1. Your company has the following information after the first year of operation: Sales $185,000; cost of goods $125,000; rent $15,000; utilities $6500; insurance $1750;

Repairs/maintenance $2800; interest $7575. Your forecast indicates that your sales will increase by 15%. Your rental agreement is for a 3% increase per year. Utility costs are forecasted to increase by 10% next year. Your insurance company has told you that your quarterly premium will increase to $500 beginning the first quarter of next year. Interest expense for next year will be $6500.

a. Construct an actual income statement for this year and a pro forma income statement for next year.

b. By what percentage did your net income change?

c. What are your current profit margin and your pro forma profit margin?

2. A company has the following balance sheet accounts: Accounts payable = $13,000; Land = &70,000; Inventory = $37,000; Retained earnings = $82,000; Salaries payable = $7,000; Cash = $15,000; Building = $190,000; Equipment = $26,000; Common stock = $100,000; Taxes payable = $19,000; Accounts receivable = $20,000; Cash = $15,000; Mortgage payable = $80,000. Determine the amount of gross working capital. Determine the companys net working capital. Calculate the current ratio.

3. A company has terms of 2/10, n/30. Annual credit sales are $500,000 and average accounts receivable are $100,000. What is the accounts receivable turnover? What is the average collection period? Based on these results, should the company do anything?

4. You want to order items that cost $400/each. Trade discounts are 30/20/10. If you take advantage of all trade discounts, what will be your net price?

5. You want to conduct an ABC inventory analysis. You have the following monthly figures for your items: games $10,000; balls $100; puzzles $1000; pencils $15; coloring books $500; dolls $3,000; paper $250; stuffed animals $5,500 Using the percent of total inventory cost, what items should be classified as A items? What items are C items?