1. Using the following selected items from the comparative balance sheet of Owen Inc. December 31, 2013 December 31, 2012 Net Sales $3,200,000 $3,000,000 Cost of Goods Sold 2,672,000 2,460,000 Gross Profit 528,000 540,000 Selling and Administrative Expenses 245,000 240,000 Net Income 283,000 300,000 Instructions A) Using vertical analysis, compute common sized income statements for Owen for 2012 and 2013. Discuss whether the results from part A indicate favorable or unfavorable changes 2. Bolt Manufacturing is a small manufacturer that uses machine-hours as its activity base for assigned overhead costs to jobs. The company estimated the following amounts for 2012 in total and for Job 15: Total Job 62 Direct materials $60,000 $5,000 Direct labor $32,000 $3,000 Manufacturing overhead costs $60,000 Machine hours 80,000 1,000 During 2012, the actual machine-hours totaled 90,000, and actual overhead costs were $62,000. Direct materials purchased totaled $63,000, total materials requisitioned for production $59,000 Instructions (a) Compute the predetermined overhead rate for Bolt. (b) Compute the total manufacturing costs for Job 15. (c) What is the dollar amount of over or under-applied overhead for the year? State whether it is under or over applied. (d) If Bolt Manufacturing sells Job 15 for $20,000, compute the gross profit. 3. Presented below is information related to the operations of Meyers Corporation. December 2012 2011 2012_ Cash $ 65,000 $ 40,000 Sales $400,000 Accounts receivable 35,000 48,000 Cost of goods sold 210,000 Inventory 37,000 22,000 Gross profit 190,000 Prepaid expenses 17,000 20,000 Other operating expenses Land 39,000 20,000 (including depreciation 156,000 Building 100,000 100,000 Income from operations 54,000 Accumulated depreciation? Loss on equipment sale 3,000 building (17,000) (8,000) Income before income taxes 51,000 Equipment 55,000 80,000 Income tax expense 16,000 Accumulated depreciation? Net income $ 15,000 equipment (17,000) (20,000) Total $314,000 $302,000 Accounts payable $ 45,000 $ 39,000 Bonds payable 0 100,000 Common stock 200,000 100,000 Retained earnings 69,000 63,000 Total $314,000 $302,000 Additional information: a) In 2012, Meyers declared and paid a cash dividend of $9,000. b) The company converted $100,000 of bonds into common stock. c) Equipment with a cost of $25,000 and book value of $13,000 was sold for $10,000. d) Land was acquired for cash. Instructions: Prepare a statement of cash flows using the indirect method. 4. The financial statements of Anderson Company appear below: Anderson Company Comparative Balance Sheet December 31, 2012 Assets 2012 2011 Cash $ 45,000 $ 40,000 Marketable securities 20,000 60,000 Accounts receivable (net) 40,000 30,000 Inventory 150,000 170,000 Property, plant and equipment (net) 150,000 200,000 Total assets $405,000 $500,000 Liabilities and stockholders' equity Accounts payable $ 45,000 $ 70,000 Short-term notes payable 10,000 90,000 Bonds payable due 1/2/20 65,000 100,000 Common stock 145,000 135,000 Retained earnings 140,000 105,000 Total liabilities and stockholders' equity $405,000 $500,000 Anderson Company Income Statement For the Year Ended December 31, 2012 Net sales (all on credit) $540,000 Cost of goods sold 364,000 Gross profit 176,000 Expenses Interest expense $16,000 Selling expenses 15,000 Administrative expenses 60,000 Total expenses 91,000 Income before income taxes 85,000 Income tax expense 20,000 Net income $ 65,000 Additional information: a. Cash dividends of $30,000 were declared and paid on common stock in 2012. b. Weighted-average number of shares of common stock outstanding during 2012 was 15,000 shares. c. Market value of common stock was $60 per share on 12/31/12 d. Net cash provided by operating activities for 2012 was $22,000 e. Anderson?s ratios for 2011 were : current ratio 1.87, return on stockholder?s equity 17%, price earnings ratio 10 times, inventory turnover 4 times, account receivables turnover 10 times, times interest earned 5 times, profit margin 18%, return on assets 15%, payout ratio 40%, cash debt coverage .28, debt to assets .52 Part A) Using the financial statements and additional information, compute the following ratios for the Anderson Company for 2012. Show your computations. 1. Current ratio 2. Return on common stockholders' equity 3. Price-earnings ratio 4. Inventory turnover ratio 5. Receivables turnover 6. Times interest earned 7. Profit margin ratio 8. Average days in inventory 9. Average days in Accounts Receivable 10. Return on assets 11. Payout Ratio 12. Debt to Total Assets 13. Earnings per share Part B) Discuss what the ratios indicate about the liquidity, profitability and solvency of Anderson. 1. Using the following selected items from the comparative balance sheet of Owen Inc. December 31, 2013 Net Sales $3,200,000 Cost of Goods Sold 2,672,000 Gross Profit 528,000 Selling and Administrative Expenses 245,000 Net Income 283,000 December 31, 2012 $3,000,000 2,460,000 540,000 240,000 300,000 Instructions A) Using vertical analysis, compute common sized income statements for Owen for 2012 and 2013. Discuss whether the results from part A indicate favorable or unfavorable changes 2. Bolt Manufacturing is a small manufacturer that uses machine-hours as its activity base for assigned overhead costs to jobs. The company estimated the following amounts for 2012 in total and for Job 15: Total Job 62 Direct materials $60,000 $5,000 Direct labor $32,000 $3,000 Manufacturing overhead costs $60,000 Machine hours 80,000 1,000 During 2012, the actual machine-hours totaled 90,000, and actual overhead costs were $62,000. Direct materials purchased totaled $63,000, total materials requisitioned for production $59,000 Instructions (a) Compute the predetermined overhead rate for Bolt. (b) Compute the total manufacturing costs for Job 15. (c) What is the dollar amount of over or under-applied overhead for the year? State whether it is under or over applied. (d) If Bolt Manufacturing sells Job 15 for $20,000, compute the gross profit. 3. Presented below is information related to the operations of Meyers Corporation. December 2012 2011 2012_ Cash $ 65,000 $ 40,000 Sales $400,000 Accounts receivable 35,000 48,000 Cost of goods sold 210,000 Inventory 37,000 22,000 Gross profit 190,000 Prepaid expenses 17,000 20,000 Other operating expenses Land 39,000 20,000 (including depreciation 156,000 Building 100,000 100,000 Accumulated depreciation 3,000 building (17,000) (8,000) 51,000 Equipment 55,000 80,000 Accumulated depreciation equipment (17,000) (20,000) Total $314,000 $302,000 Accounts payable Bonds payable Common stock Retained earnings Total $ 45,000 0 200,000 69,000 $314,000 Income from operations 54,000 Loss on equipment sale Income before income taxes Income tax expense Net income 16,000 $ 15,000 $ 39,000 100,000 100,000 63,000 $302,000 Additional information: a) In 2012, Meyers declared and paid a cash dividend of $9,000. b) The company converted $100,000 of bonds into common stock. c) Equipment with a cost of $25,000 and book value of $13,000 was sold for $10,000. d) Land was acquired for cash. Instructions: Prepare a statement of cash flows using the indirect method. 4. The financial statements of Anderson Company appear below: Anderson Company Comparative Balance Sheet December 31, 2012 ____________________________________________________________________________ Assets 2012 2011 Cash .................................................................................................. $ 45,000 $ 40,000 Marketable securities ........................................................................ 20,000 60,000 Accounts receivable (net) ................................................................. 40,000 30,000 Inventory ........................................................................................... 150,000 170,000 Property, plant and equipment (net) ................................................. 150,000 200,000 Total assets ................................................................................. $405,000 $500,000 Liabilities and stockholders' equity Accounts payable .............................................................................. $ 45,000 $ 70,000 Short-term notes payable ................................................................. 10,000 90,000 Bonds payable due 1/2/20................................................................. 65,000 100,000 Common stock .................................................................................. 145,000 135,000 Retained earnings ............................................................................. 140,000 105,000 Total liabilities and stockholders' equity....................................... $405,000 $500,000 Anderson Company Income Statement For the Year Ended December 31, 2012 Net sales (all on credit) ..................................................................... Cost of goods sold ............................................................................ Gross profit ........................................................................................ Expenses Interest expense ......................................................................... Selling expenses ......................................................................... Administrative expenses ............................................................. Total expenses ...................................................................... Income before income taxes ............................................................ Income tax expense .......................................................................... Net income ........................................................................................ $540,000 364,000 176,000 $16,000 15,000 60,000 91,000 85,000 20,000 $ 65,000 Additional information: a. Cash dividends of $30,000 were declared and paid on common stock in 2012. b. Weighted-average number of shares of common stock outstanding during 2012 was 15,000 shares. c. Market value of common stock was $60 per share on 12/31/12 d. Net cash provided by operating activities for 2012 was $22,000 e. Anderson's ratios for 2011 were : current ratio 1.87, return on stockholder's equity 17%, price earnings ratio 10 times, inventory turnover 4 times, account receivables turnover 10 times, times interest earned 5 times, profit margin 18%, return on assets 15%, payout ratio 40%, cash debt coverage .28, debt to assets .52 Part A) Using the financial statements and additional information, compute the following ratios for the Anderson Company for 2012. Show your computations. 1. Current ratio 2. Return on common stockholders' equity 3. Price-earnings ratio 4. Inventory turnover ratio 5. Receivables turnover 6. Times interest earned 7. Profit margin ratio 8. Average days in inventory 9. Average days in Accounts Receivable 10. Return on assets 11. Payout Ratio 12. Debt to Total Assets 13. Earnings per share Part B) Discuss what the ratios indicate about the liquidity, profitability and solvency of Anderson. 1. Using the following selected items from the comparative balance sheet of Owen Inc. December 31, 2013 Net Sales $3,200,000 Cost of Goods Sold 2,672,000 Gross Profit 528,000 Selling and Administrative Expenses 245,000 Net Income 283,000 December 31, 2012 $3,000,000 2,460,000 540,000 240,000 300,000 Instructions A) Using vertical analysis, compute common sized income statements for Owen for 2012 and 2013. Discuss whether the results from part A indicate favorable or unfavorable changes 2. Bolt Manufacturing is a small manufacturer that uses machine-hours as its activity base for assigned overhead costs to jobs. The company estimated the following amounts for 2012 in total and for Job 15: Total Job 62 Direct materials $60,000 $5,000 Direct labor $32,000 $3,000 Manufacturing overhead costs $60,000 Machine hours 80,000 1,000 During 2012, the actual machine-hours totaled 90,000, and actual overhead costs were $62,000. Direct materials purchased totaled $63,000, total materials requisitioned for production $59,000 Instructions (a) Compute the predetermined overhead rate for Bolt. (b) Compute the total manufacturing costs for Job 15. (c) What is the dollar amount of over or under-applied overhead for the year? State whether it is under or over applied. (d) If Bolt Manufacturing sells Job 15 for $20,000, compute the gross profit. 3. Presented below is information related to the operations of Meyers Corporation. December 2012 2011 2012_ Cash $ 65,000 $ 40,000 Sales $400,000 Accounts receivable 35,000 48,000 Cost of goods sold 210,000 Inventory 37,000 22,000 Gross profit 190,000 Prepaid expenses 17,000 20,000 Other operating expenses Land 39,000 20,000 (including depreciation 156,000 Building 100,000 100,000 Accumulated depreciation 3,000 building (17,000) (8,000) 51,000 Equipment 55,000 80,000 Accumulated depreciation equipment (17,000) (20,000) Total $314,000 $302,000 Accounts payable Bonds payable Common stock Retained earnings Total $ 45,000 0 200,000 69,000 $314,000 Income from operations 54,000 Loss on equipment sale Income before income taxes Income tax expense Net income 16,000 $ 15,000 $ 39,000 100,000 100,000 63,000 $302,000 Additional information: a) In 2012, Meyers declared and paid a cash dividend of $9,000. b) The company converted $100,000 of bonds into common stock. c) Equipment with a cost of $25,000 and book value of $13,000 was sold for $10,000. d) Land was acquired for cash. Instructions: Prepare a statement of cash flows using the indirect method. 4. The financial statements of Anderson Company appear below: Anderson Company Comparative Balance Sheet December 31, 2012 ____________________________________________________________________________ Assets 2012 2011 Cash .................................................................................................. $ 45,000 $ 40,000 Marketable securities ........................................................................ 20,000 60,000 Accounts receivable (net) ................................................................. 40,000 30,000 Inventory ........................................................................................... 150,000 170,000 Property, plant and equipment (net) ................................................. 150,000 200,000 Total assets ................................................................................. $405,000 $500,000 Liabilities and stockholders' equity Accounts payable .............................................................................. $ 45,000 $ 70,000 Short-term notes payable ................................................................. 10,000 90,000 Bonds payable due 1/2/20................................................................. 65,000 100,000 Common stock .................................................................................. 145,000 135,000 Retained earnings ............................................................................. 140,000 105,000 Total liabilities and stockholders' equity....................................... $405,000 $500,000 Anderson Company Income Statement For the Year Ended December 31, 2012 Net sales (all on credit) ..................................................................... Cost of goods sold ............................................................................ Gross profit ........................................................................................ Expenses Interest expense ......................................................................... Selling expenses ......................................................................... Administrative expenses ............................................................. Total expenses ...................................................................... Income before income taxes ............................................................ Income tax expense .......................................................................... Net income ........................................................................................ $540,000 364,000 176,000 $16,000 15,000 60,000 91,000 85,000 20,000 $ 65,000 Additional information: a. Cash dividends of $30,000 were declared and paid on common stock in 2012. b. Weighted-average number of shares of common stock outstanding during 2012 was 15,000 shares. c. Market value of common stock was $60 per share on 12/31/12 d. Net cash provided by operating activities for 2012 was $22,000 e. Anderson's ratios for 2011 were : current ratio 1.87, return on stockholder's equity 17%, price earnings ratio 10 times, inventory turnover 4 times, account receivables turnover 10 times, times interest earned 5 times, profit margin 18%, return on assets 15%, payout ratio 40%, cash debt coverage .28, debt to assets .52 Part A) Using the financial statements and additional information, compute the following ratios for the Anderson Company for 2012. Show your computations. 1. Current ratio 2. Return on common stockholders' equity 3. Price-earnings ratio 4. Inventory turnover ratio 5. Receivables turnover 6. Times interest earned 7. Profit margin ratio 8. Average days in inventory 9. Average days in Accounts Receivable 10. Return on assets 11. Payout Ratio 12. Debt to Total Assets 13. Earnings per share Part B) Discuss what the ratios indicate about the liquidity, profitability and solvency of Anderson. 1. Using the following selected items from the comparative balance sheet of Owen Inc. December 31, 2013 Net Sales $3,200,000 Cost of Goods Sold 2,672,000 Gross Profit 528,000 Selling and Administrative Expenses 245,000 Net Income 283,000 December 31, 2012 $3,000,000 2,460,000 540,000 240,000 300,000 Instructions A) Using vertical analysis, compute common sized income statements for Owen for 2012 and 2013. Discuss whether the results from part A indicate favorable or unfavorable changes 2. Bolt Manufacturing is a small manufacturer that uses machine-hours as its activity base for assigned overhead costs to jobs. The company estimated the following amounts for 2012 in total and for Job 15: Total Job 62 Direct materials $60,000 $5,000 Direct labor $32,000 $3,000 Manufacturing overhead costs $60,000 Machine hours 80,000 1,000 During 2012, the actual machine-hours totaled 90,000, and actual overhead costs were $62,000. Direct materials purchased totaled $63,000, total materials requisitioned for production $59,000 Instructions (a) Compute the predetermined overhead rate for Bolt. (b) Compute the total manufacturing costs for Job 15. (c) What is the dollar amount of over or under-applied overhead for the year? State whether it is under or over applied. (d) If Bolt Manufacturing sells Job 15 for $20,000, compute the gross profit. 3. Presented below is information related to the operations of Meyers Corporation. December 2012 2011 2012_ Cash $ 65,000 $ 40,000 Sales $400,000 Accounts receivable 35,000 48,000 Cost of goods sold 210,000 Inventory 37,000 22,000 Gross profit 190,000 Prepaid expenses 17,000 20,000 Other operating expenses Land 39,000 20,000 (including depreciation 156,000 Building 100,000 100,000 Accumulated depreciation 3,000 building (17,000) (8,000) 51,000 Equipment 55,000 80,000 Accumulated depreciation equipment (17,000) (20,000) Total $314,000 $302,000 Accounts payable Bonds payable Common stock Retained earnings Total $ 45,000 0 200,000 69,000 $314,000 Income from operations 54,000 Loss on equipment sale Income before income taxes Income tax expense Net income 16,000 $ 15,000 $ 39,000 100,000 100,000 63,000 $302,000 Additional information: a) In 2012, Meyers declared and paid a cash dividend of $9,000. b) The company converted $100,000 of bonds into common stock. c) Equipment with a cost of $25,000 and book value of $13,000 was sold for $10,000. d) Land was acquired for cash. Instructions: Prepare a statement of cash flows using the indirect method. 4. The financial statements of Anderson Company appear below: Anderson Company Comparative Balance Sheet December 31, 2012 ____________________________________________________________________________ Assets 2012 2011 Cash .................................................................................................. $ 45,000 $ 40,000 Marketable securities ........................................................................ 20,000 60,000 Accounts receivable (net) ................................................................. 40,000 30,000 Inventory ........................................................................................... 150,000 170,000 Property, plant and equipment (net) ................................................. 150,000 200,000 Total assets ................................................................................. $405,000 $500,000 Liabilities and stockholders' equity Accounts payable .............................................................................. $ 45,000 $ 70,000 Short-term notes payable ................................................................. 10,000 90,000 Bonds payable due 1/2/20................................................................. 65,000 100,000 Common stock .................................................................................. 145,000 135,000 Retained earnings ............................................................................. 140,000 105,000 Total liabilities and stockholders' equity....................................... $405,000 $500,000 Anderson Company Income Statement For the Year Ended December 31, 2012 Net sales (all on credit) ..................................................................... Cost of goods sold ............................................................................ Gross profit ........................................................................................ Expenses Interest expense ......................................................................... Selling expenses ......................................................................... Administrative expenses ............................................................. Total expenses ...................................................................... Income before income taxes ............................................................ Income tax expense .......................................................................... Net income ........................................................................................ $540,000 364,000 176,000 $16,000 15,000 60,000 91,000 85,000 20,000 $ 65,000 Additional information: a. Cash dividends of $30,000 were declared and paid on common stock in 2012. b. Weighted-average number of shares of common stock outstanding during 2012 was 15,000 shares. c. Market value of common stock was $60 per share on 12/31/12 d. Net cash provided by operating activities for 2012 was $22,000 e. Anderson's ratios for 2011 were : current ratio 1.87, return on stockholder's equity 17%, price earnings ratio 10 times, inventory turnover 4 times, account receivables turnover 10 times, times interest earned 5 times, profit margin 18%, return on assets 15%, payout ratio 40%, cash debt coverage .28, debt to assets .52 Part A) Using the financial statements and additional information, compute the following ratios for the Anderson Company for 2012. Show your computations. 1. Current ratio 2. Return on common stockholders' equity 3. Price-earnings ratio 4. Inventory turnover ratio 5. Receivables turnover 6. Times interest earned 7. Profit margin ratio 8. Average days in inventory 9. Average days in Accounts Receivable 10. Return on assets 11. Payout Ratio 12. Debt to Total Assets 13. Earnings per share Part B) Discuss what the ratios indicate about the liquidity, profitability and solvency of Anderson