have belonged to another
person. I can fancy it all very well," cried I, tearing Frank's letter that
I held in my hand into little atoms and scattering them about the
floor; "I can see just how it might happen, and nobody be to blame.
No, nobody be to blame at all."
"Margaret, Margaret, for God's sake, collect yourself!" cried Joyce,
her voice breaking into something like a sob. "You frighten me. What
do you mean? What can you mean?"
"No, nobody to blame," repeated I, wildly, without paying any
heed to her; "only just what one might have known would happen.
One, with every gift that God can give, and the other, with—nothing
but a vile temper that makes folk shun her even after they've
seemed to be friends with her. What does it matter that you have
promised to marry another man? Nobody knows it; and when one is
as beautiful as you are, I suppose it isn't in human nature not to like
to see one's beauty draw people away from what had been good
enough for them before. I ought to have known it. There's nobody
to blame, of course."
"Margaret," said my sister—and even in the midst of my fury the
firm tone of her voice surprised me and checked me for a moment
—"you must explain yourself. I don't understand you; I don't,
indeed. Perhaps, if you knew everything, you wouldn't have the
heart to speak so. You are cruel, and you are unjust. You say I am
cold; but even if I am cold I can suffer, Meg; you must recollect that
I can suffer."
"Suffer!" cried I, bitterly. "I wish you could suffer one little tiny bit
of what I suffer. Ah, for pity's sake, don't let me say any more; don't
let me go on; let me go!"

"I can't let you go," said Joyce, with that unusual firmness that did
crop up at times so unexpectedly in her. "You must tell me first what
you meant when you said that I took people away from what had
been good enough for them before."
"Meant!" cried I. "You know well enough what I meant. I meant
that it was easy enough for you to be noble and self-sacrificing,
when all the time your thoughts were elsewhere. Yes, very easy for
you to be patient, waiting for your own lover, when you were busy
robbing me of my lover. Oh, don't speak, don't deny it! It's useless.
You have done it, and you know that you have done it."
I think I expected Joyce to be crushed—I expected her to cry. I
stood there panting and waiting for it. But she was neither crushed
nor did she cry; she was not even angry. She stood there quietly,
looking away from me out of the window, and at last she said:
"You're mistaken, Meg; I never wanted to rob you of your lover. If
you remember, when first I came home I told you that it was my
hope such a thing might happen between you. I always thought you
were too clever for the folk about here, and I thought he was clever.
But you know you told me it never could be. You led me to believe
you hated him, and always should hate him, because he had come
to the farm to do your work. I believed it. Yes, until quite a little
while ago I believed it. Then—"
"Well?" asked I, scornfully. "Then? What then?"
"Then, when I began to suspect that I might be mistaken, I
resolved to go back and live with Aunt Naomi until matters were
settled between you. That's what I was telling Mr. Harrod the day
you came into the parlor last week."
"Oh, that's what you were telling him," cried I. "You don't say
what he said to you that made you tell him that. You don't say if you
also told him that you were engaged to another man."
"I didn't, because he said nothing to me to warrant it," answered
my sister. "If he had I should have told him that I was not free."
"Ah, you do mean to keep your word to Frank, then?" asked I.

"I mean to keep my word to him if he wishes it," answered she, in
a low voice.
Her face ought to have shamed me, but it raised the devil in me.
"Well, if you still love Frank there is no need for you to go away,"
said I, brutally. "Or is it because you are afraid of Mr. Harrod's peace
of mind that you want to go?"
"Oh, Meg, how can you?" murmured Joyce.
Yes, how could I? The evil spirit was stronger than myself.
"It doesn't occur to you that this fine generosity of yours comes
too late," cried I. "But the mischief is done. I won't have you go
away now. I will go away."
"You!" exclaimed Joyce. "Where?"
"Not to Aunt Naomi's," I began, scornfully; and for a moment the
temptation rose up in me to show her that I too was loved, was
sought—to tell her where I might go if I chose, and be cherished, I
knew it, for a lifetime. But the memory of the squire's face, of the
little tremble in his voice, came back to me, and I could not speak of
his love. "Not to Aunt Naomi," I said. "To be a governess."
"Oh no, Meg, I couldn't let you do that," said Joyce, concernedly.
"I thought perhaps you were going to say something quite different.
I have had a fancy now and then of late that we were all of us
mistaken in that foolish notion of the reason why the squire has
been such a faithful visitor to us all these years. Supposing it were
as I fancy, don't you think you could grow to love him, Meg? He is
worthy of you in every way."
She spoke with a strange pleading; her words heaped fuel on the
fire within me; she paused for an answer, but I gave her none. "He
is coming here to-night. I heard him promise mother he would
come. Oh, how I wish it might be about you! Do you think there is
any chance?"

Her voice flew at me like a shaft from a bow. I felt myself grow
cold.
"How dare you?" I cried. "How dare you?"
I could say no more—I was paralyzed—I had no words.
Poor transparent Joyce, who had meant to be so generous, and
who undid her work so thoroughly! How little I repaid her with my
gratitude. She stood there gazing at me with a frightened expression
on her lovely face.
"Go away, go away!" I stammered, wildly. "I want you to go
away."
She made a movement forward as if to beg my pardon for
anything she had said amiss. There was concern, pity, distress in her
eyes, but I put her away. She went out of the room slowly, clasping
the fragments of the broken bowl in her apron.
I threw myself down on the far window-seat. I did not cry, I never
cried; but my whole body was trembling convulsively. I sat there in a
trance till the latch of the front door roused me, and I heard some
one come slowly, very slowly, across the hall.
Father came into the parlor; he came across to where I was, and
laid his hand upon my head. The touch of it seemed to pass into me
and soothe my troubled spirit.
"God help us to forget our troubles in those of others, Meg," he
said, gravely, after some minutes.
And then I remembered that he had just come from the death-bed
of that little lad whom he had loved so well.
I think there were tears in my eyes then.

CHAPTER XXXVII.
The squire came that night to visit us, as Joyce had predicted. We
were still sitting round the supper-table when he came in—a gloomy
party. How unlike the merry, argumentative gatherings of old! Joyce
and I did not look at one another, but Trayton Harrod glanced now
and then at us both. The traces of tears were on my sister's face.
But father pushed his plate aside untouched, and turned to the
bailiff with his business manner.
"Will you see to those poor folk down at the camp having a week's
wage before they are discharged, Harrod?" said he. "Those of them
who won't be needed, I mean."
"We'll see first how many will be needed, sir," answered Harrod,
trying to be cheerful.
"Our own folk will be enough," replied father, quietly. "It's rough
weather, and there are children down there. It's useless keeping
them about for nothing."
Harrod was silent, and father lit his pipe. We none of us spoke of
the little child who we knew was in his thoughts, but mother sighed.
I think that little grave was very near to another little grave that she
had in the abbey church-yard.
The squire shook hands with me just as usual when he came in,
looking full into my eyes, with such a concerned look of kind inquiry
as made me feel ashamed of my heavy face; but I made an excuse
to get away at once—I could not stay in the room. I went into the
kitchen to make cakes.
Not long afterwards I heard the front door close upon Trayton
Harrod—I knew his step well enough—and then Joyce came into the
kitchen. I know I asked her what she wanted in there at that time of

day, for I did not care for the squire to be left alone with my parents,
but she said that mother had sent her away. I saw Deb raise her
eyebrows and purse her mouth in a way that was, as we knew, a
sure forerunner of some sharp, good-natured raillery.
"Oh, what was that for, I wonder? What's the secret now?" said
she, wiping her big red arms, and then stirring up the fire with a
sharp brisk motion that betokened her most biting mood.
"I don't know," said Joyce, but in a tone that said she knew very
well.
"Well, well, we've all expected it this long while past," said Deb.
"I'm glad it's come at last."
She plunged her hands into the dish-tub once more, and looked
up with a comical expression of triumph on her ugly old face.
"I don't know what you mean," said Joyce, faintly.
"Oh, don't you?" answered she. "Perhaps Meg does. Eh, do you
know, Margaret?"
"I think you had better mind your own business, or talk of things
you know something about," said I, tartly.
But Deb only laughed good-humoredly.
"I suppose you make no doubt it's your pretty face the squire's
after, eh, Joyce?" persisted she, mercilessly.
Joyce flushed painfully.
"Don't, Deb, don't," said she.
"Well, my dear, no shame to you," added the old woman; "we
have all thought the same thing. But maybe it isn't. Maybe Meg
knows what he has come for, and is thinking over what answer she'd
give him now."
"It wouldn't take me long to think what answer I should give you,"
cried I, fairly out of patience. "If the squire wanted an answer from

me I could give him one without asking your advice, I dare say. But
he's not such a fool."
"No, the squire's no fool," retorted Deb; "but I'm thinking other
folk aren't so very far off it. The Lord grant you don't all of you get a
lesson stiffer than you reckoned for one of these days, my dears,"
added she, with a little sigh.
We said no more on the subject. Joyce soon went up-stairs on
some household job, and Deb and I went on silently with our work.
But before my cakes were ready for the oven mother called me into
the parlor. The squire had left. As Joyce had hoped, he had spoken
to mother about me.
I knew it the moment I went into the room. I am sure he had not
spoken willingly; but that he had said something, I knew the
moment I looked at mother. There was a flush upon her cheek and a
light in her eye that told of surprise, but of pride and pleasure also.
It proved how there was never really any favoritism in her for my
sister, for she showed not the slightest disappointment that the
squire's proposal was for me and not for Joyce.
"Margaret," said she, sitting down in the big wooden chair
opposite to father, who leaned forward in his favorite attitude, as
though about to rise—"Margaret, the squire has just been here." She
stopped a moment and half smiled. "The squire is very fond of you,
Margaret," she added, gravely, going at once, as was her way, to the
heart of the matter.
"The squire is fond of us all, I know," I answered, evasively. "He
has known us such a long time."
"But he is fond of you in a different way to that," continued
mother. "He loves you as a man loves the woman whom he could
make his wife."
I did not answer for a bit, and mother, fancying, I suppose, that I
must be as surprised as she was at the news, went on: "I had
thought once it would be different, but now many things are

explained. I think he has loved you ever since you began to grow
up. It ought to make any girl feel proud, I'm sure."
"Yes," said I, softly. And I did feel proud, quite as proud as mother
could wish, but I was not going to show it in the way that mother
expected.
"Of course," she went on, after I had been silent a little while, "I
quite understand how such a piece of news must come as a great
surprise to you, almost as though it would take your breath away, I
dare say. I don't wonder you don't know what to say."
Still I was silent. I stood by the table, twisting the fringe of the
table-cover in my hand.
"I don't want to press you now," continued she. "Take your time
about it, and tell me your mind in a day or two."
"Did the squire ask you to ask me my mind?" I said then,
hurriedly.
It was mother's turn to be silent at that. And I knew that I had
guessed aright, and that the squire had probably only had his secret
drawn from him against his will by some remark showing the
mistake that mother too had made about his love for Joyce. I even
felt sure that he had specially begged that I should not be spoken to
on the matter.
"Squire Broderick was speaking mostly about your sister,"
answered mother, evasively. "You know I told you I felt it my duty to
set him straight about what you allowed you had made him think
mistakenly about. And he was very much relieved when I told him
there was no engagement between Joyce and that nephew of his.
It's plain to see he thinks no good of him."
"Gently, gently, mother," murmured father, in remonstrating tones.
"But I suppose in that way he came to guess what was in my
mind about him and her, and thought it best to put it right,"
concluded mother.

Of course I saw in a moment that it had all happened exactly as I
might have been sure from the squire it would happen. The
knowledge gave me courage. "I will give my answer to the squire
himself when he asks me," I said, bravely.
Mother looked at me. I fancied there was a half-apologetic look in
her eyes.
"The squire will not ask you, Margaret," said she. "I suppose he's
timid. I suppose all good men are timid before the woman they love,
however much they may really be worthy of her—the worthier
perhaps the more so. It seems strange, but the squire'll never ask
you to your face. So you'd better make up your mind to it. Your
answer'll have to come through your parents in the old-fashioned
way."
I went back to my occupation of pulling the fringe of the table-
cover.
"But there's no need for you to say anything yet a while, lass,"
said father, after a few minutes.
It was the first time he had spoken, and I looked at him
reassured.
"Oh yes, I think I had just as well say what I have to say now," I
answered, with sudden boldness. "What's the good of waiting? I
sha'n't change my mind. I can never change my mind. I can't marry
Squire Broderick, if that's what you mean he wants."
There was silence. Mother seemed to be actually stupefied.
"But perhaps, after all, it isn't what he wants," added I, cheerfully,
after a bit. "He's fond of me, because he has known me ever since
I've been a little girl, and—well, because he is fond of me. But
perhaps, after all, he doesn't want to marry me. I shouldn't think he
would be so silly. I shouldn't be a bit of credit to him. I shouldn't be
a bit suited to it. Not because father's a farmer, but because—well,
because I'm not that sort of girl, like Joyce."
Mother had found her tongue.

"That's for the squire to decide," said she. "I know well enough it's
a rise for any daughter of mine to marry into the Brodericks. Yes,
you may say what you like, Laban," insisted she, fearlessly, turning
to father, who had looked up with the old fire in his eye. "Our family
may be older than his, but as the world goes now he's above us, and
marriage with him would be a rise for our child. And I think that it
would be a very good thing for one of our girls to be wed with the
squire, and that's the truth."
Mother spoke emphatically, as though this were a question that
had often arisen between her and father, as indeed I knew that it
had, although not on my account. I looked round to see him fire up
as I had seen him do before. I waited to hear him say that if the
squire thought he was doing us a favor by asking one of us to marry
him he was mistaken; but the light had all died out of his eye, and if
his lip trembled, it was plain enough that it was not with anger.
"No doubt you're right, Mary," he said, very slowly. "Let class and
family and such-like be. There's times when we forget all that. The
squire's a good man, a good man."
I was dumb. I had certainly never thought that father would want
me to marry the squire. But a retort that had risen to my lips at
mother's speech, to the effect that I certainly shouldn't marry the
squire, because it would be "a good thing" for me, died away. I was
ashamed of it. It was so true that the squire was "a good man," and
I was proud of his love.
"I can't marry the squire, mother, because I don't love him," said
I, humbly.
Mother rose from her seat in all the height and breadth of her soft
gray skirts.
"You and I never were of one mind as to what we meant by love,
Margaret," said she. "But you take my advice. You don't say anything
about this now, but just go away and think things over in your own
mind for a while. Maybe you'll see you're not likely to be loved again
as squire loves you. And maybe you'll say to yourself there ain't

anything very much better to do than to make yourself worthy of it.
Of course I don't know; folk are so different; and there's such a deal
talked about love nowadays that most like it's grown to be
something better than it was when I was young. But it won't hurt
you to consider a while anyway."
"It's no use," said I, doggedly. "I suppose folk are different; but I
can never marry a man I don't love as he loves me. I can't help it.
That's the truth."
Mother had reached the door; she was going out, but she turned
round. She was angry. The squire was rich, a gentleman. She had
known him all his life, and knew that he was a good and kind man,
and would make a good and true husband. Would not any mother
have desired him for a son-in-law? She guessed at no reason why I
should not wed him, and I think it was natural that she should be
angry at mere obstinacy. I think so now, but I did not think so then.
"You can't marry a man you don't love as he loves you," repeated
she, with an accent of something very like scorn. "Well, my girl, let
me tell you that the very best sort o' love a woman can have for a
man is gratitude, and if she can't live happy with that she's no good
woman. There's no happiness comes of it when the woman's the
first to love, for it's heartache and no mistake when she must needs
pass her life with a man she loves more than he do her. There—I'm
prating to the wind, I know. There never was a girl yet thought an
old woman had once known what love was. You must go your own
way, but you may take my word for it that your opinion about love'll
be more worth knowing in twenty years' time than it is now. A chit
like you, indeed! At least squire knows what he is about."
And with that she went out of the room and left me standing
there, frozen into silence. The torrent of her unwonted speech,
poured forth from the furnace of an unwonted fire in her, had fallen
upon me like a cold stream of icy water. Had she guessed? Had
every one guessed? Was I the sport of the community? Had I worn
my heart upon my sleeve indeed?

I turned round to find father's gaze fixed upon me anxiously. I
couldn't make out just what it meant—it was so full of a keen yet
half-puzzled inquiry; but it was tender and sympathetic, and it
soothed my ruffled spirit.
"You mustn't let mother's words hurt you, child," he said, kindly.
"Mother's tongue is sharp sometimes, because she puts things in
plain English; but she's a wise woman, Meg, a wise woman. There
are never any clouds and mists round the tract of country mother
travels. She sees things straight."
"I don't believe one person can ever see for another," declared I,
stoutly. "However poor my opinion may be, it's all the light I have. I
can't wait twenty years to decide what to do now."
Father smiled, but sadly. "Yes, we must all fight our own fight," he
said, with a sigh.
"Oh, father, I can't believe you want me to marry Squire
Broderick," said I, turning from the reflective which father so loved
to the practical side of the question. "You always used to say that
you wouldn't like us to marry out of our station."
"My dear," he said, "there's many windows that'll let in light if we'll
only open them. But sometimes we're a long while before we'll open
more than one window. I dare say, if the truth were known, it wasn't
all at once the squire made up his mind that he wanted to marry out
of his station. We mustn't forget that, Meg. It shows he loves you
truly, child, and that he's a man above the common. The squire's a
good man, a good man and true. And, after all, that's more than
theories and such like."
I looked up at father anxiously.
"Would you have liked to see me the squire's wife, father?" asked
I.
He held out his hand, beckoning me to him, and I went and knelt
down at his side.

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