College Accounting: Chapter 24 Mastery Problem - Comparative financial statements for Na Pali Coast

College Accounting
Chapter 24 Mastery Problem
Comparative financial statements for Na Pali Coast Company for the year ending December 31, 20-1 ad 20-2 are provided.
Na Pali Coast Company
Comparative Income Statement
For Years Ended December 31, 20-2 and 20-1
20-2 20-1
Net sales 466,451 291,613
Cost of goods sold 285,889 188,626
Gross profit 180,562 102,987
Operating expenses 125,650 78,200
Operating income 54,912 24,787
Other expenses 1,200 500
Income before income taxes 53,712 24,287
Income tax expense 18,250 7,285
Net income $35,462 $17,002

Na Pali Coast Company
Comparative Balance Sheet
December 31, 20-2 and 20-1
20-2 20-1
Assets
Current Assets:
Cash 8,600 7,500
Government notes 3,000 2,000
Accounts receivable (net) 10,500 8,600
Merchandise inventory 53,600 33,200
Supplies and prepayments 4,500 3,200
Total current assets 80,200 54,500
Property, plant and equipment:
Land 40,000 40,000
Buildings (net) 200,000 150,000
Delivery equipment (net) 13,000 15,000
Office equipment (net) 5,400 6,000
Patents 5,000 6,000
Total property, plant and equipment 263,400 217,000
Total Assets $343,600 $271,500
Liabilities
Current Liabilities:
Notes payable 5,000 3,000
Accounts payable 28,700 22,300
Accrued and withheld payroll taxes 4,200 5,600
Accrued interest payable 500 1,700
Total current liabilities 38,400 32,600
Long-term liabilities:
Bonds payable 50,000 20,000
Total Liabilities 88,400 52,600
Stockholders' Equity
Common stock ($5 par) 115,000 100,000
Paid-in capital in excess of par 65,000 60,000
Retained earnings 75,200 58,900
Total Stockholders' Equity 255,200 218,900
Total Liabilities and Stockholders' Equity $343,600 $271,500

Required:
1. Perform horizontal analysis of the comparative income statement and balance sheet. Round percentages to one decimal place.
2. Perform vertical analysis of the comparative income statement and balance sheet. Round percentages to one decimal place.
3. Compute the following liquidity measures for 20-2 (round all calculations to two decimal places):
a. Working capital
b. Current ratio
c. Quick or acid-test ratio
4. Compute the following activity measures for 20-2 (round all calculations to two decimal places):
a. Accounts receivable turnover and average number of days to collect receivables (Assume that sales on account for 20-2 were $120,000).
b. Merchandise inventory turnover and average number of days to sell inventory
c. Asset turnover
5. Compute the following profitability measures for 20-2 (round all calculations to two decimal places):
a. Profit margin ratio
b. Return on assets
c. Return on common stockholders' equity
d. Earnings per share of common stock
6. Compute the following leverage measures for 20-2 (round all calculations to two decimal places):
a. Debt-to-equity ratio
b. Times interest earned ratio (Assume interest expense for 20-2 was $1,200)
7. Compute the following market measures for 20-2 (round all calculations to two decimal places):
a. Price-earnings ratio (The market price of Na Pali Coast Company's common stock was $23.00 on December 31, 20-2).
b. Book value per share of common stock.
Powered by