MBA560 Financial and Managerial Accounting: Module 5 Homework (P9-23 and P10-21)

MBA560 Financial and Managerial Accounting
Module 5 Homework (P9-23 and P10-21)

Problem 9-23 Ratio analysis
Use the financial statements for Bernard Company from Problem 9-22 to calculate the following for 2012 and 2011.
Bernard Company
Balance Sheets
As of December 31
2012 2011
Assets
Current assets
Cash 16,000 12,000
Marketable securities 20,000 6,000
Accounts receivable (net) 54,000 46,000
Inventories 135,000 143,000
Prepaid items 25,000 10,000
Total current assets 250,000 217,000
Investments 27,000 20,000
Plant (net) 270,000 255,000
Land 29,000 24,000
Total assets $576,000 $516,000
Liabilities and Stockholders Equity
Liabilities
Current Liabilities
Notes payable 17,000 6,000
Accounts payable 113,800 100,000
Salaries payable 21,000 15,000
Total current liabilities 151,800 121,000
Noncurrent liabilities
Bonds payable 100,000 100,000
Other 32,000 27,000
Total noncurrent liabilities 132,000 127,000
Total liabilities 283,800 248,000
Stockholders' equity
Preferred stock, par value $10, 4% cumulative, non-participating; 8,000 shares authorized and issued 80,000 80,000
Common stock, no par; 50,000 shares authorized; 10,000 shares issued 80,000 80,000
Retained earnings 132,200 108,000
Total stockholders' equity 292,200 268,000
Total liabilities and stockholders' equity $576,000 $516,000

Bernard Company
Statement of Income and Retained Earnings
For the Years Ended December 31
2012 2011
Revenues
Sales (net) 230,000 210,000
Other revenues 8,000 5,000
Total revenues 238,000 215,000
Expenses
Cost of goods sold 120,000 103,000
Selling, general, and administrative expenses 55,000 50,000
Interest expense 8,000 7,200
Income tax expense 23,000 22,000
Total expenses 206,000 182,200
Net earnings (net income) 32,000 32,800
Retained earnings, January 1 108,000 83,000
Less: Preferred stock dividends 2,800 2,800
Common stock dividends 5,000 5,000
Retained earnings, December 31 $132,200 $108,000

Required:
a. Working capital
b. Current Ratio
c. Quick Ratio
d. Accounts receivable turnover (beginning receivables at 01/01/2011, was $47,000)
e. Average number of days to collect accounts receivable
f. Inventory turnover (beginning inventory at 01/01/2011, was $140,000)
g. Average number of days to sell inventory
h. Debt to asset ratio
i. Debt to equity ratio
j. Times interest earned
k. Plant assets to long-term debt
l. Net margin
m. Asset turnover
n. Return on investment (ROI)
o. Return on Equity (ROE)
p. Earnings per share
q. Book value per share of common stock
r. Price-earnings ratio (market price per share: 2011, $11.75; 2012, $12.50)
s. Dividend yield on common stock

Problem 10-21 Product versus general, selling, and administrative costs
The following transactions pertain to 2012, the first year of operations of Hall Company. All inventory was started and completed during 2012. Assume that all transactions are cash transactions.
1. Acquired $4,000 cash by issuing common stock.
2. Paid $720 for materials used to produce inventory.
3. Paid $1,800 to production workers.
4. Paid $540 rental fee for production equipment.
5. Paid $180 to administrative employees.
6. Paid $144 rental fee for administrative office equipment.
7. Produced 300 units of inventory of which 200 units were sold at a price of $12 each.

Required
Prepare an income statement, balance sheet, and statement of cash flows.
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