P15
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| Student Name: |
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| Class: |
| Problem 15-11 |
| 1. |
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| MODERN BUILDING SUPPLY |
|
| Ratios |
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| This Year |
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| Last Year |
| curret assets |
| $ 2,
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| 0 |
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| 60 |
,000
| $
| 1,470,000 |
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| current liabilities |
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| $ 1,
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| 10 |
0,000
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| $
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|
| 600,000 |
|
| Working capital |
$
| 9 |
60,000
$ 870,000 |
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| Correct! |
Correct!
| current assets |
$
2,060,000 |
$ 1,470,000
current liabilities $ 1,100,000
$ 600,000 |
|
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| Current ratio |
2.45 |
0 Correct!
| c,ms,ar,s.t. note |
$ 740,000 |
$ 6,4
|
| 50 |
,000
current liabilities $ 1,100,000 $ 600,000
|
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| Acid-test ratio |
0 0
| sales |
| $ 7,000,000 |
| $ 6,000,000 |
| A.R. |
$ 525,000 |
$
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| 400,000 |
|
|
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| Accounts receivable |
turnover
1
| 3. |
3
| 15.0 |
|
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|
| Average collection period |
0 0
| cogs |
$
| 5,400,000 |
$ 4,
|
| 800,000 |
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| Inventory |
$
| 1,050,000 |
$ 800,000 |
|
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| Inventory turnover |
ratio
5.1 |
|
| 6.0 |
|
| Average sales period |
0 0
| total liabilites |
$
| 1,850,000 |
$
| 1,350,000 |
| stockholders equity |
$
| 2,150,000 |
$
| 1,950,000 |
|
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|
|
| Debt-to-equity ratio |
0.860 |
Correct! 0
| earnings |
$
| 630,000 |
$
| 4
|
| 90,000 |
| interest expense |
|
| $ 90,000 |
$ 90,000
|
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| Times interest earned |
| 7.0 |
Correct! 0
|
| 2a. |
MODERN BUILDING SUPPLY
| Common-Size
|
| Balance Sheet |
s
This Year Last Year
|
|
|
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| Current assets |
:
|
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| Cash |
55.0% |
|
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| Marketable securities |
|
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| Accounts receivable, net |
Inventory
|
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| Prepaid expenses |
|
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| Total |
current assets
|
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| Plant and equipment |
, net
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| Total assets |
0 0
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| Liabilities |
:
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| Current liabilities |
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| Bonds payable |
, 12%
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| Total liabilities |
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| Stockholders’ equity |
:
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| Preferred stock |
, $50 par, 8%
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| Common stock |
, $10 par
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| Retained earnings |
|
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| Total stockholders’ equity |
|
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| Total liabilities and equity |
0 0
|
| 2b. |
MODERN BUILDING SUPPLY
| Common-Size
|
| Income Statement |
s
This Year Last Year
|
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| Sales |
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| Cost of goods sold |
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| Gross margin |
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| Selling and administrative expenses |
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| Net operating income |
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| Interest expense |
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| Net income |
before taxes
|
| Income taxes |
Net income
0 0
Enter appropriate data in yellow cells. Your answers for each of the ratios will be verified.
Enter appropriate data in yellow cells.
Enter appropriate data in yellow cells.
Given P15-11
| Given Data P15-11: |
|
| Requested loan amount |
$ 300,000 |
MODERN BUILDING SUPPLY
|
| Comparative Balance Sheet |
This Year Last Year
|
| Assets |
| Current assets: |
Cash $ 90,000
| $
|
|
| 200,000 |
Marketable securities – 50,000
Accounts receivable, net
| 650,000 |
400,000
Inventory
|
| 1,300,000 |
800,000
Prepaid expenses
|
| 20,000 |
20,000
|
|
| Total current assets |
2,060,000 1,470,000
| Plant and equipment, net |
1,940,000 |
1,830,000 |
Total assets
|
| $ 4,000,000 |
| $
| 3,300,000 |
|
| Liabilities and Stockholders’ Equity |
Liabilities:
Current liabilities $ 1,100,000 $ 600,000
Bonds payable, 12%
|
| 750,000 |
750,000
Total liabilities 1,850,000 1,350,000
|
| Stockholders’ equity: |
Preferred stock, $50 par, 8% 200,000 200,000
Common stock, $10 par
|
| 500,000 |
500,000
Retained earnings
| 1,450,000 |
| 1,250,000 |
Total stockholders’ equity 2,150,000 1,950,000
|
| Total liabilities and stockholders’ equity |
$ 4,000,000 $ 3,300,000
MODERN BUILDING SUPPLY
|
| Comparative Income Statement and Reconciliation |
This Year Last Year
Sales $ 7,000,000 $ 6,000,000
Cost of goods sold 5,400,000
| 4,800,000 |
Gross margin
| 1,600,000 |
| 1,200,000 |
Selling and administrative expenses
| 970,000 |
710,000 |
Net operating income 630,000 490,000
Interest expense 90,000 90,000
|
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|
|
| Net income before taxes |
540,000 |
400,000
|
| Income taxes (40%) |
2
|
| 16,000 |
| 160,000 |
Net income
| 324,000 |
| 240,000 |
|
| Dividends paid: |
| Preferred dividends |
16,000 16,000
| Common dividends |
108,000 |
60,000
|
| Total dividends paid |
124,000 |
76,000 |
|
| Net income retained |
200,000
164,000 |
|
| Retained earnings, beginning of year |
1,250,000
1,086,000 |
|
| Retained earnings, end of year |
$ 1,450,000 |
$ 1,250,000 |
|
| Typical ratios: |
Current ratio
| 2.5 |
Acid-test ratio
|
| 1.2 |
Average collection period
| 18 |
|
|
| days |
|
| Average sale period |
50 days
Debt-to-equity ratio
| 0.75 |
Times interest earned 6.0
|
|
| Return on total assets |
10% |
|
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| Price-earnings ratio |
9
|
| Accounts receivable, beginning of last year |
$ 350,000 |
|
| Inventory, beginning of last year |
$ 720,000 |
P15-16
Student Name:
Class:
| Problem 15-16 |
|
|
|
|
| HEDRICK COMPANY |
| Rates of Return |
| 1a. |
This Year Last Year
Net income
| Add after-tax cost of interest: |
Total
| Average total assets |
Return on total assets
0 0
| 1b. |
Net income
| Less preferred dividends |
|
| Net income remaining for common |
0 0
| Average total stockholders’ equity |
| Less average preferred stock |
| Average common equity |
| Return on common equity |
0 0
HEDRICK COMPANY
| Stockholders’ Well Being |
2a.
Net income remaining for common
|
| Avg. number of common shares outstanding |
|
|
|
|
| Earnings per share |
0 0
2b.
|
| Dividends per share |
|
| Market price per share |
| Dividend yield ratio |
0 0
| 2c. |
Dividends per share
Earnings per share
| Dividend payout ratio |
0 0
| 2d. |
Market price per share
Earnings per share
Price-earnings ratio
0 0
| 2e. |
Stockholders’ equity
| Less preferred stock |
| Common stockholders’ equity |
| Number of common shares |
| Book value per share |
0 0
| 2f. |
Gross margin
Sales
| Gross margin percentage |
0 0
3.
HEDRICK COMPANY
Ratios
This Year Last Year
Working capital
0 0
Current ratio
0 0
Acid-test ratio
0 0
Average collection period
0 0
Average sales period
0 0
Debt-to-equity ratio
0 0
Times interest earned
0 0
Enter appropriate data in yellow cells. Your answers for each of the ratios will be verified.
Enter appropriate data in yellow cells. Your answers for each of the sections will be verified.
Enter appropriate data in yellow cells. Your answers for each of the ratios will be verified.
Enter appropriate data in yellow cells. Your answers for each of the ratios will be verified.
Given SP15-16
| Given Data SP15-16: |
Requested loan amount
| $
| 1,000,000 |
HEDRICK COMPANY
Comparative Balance Sheet
This Year Last Year
Assets
Current assets:
Cash
| $320,000 |
$420,000 |
Marketable securities – 100,000
Accounts receivable, net
| 900,000 |
600,000
Inventory 1,300,000 800,000
Prepaid expenses
| 80,000 |
60,000
Total current assets
| 2,600,000 |
1,980,000 |
Plant and equipment, net
| 3,100,000 |
2,980,000 |
Total assets
|
| $ 5,700,000 |
| $ 4,960,000 |
Liabilities and Stockholders’ Equity
Liabilities:
Current liabilities
| $ 1,300,000 |
$ 920,000 |
|
|
| Bonds payable, 10% |
1,200,000 1,000,000
Total liabilities
| 2,500,000 |
1,920,000 |
Stockholders’ equity:
| Preferred stock, 8%, $30 par value |
600,000 600,000
| Common stock, $40 par value |
| 2,000,000 |
2,000,000
Retained earnings 600,000
|
| 440,000 |
Total stockholders’ equity
| 3,200,000 |
3,040,000 |
Total liabilities and stockholders’ equity $ 5,700,000 $ 4,960,000
HEDRICK COMPANY
Comparative Income Statement and Reconciliation
This Year Last Year
| Sales (all on account) |
$ 5,250,000 |
$ 4,160,000 |
Cost of goods sold
| 4,200,000 |
3,300,000
Gross margin 1,050,000
| 860,000 |
Selling and administrative expenses
| 530,000 |
| 520,000 |
Net operating income 520,000
| 340,000 |
Interest expense
|
|
| 120,000 |
100,000
Net income before taxes 400,000 240,000
| Income taxes (
| 30% |
)
120,000
| 72,000 |
Net income
| 280,000 |
168,000 |
Dividends paid:
Preferred stock
|
| 48,000 |
48,000
Common stock 72,000
| 36,000 |
Total dividends paid 120,000
|
| 84,000 |
Net income retained 160,000 84,000
Retained earnings, beginning of year 440,000
| 356,000 |
Retained earnings, end of year $ 600,000
| $ 440,000 |
| Tax rate |
30%
| Percentage increase in sales |
25% |
| Common stock price, last year |
$ 20 |
| Common stock price, this year |
$ 36 |
Typical ratios:
Current ratio
| 2.3 |
Acid-test ratio 1.2
Average collection period
| 31 |
days
Average sale period 60 days
| Return on assets |
9.5% |
Debt-to-equity ratio
| 0.65 |
| Times interest earned ratio |
5.7 |
Price-earnings ratio 10
| Total assets beginning last year |
$ 4,320,000 |
| Stockholders’ equity beginning last year |
$ 3,016,000 |
Accounts receivable, beginning of last year
| $ 520,000 |
Inventory, beginning of last year
| $ 640,000 |
P15-19
Student Name:
Class:
| Problem 15-19 |
|
|
|
|
| TANNER COMPANY |
| Computations |
Interest expense
Times interest earned
|
| Earnings before interest & taxes |
0
Earnings before interest & taxes
Interest expense
Net income before taxes
0
| Income tax expense |
Net income
0
| Sales on account |
| Average accounts receivable balance |
Accounts receivable turnover
| Ending accounts receivable balance |
0
| Quick assets |
Current liabilities
Acid-test ratio
Cash
0
Current assets
Current liabilities
Current ratio
Inventory
0
| Average inventory |
Inventory turnover
Cost of goods sold
0
Gross margin
0
Gross margin
Net operating income
| Operating expenses |
0
Interest expense
| Interest rate |
Bonds payable
0
Current liabilities
Bonds payable
Total liabilities
0
| Net income, less preferred dividends |
Avg. number of common shares outstanding
Earnings per share
| Total common stock |
0
Total liabilities
Debt-to-equity ratio
Stockholders’ equity
0
Total stockholders’ equity
Common stock
Retained earnings
0
Total liabilities
Stockholders’ equity
Total assets
0
Total assets
Current assets
| Plant & equipment |
0
TANNER COMPANY
Income Statement
| For the Year Ended
| March 31 |
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Interest expense
Net income before taxes
Income taxes
Net income
0
TANNER COMPANY
Balance Sheet
March 31
Current assets:
Cash
Accounts receivable, net
Inventory
Total current assets
Plant and equipment
Total assets
Current liabilities
Bonds payable, 10%
Total liabilities
Stockholders’ equity:
|
| Common stock, $2.50 par value |
Retained earnings
Total stockholders’ equity
Total liabilities and equity
0
Enter appropriate data in yellow cells. Use your computations from above to complete the missing amounts in the financial statements.
“Net Income” and “Total liabilities and equity” will be verified.
Enter appropriate data in yellow cells. Use these computations to complete the missing amounts in the financial statements below.
Given P15-19
| Given Data P15-19: |
TANNER COMPANY
Income Statement
| For the Year Ended
| December 31 |
Sales
| $ 2,700,000 |
Cost of goods sold
|
|
|
|
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|
|
|
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|
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|
|
|
|
| ? |
Gross margin ?
Selling and administrative expenses ?
Net operating income ?
Interest expense
| 45,000 |
Net income before taxes ?
Income taxes (40%) ?
Net income ?
TANNER COMPANY
Balance Sheet
December 31
Current assets:
Cash ?
Accounts receivable, net ?
Inventory ?
Total current assets ?
Plant and equipment, net ?
Total assets ?
Liabilities
Current liabilities
| $ 250,000 |
Bonds payable, 10% ?
Total liabilities ?
Stockholders’ equity:
Common stock, $2.50 par value ?
Retained earnings ?
Total stockholders’ equity ?
Total liabilities and equity ?
| Selected financial ratios computed from above statements: |
Current ratio
| 2.40 |
Acid-test ratio
| 1.12 |
Accounts receivable turnover 15.0
Inventory turnover 6.0
Debt-to-equity ratio
| 0.875 |
Times interest earned 7.0
Earnings per share
| $4.05 |
Return on total assets
| 14% |
| Selected balances at beginning of current year: |
Accounts receivable
| $ 160,000 |
Inventory
| $ 280,000 |
Total assets
| $ 1,200,000 |
|
|
| 2 |
>P1
4 |
–
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| Student Name: |
|
|
| Class: |
| Problem 14-8 |
|
| 1. and 2. |
| Calculation of
| depreciation |
to add back to Net Income:
|
| Accumulated
| Depreciation |
, beginning balance
$
| 7 |
|
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| Correct! |
|
| Accumulated Depreciation, ending balance |
$ 8
| 5 |
Correct!
|
| Debits to Accumulated Depreciation |
$
| 10 |
Correct!
|
| Credits to Accumulated Depreciation |
$
|
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| 25 |
Correct!
|
| Changes in noncash balance sheet accounts that impact net income: |
|
|
|
| Increase in |
|
|
| Decrease in |
|
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|
|
|
| Account |
Account
| Current
|
|
| Assets |
|
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|
|
| Balance |
Balance
|
|
|
|
| Accounts receivable |
| (
|
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| 80 |
)
Correct! 0
|
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|
| Inventory |
|
|
| 3 |
5
0 Correct!
|
|
|
|
| Prepaid expenses |
(2) |
Correct! 0
|
| Current Liabilities |
|
|
| Accounts Payable |
| 75 |
Correct! 0
|
|
|
|
| Accrued liabilities |
(10) |
0 Correct!
|
|
|
|
|
| Income taxes |
payable
8 Correct! 0
|
| Changes in noncash balance sheet accounts that impact investing and financing: |
Increase in Decrease in
Account Account
|
| Noncurrent Assets |
Balance Balance
|
| Property, plant, and equipment |
(80) |
Correct! 0
| Long-term
| investment |
s
7 0 Correct!
|
| Liabilities and Stockholders’ equity |
|
|
|
|
| Bonds payable |
25 Correct! 0
|
|
|
|
| Common stock |
| (40) |
0 Correct!
|
| Property, Plant and Equipment |
|
| Property, Plant and Equipment, beginning balance |
|
|
| $ 4 |
20
Correct!
|
| Property, Plant and Equipment, ending balance |
$
|
| 500 |
Correct!
|
| Debits to Property, Plant and Equipment |
$
| 11 |
0
Correct!
|
| Credits to Property, Plant and Equipment |
|
| $ 30 |
Correct!
|
| Retained Earnings |
|
| Retained Earnings, beginning balance |
$
|
| 92 |
Correct!
|
| Retained Earnings, ending balance |
$
|
| 132 |
Correct!
|
| Debits to Retained Earnings |
$ 1
|
| 6 |
Correct!
|
| Credits to Retained Earnings |
|
|
| $ 5 |
6
Correct!
|
|
|
|
|
|
| EATON COMPANY |
| Statement of
|
|
| Cash |
Flows
| For the Year Ended December
|
| 31 |
,
|
| 2011 |
|
|
| Operating activities: |
|
|
|
|
| Net income |
| $ 56 |
| Adjustments needed to convert net income to cash basis: |
depreciation 25
| accounts receivable |
80
| inventory |
35
| prepaid expense |
2
| accts payable |
75
| accrued liabilities |
10
| income tax payable |
8
| gain on
| sale of equipment |
5
| loos on sale of equipment |
2
48 |
|
|
|
|
| Net cash provided by operating activities |
104 |
Correct!
|
|
| Investing activities: |
investment
| $ (12) |
| equipment sale |
18 |
| capital |
(110) |
|
| Net cash used for investing activities |
(80) Correct!
|
|
| Financing activities: |
| bonds payable |
25
| common stock |
(40)
| dividents |
(16) |
|
| Net cash used in financing activities |
$ (31) |
Correct!
|
|
| Net decrease in cash |
(7) |
| Cash balance, January 1, 2011 |
11
| Cash balance, December 31, 2011 |
4
Correct!
Enter appropriate data in yellow cells. Your answers for net cash provided or used for each section will be verified. Use the worksheet provided below to help with calculations.
HINT: Three of the variables are given. Solve for the fourth.
HINT: Three of the variables are given. Solve for the fourth.
HINT: Three of the variables are given. Solve for the fourth.
Given P14-8
| Given Data P14-8: |
EATON COMPANY
|
|
| Comparative Balance Sheet |
| December 31, 2011, and
|
|
| 2010 |
2011 2010
Assets
Cash $ 4
|
| $ 11 |
Accounts receivable
|
| 310 |
| 230 |
Inventory
|
|
|
| 160 |
|
|
| 195 |
Prepaid expenses 8 6
|
|
| Total current assets |
| 482 |
| 442 |
|
| Property, Plant, and equipment |
500
| 420 |
|
|
| Less accumulated depreciation |
| 85 |
|
|
| 70 |
|
| Net property, plant, and equipment |
| 415 |
| 350 |
|
|
|
| Long-term investments |
31
| 38 |
|
|
| Total assets |
|
|
| $ 928 |
|
|
| $ 830 |
|
|
| Liabilities and Stockholders’ Equity |
|
|
| Accounts payable |
$
|
| 300 |
| $ 225 |
Accrued liabilities 70 80
|
|
| Income taxes payable |
| 71 |
| 63 |
|
|
| Total current liabilities |
| 441 |
| 368 |
Bonds payable 195
|
| 170 |
|
|
| Total liabilities |
| 636 |
| 538 |
Common stock 160
|
| 200 |
|
|
| Retained earnings |
132 92
|
|
| Total stockholders’ equity |
|
|
| 292 |
292
|
|
| Total liabilities and stockholders’ equity |
$ 928 $ 830
EATON COMPANY
|
|
| Income Statement |
|
|
|
|
| For the Year Ended December 31, 2011 |
|
|
|
| Sales |
|
| $ 7 |
50
|
|
|
| Cost of goods sold |
|
| 450 |
|
|
| Gross margin |
300
|
|
|
| Selling and administrative expenses |
|
| 223 |
|
|
| Net operating income |
| 77 |
|
|
| Nonoperating items: |
|
|
| Gain on sale of investments |
$ 5
|
|
| Loss on sale of equipment |
2 3
|
|
| Income before taxes |
80
Income taxes
|
|
| 24 |
Net income $ 56
|
|
| Equipment cost |
$ 30
|
|
| Equipment selling price |
| $ 18 |
|
| Accumulated depreciation of equipment |
| $ 10 |
|
| Long-term investment purchase |
$ 7
|
|
| Long-term investment sale |
| $ 12 |
|
| Paid cash dividend |
|
|
| ? |
|
| Stock repurchase |
| $ 40 |
P14-14
Student Name:
Class:
| Problem 14-14 |
1. and 2.
Calculation of depreciation to add back to Net Income: |
Accumulated Depreciation, beginning balance
| $ 1
| 90,000 |
Correct!
Accumulated Depreciation, ending balance
| $ 2
|
| 10,000 |
Correct!
Debits to Accumulated Depreciation
|
| $ 40,000 |
Correct!
Credits to Accumulated Depreciation
|
| $ 60,000 |
Correct!
Changes in noncash balance sheet accounts that impact net income:
Increase in Decrease in
Account Account
Current Assets |
Balance Balance
Accounts receivable 10,000 0 Correct!
Inventory
|
| (54,000) |
Correct! 0
Prepaid expenses
|
| 8,000 |
0 Correct!
Current Liabilities
Accounts Payable
|
| (55,000) |
0 Correct!
Accrued liabilities
|
| (
| 7,000 |
)
0 Correct!
Income taxes payable
|
| 3,000 |
Correct! 0
Changes in noncash balance sheet accounts that impact investing and financing:
Increase in Decrease in
Account Account
Noncurrent Assets Balance Balance
Property, plant, and equipment
| (110,000) |
Correct! 0
Long-term investments
|
| 30,000 |
0 Correct!
Liabilities and Stockholders’ equity
Bonds payable
|
|
|
| 100,000 |
Correct! 0
Common stock
|
| (5,000) |
0 Correct!
Property, Plant and Equipment
Property, Plant and Equipment, beginning balance
| $ 7
| 50,000 |
Correct!
Property, Plant and Equipment, ending balance
| $
| 860,000 |
Correct!
Debits to Property, Plant and Equipment
| $
|
| 200,000 |
Correct!
Credits to Property, Plant and Equipment
|
| $ 90,000 |
Correct!
Retained Earnings
Retained Earnings, beginning balance
| $
| 150,000 |
Correct!
Retained Earnings, ending balance
| $
| 192,000 |
Correct!
Debits to Retained Earnings
| $ 28,000 |
Correct!
Credits to Retained Earnings
|
|
| $ 70,000 |
Correct!
|
|
| ALLIED COMPANY |
| Statement of Cash Flows |
For the Year Ended December 31, 2011
Operating activities:
Net income $ 70,000
| Adjustments needed to convert net income to a cash basis: |
Depreciation $ 60,000
| Accounts Receivable |
10,000
Inventory (54,000)
| Prepaid Expense |
8,000
Accounts Payable (55,000)
| Accrued Liabilities |
(7,000)
| Income tax payable |
3,000
| Gain on sale of equipment |
(20,000) |
Loss on sale of equipment
|
| 6,000 |
49,000 |
Net cash provided by operating activities
| 21,000 |
Correct!
Investing activities:
| Sale of long term investment |
50,000
sale of equipment
| 44,000 |
| Purchased equipment |
| (200,000) |
Net cash used for investing activities
| (106,000) |
Correct!
Financing activities:
| divident payment |
| (28,000) |
| issuance of bonds |
100,000
| purchase of common |
(5,000)
| Net cash provided by financing activities |
67,000 |
Correct!
Net decrease in cash
| 18,000 |
| Cash balance, Beginning of year |
33,000 |
| Cash balance, End of year |
| $
| 15,000 |
Correct!
| 3.
| Free cash flow |
computation
Net cash provided by operating activities
| $ 21,000 |
| Capital expenditures |
(200,000)
| Dividends |
(28,000)
(228,000) |
Free cash flow
| $ (207,000) |
Correct!
Enter appropriate data in yellow cells. Your answers for net cash provided or used for each section will be verified. Use the worksheet provided below to help with calculations.
HINT: Three of the variables are given. Solve for the fourth.
HINT: Three of the variables are given. Solve for the fourth.
HINT: Three of the variables are given. Solve for the fourth.
Given P14-14
| Given Data P14-14: |
| Minimum cash balance |
| $ 20,000 |
ALLIED COMPANY
Comparative Balance Sheet
| December 31, 2011, and 2010 |
2011 2010
Assets
| Current assets: |
Cash
| $ 15,000 |
$ 33,000 |
Accounts receivable 200,000
|
| 210,000 |
Inventory
| 250,000 |
196,000 |
Prepaid expenses 7,000 15,000
Total current assets
| 472,000 |
454,000 |
Long-term investments 90,000
| 120,000 |
| Plant and equipment |
860,000
| 750,000 |
Less accumulated depreciation 210,000
| 190,000 |
| Net plant and equipment |
650,000 |
560,000 |
Total assets
|
| $ 1,212,000 |
| $ 1,134,000 |
Liabilities and Stockholders’ Equity
| Current liabilities: |
Accounts payable
| $ 175,000 |
$ 230,000 |
Accrued liabilities
| $ 8,000 |
$ 15,000
Income taxes payable
| 42,000 |
39,000 |
Total current liabilities
| 225,000 |
284,000 |
Bonds payable 200,000 100,000
Total liabilities
| 425,000 |
384,000 |
| Stockholders’ equity: |
Common stock
| 595,000 |
600,000 |
Retained earnings 192,000 150,000
Total stockholders’ equity
| 787,000 |
750,000
Total liabilities and stockholders’ equity $ 1,212,000 $ 1,134,000
ALLIED COMPANY
Income Statement
For the Year Ended December 31, 2011
Sales
| $ 800,000 |
Cost of goods sold
| 500,000 |
Gross margin
| 300,000 |
Selling and administrative expenses
| 2
| 14,000 |
Net operating income
| 86,000 |
Nonoperating items:
Gain on sale of investments $ 20,000
| Loss on sales of equipment |
6,000 14,000
Income before taxes 100,000
Income taxes 30,000
Net income $ 70,000
| Additional information: |
| Long-term investment cost |
$ 30,000 |
Long-term investment sale
| $ 50,000 |
Equipment cost $ 90,000
| Equipment accumulated depreciation |
$ 40,000
Equipment selling price
| $ 44,000 |
| Dividends declared and paid |
?
| Stock was repurchased for cash |
?
P14A-5
Student Name:
Class:
| Problem 14A-5 |
EATON COMPANY
| Adjusted Income Statement |
For the Year Ended December 31, 2011
Sales
|
| $ 750 |
|
|
|
| Adjustments to a cash basis: |
Cost of goods sold 450
Adjustments to a cash basis:
Selling and administrative expenses 223
Adjustments to a cash basis:
Income taxes 24
Adjustments to a cash basis:
Net cash provided by operating activities
| $ 104 |
Correct!
EATON COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2011
Operating activities:
| Cash received from customers |
$ 4
| Less cash disbursements for: |
| Total cash disbursements |
Net cash provided by operating activities
0
Investing activities:
| Net cash used in investing activities |
0
Financing activities:
Net cash used in financing activities 0
Net decrease in cash
| Cash balance, beginning |
| Cash balance, ending |
0
Enter appropriate data in yellow cells. Your answer for “Net cash provided by operating activities” will be verified.
Enter appropriate data in yellow cells. Your answers for net cash provided or used for each section will be verified.
Given P14A-5
| Given Data P14A-5: |
EATON COMPANY
Comparative Balance Sheet
December 31, 2011, and 2010
2011 2010
Assets
Cash $ 4 $ 11
Accounts receivable 310 230
Inventory 160 195
Prepaid expenses 8 6
Total current assets 482 442
Property, Plant, and equipment 500 420
Less accumulated depreciation 85 70
Net property, plant, and equipment 415 350
Long-term investments 31 38
Total assets $ 928 $ 830
Liabilities and Stockholders’ Equity
Accounts payable
$ 300 |
$ 225
Accrued liabilities 70 80
Income taxes payable 71 63
Total current liabilities 441 368
Bonds payable 195 170
Total liabilities 636 538
Common stock 160 200
Retained earnings 132 92
Total stockholders’ equity 292 292
Total liabilities and stockholders’ equity $ 928 $ 830
EATON COMPANY
Income Statement
For the Year Ended December 31, 2011
Sales $ 750
Cost of goods sold 450
Gross margin 300
Selling and administrative expenses 223
Net operating income 77
Nonoperating items:
Gain on sale of investments $ 5
Loss on sale of equipment 2 3
Income before taxes 80
Income taxes 24
Net income $ 56
Equipment cost $ 30
Equipment selling price $ 18
Accumulated depreciation of equipment $ 10
Long-term investment purchase $ 7
Long-term investment sale $ 12
Paid cash dividend ?
Stock repurchase $ 40
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