Acc557 Financial Accounting: Week 10 Chapter 14 (E14-3,E14-4,E14-13,P14-6A)

Acc557 Financial Accounting

Week 10 Chapter 14 (E14-3,E14-4,E14-13,P14-6A)



Exercise 14-3

The comparative condensed balance sheets of Garcia Corporation are presented below:

GARCIA CORPORATION

Comparative Condensed Balance Sheets

December 31

2014 2013

Assets

Current assets 76,000 80,000

Property, plant, and equipment (net) 100,000 90,000

Intangibles 24,000 40,000

Total assets 200,000 210,000

Liabilities and stockholders' equity

Current liabilities 40,000 48,000

Long-term liabilities 140,000 150,000

Stockholders' equity 20,000 12,000

Total liabilities and stockholders' equity 200,000 210,000

Instructions:

(a) Prepare a horizontal analysis of the balance sheet data for Garcia Corporation using 2013 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000). (20%). Round percentages to 1 decimal place, e.g. 12.3%.)

(b) Prepare a vertical analysis of the balance sheet data for Garcia Corporation in columnar form for 2014. (Round percentages to 0 decimal places, e.g. 12%.)



Exercise 14-4

The comparative condensed income statements of Hendi Corporation are shown below:

HENDI CORPORATION

Comparative Condensed Income Statements

For the Years Ended December 31

2014 2013

Net sales 600,000 500,000

Cost of goods sold 468,000 400,000

Gross profit 132,000 100,000

Operating expenses 60,000 54,000

Net income 72,000 46,000

Instructions:

(a) Prepare a horizontal analysis of the income statement data for Hendi Corporation using 2013 as a base. (Show the amounts of increase or decrease.) (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000). (20%). Round percentages to 1 decimal place, e.g. 12.3%.)

(b) Prepare a vertical analysis of the income statement data for Hendi Corporation in columnar form for both years. (Round percentages to 1 decimal place, e.g. 12.3%.)



Exercise 14-13

Maulder Corporation has income from continuing operations of $290,000 for the year ended December 31, 2014. It also has the following items (before considering income taxes).

1. An extraordinary loss of $70,000.

2. A gain of $35,000 on the discontinuance of a division.

3. A correction of an error in last years financial statements that resulted in a $25,000 understatement of 2013 net income.

Assume all items are subject to income taxes at a 30% tax rate.



Instruction:

Prepare an income statement, beginning with income from continuing operations.

Problem 14-6A

The comparative statements of Beulah Company are presented below.

Beulah Company

Income Statement

For the Years Ended December 31

2014 2013

Net sales (all on account) 500,000 420,000

Expenses

Cost of goods sold 315,000 254,000

Selling and administrative 120,800 114,800

Interest expense 7,500 6,500

Income tax expense 20,000 15,000

Total expenses 463,300 390,300

Net income 36,700 29,700

BEULAH COMPANY

Balance Sheets

December 31

Assets 2014 '2013

Current assets

Cash 21,000 18,000

Short-term investments 18,000 15,000

Accounts receivable (net) 85,000 75,000

Inventory 80,000 60,000

Total current assets 204,000 168,000

Plant assets (net) 423,000 383,000

Total assets 627,000 551,000

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable 122,000 110,000

Income taxes payable 12,000 11,000

Total current liabilities 134,000 121,000

Long-term liabilities

Bonds payable 120,000 80,000

Total liabilities 254,000 201,000

Stockholders' equity

Common stock ($5 par) 150,000 150,000

Retained earnings 223,000 200,000

Total stockholders' equity 373,000 350,000

Total liabilities and stockholdersr' equity 627,000 551,000

Additional data:

The common stock recently sold at $19.50per share.

Compute the following ratios for 2014. (Round Earnings per share and Acid-test ratio to 2 decimal places, e.g. 1.65, and all others to 1 decimal place, e.g. 6.8 or 6.8% .)

a. Current Ratio

b. Acid-test Ratio

c. Receivables Turnover

d. Inventory Turnover

e. Profit Margin

f. Asset Turnover

g. Return on Assets

h. Return on Common Stockholders' Equity

i. Earnings per share

j. Price-Earnings Ratio

k. Payout Ratio

l. Debt to Asset Ratio

m. Times Interest Earned

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