Base your answers to the following questions on the 2010 financial statements of Magnotta Winery Corporation in Exhibit 2-13. (Magnotta Winery has vineyards in Ontario and Chile, and produces, imports, exports, and retails beer and spirits, as well as wine and ingredients for making wine.)
In Exhibit 2-13
Consolidated Statement of Earnings,
Comprehensive Income and Retained Earnings
Years ended January 31, 2010 and 2009

a. Assuming that all the sales were on account, determine the amount of cash that was collected from customers in fiscal 2010.
b. Assuming that all the transactions that flow through the accounts payable and accrued liabilities account are related to purchases of inventory, determine the amount of cash that was paid to suppliers in fiscal 2010.
c. How much cash did Magnotta have at the end of fiscal 2010?
d. What amount of retained earnings did the company have at the end of fiscal 2010?
e. Did the company declare dividends during fiscal 2010? How did you determine this?
f. Why do you think Magnotta reports amortization of property, plant, and equipment in two different places on the statement of earnings?
g. Calculate the following ratios for fiscal 2010. (Note that, in order to be able to calculate these ratios for each of the years, you will have to use the total assets for each year and the total shareholders' equity for each year in your ratios, rather than average total assets and average shareholders' equity.)
i. Profit margin ratio
ii. Return on assets
iii. Return on equity
h. Comment on your results in part "g".

Transcribed Image Text:

2010 2009 Net sales $ 24.172.809 24,046,671 Cost of goods sold, excluding amortization of property plant and equipment Amortization of property, plant 13,935.458 1 4, 1 72.992 and equipment (production) Total cost of goods sold Gross profit 524,864 14.460,322 9.712.487 511,764 11,684,756 9.361,915 Expenses: 4.717.334 1,600,000 Selling, administration and other Retirement allowance (note 10) Amortization of property, plant and equipment (non-production) Interest 4,400,094 595,471 698,676 372,567 128,232 7413.604 2,298,883 449.700 184,714 5.733.184 3,628,731 Long-term deht Bank indebtedness Earnings before income taxes Income taxes (recovery) (note 8): 1,131,422 422,653) 708,769 1,590,11 27.984.313 Current 1,043.261 (58,459) 984,802 2,643,929 25.340,384 $ 27984.313 Future Net earnings and comprchensive income Retained earnings, beginning of year Retained carnings, end of year Earnings per common share (note 7: s 29,574.427 0.19 0, 19 Basic 0.12 0.11 Diluted