Acc300 Principles of Accounting: Week 4 (P2-6A Sievert Corporation and P13-2A Lucille Company)

Acc300 Principles of Accounting Week 4 Assignment P2-6A Condensed balance sheet and income statement data for Sievert Corporation are presented here and on the next page. SIEVERT CORPORATION Balance Sheets 31-Dec Assets 2012 2011 Cash 28,000 20,000 Receivables (net) 70,000 62,000 Other current assets 90,000 73,000 Long-term investments 62,000 60,000 Plant and equipment (net) 510,000 470,000 Total assets 760,000 685,000 Liabilities and Stockholders’ Equity Current liabilities 75,000 70,000 Long-term debt 80,000 90,000 Common stock 330,000 300,000 Retained earnings 275,000 225,000 Total liabilities and stockholders’ equity 760,000 685,000 SIEVERT CORPORATION Income Statements For the Years Ended December 31 2012 2011 Sales 750,000 680,000 Cost of goods sold 440,000 400,000 Operating expenses (including income taxes) 240,000 220,000 Net income 70,000 60,000 Additional information: Cash from operating activities 82,000 56,000 Cash used for capital expenditures 45,000 38,000 Dividends paid 20,000 15,000 Average number of shares outstanding 33,000 30,000 Instructions Compute these values and ratios for 2011 and 2012. (a) Earnings per share. (b) Working capital. (c) Current ratio. (d) Debt to total assets ratio. (e) Free cash flow. (f ) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2011 to 2012 of Sievert Corporation P13-2A The comparative statements of Lucille Company are presented here. LUCILLE COMPANY Income Statements For the Years Ended December 31 2012 2011 Net sales 1,890,540 1,750,500 Cost of goods sold 1,058,540 1,006,000 Gross profit 832,000 744,500 Selling and administrative expenses 500,000 479,000 Income from operations 332,000 265,500 Other expenses and losses Interest expense 22,000 20,000 Income before income taxes 310,000 245,500 Income tax expense 92,000 73,000 Net income 218,000 172,500 LUCILLE COMPANY Balance Sheets 31-Dec Assets 2012 2011 Current assets Cash 60,100 64,200 Short-term investments 74,000 50,000 Accounts receivable 117,800 102,800 Inventory 126,000 115,500 Total current assets 377,900 332,500 Plant assets (net) 649,000 520,300 Total assets 1,026,900 852,800 Liabilities and Stockholders’ Equity Current liabilities Accounts payable 160,000 145,400 Income taxes payable 43,500 42,000 Total current liabilities 203,500 187,400 Bonds payable 220,000 200,000 Total liabilities 423,500 387,400 Stockholders’ equity Common stock ($5 par) 290,000 300,000 Retained earnings 313,400 165,400 Total stockholders’ equity 603,400 465,400 Total liabilities and stockholders’ equity 1,026,900 852,800 All sales were on account. Net cash provided by operating activities for 2012 was $220,000. Capital expenditures were $136,000, and cash dividends were $70,000. Instructions Compute the following ratios for 2012. (a) Earnings per share. (b) Return on common stockholders’ equity. (c) Return on assets. (d) Current ratio. (e) Receivables turnover. (f ) Average collection period. (g) Inventory turnover. (n) Free cash flow. (h) Days in inventory. (i) Times interest earned. (j) Asset turnover. (k) Debt to total assets. (l) Current cash debt coverage. (m) Cash debt coverage.
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