ACC 122 Fall 2020 Comprehensive Project BestValue Corporation's Trial Balance December 31, 200 is presented below AB 2000 transactions have been recorded except for the tems described on the Credit Debit 109,890 28,789 25,540 0 55,674 215,850 75,120 $ 1,027 63,305 16,048 35,278 0 48,900 0 0 Cash Accounts Receivable Inventory Debt Investments Land Buildings Equipment Allowance for Doubtful Accounts Accumulated Depreciation Buildings Accumulated Depreciation Equipment Accounts Payable Interest Payable Unearned Rent Revenue Dividends Payable Income Tax Payable Bonds Payable Discount on Bonds Payable Common Stock (52 par) Paid in Capital in Excess of Par Common Stock Preferred Stock (560 par) Paldin Capital in Excess of Par-Preferred Stock Retained Earnings Treasury Stock Cash Dividends Sales Revenue Rent Revenue Gain on Sale of Land Bad Debt Expense Interest Expense Cost of Goods Sold Depreciation Expense Other Operating Expenses Salaries and Wages Expense Income Tax Expense Total 29,200 44,580 0 107,904 0 776,068 0 0 0 478,542 0 53,274 79,632 0 $ 1,122,311 $ 1,122,311 CONTINUED ON NEXT PAGE 2 Unrecorded transactions: Round all calculations if necessary to -6- decimals to the nearest dollar, do not show cents). 1. On january 1, 2016, Best Value issued 520 shares of 560 par, s preferred stock for $75.810 2. On January 1, 2016, Best Value also sud 5.800 shares of common stock for $42,050. 2. On January 1, 2016, Best Value issued $325,000, 5.59 year bonds when the market rate was Interest is to be paid annually on each lanuary 1, beginning 1 year from date of issue 4. Best Value racquired 1.600 shares of a common stochon lanuary 12, 2016 for $8.50 peshore 5. On December 31, 2016 Best Value declared the annual preferred Gividends a $2.75 per share dividend on the outstanding common stock, al poble in cash only 6. On December 31, 20X, Best Value estimates that the total amount of recht is uncollectible at year and is $180. 7. The building is being deprecated using the straight line method over 25 years The salvage value is $100,000 8. The equipment is being deprecated using the sight line method over years The salvage value is $15.000 9. Sold the Land for $60,000 cash 10. Bought Debt investments worth $200,000 for cash 11. The neared rent was collected on December 1, 2006. It was recept of 3 months rent in advance (December 1, 2010 through February 28 of next year) 12. The first cash interest payment on the 55 bonds is due anuary 1 of next year. The annual Interest on the bands for 20x has not yet been recorded. Use the effective interest method 13. The Best Value Corporation must make an adjusting entry to care income tax expense on Income Before Income Tax at a rate of 36%. The taxes will not be paid until March of next year. Instructions: (a) Prepare journal entries for the transactions listed above. (h) Prepare an updated December 31, 2017 trial balance (dPrepare a multiple-step income statement for the year ending December 31, 2014 d) Prepare a retained earnings statement for the year ending December 31, 2016 le) Prepare a classified balance sheet as of December 31, 2016 Prepare a Statement of Cash Flows as of December 31, 2000 e) and in calculate and analyze the following ratios, clearly presenting your work and answers 1. Working Capital 2. Current Ratio 3. Return on Stockholders' Equity (use ending Common Stockholders' Equity 4. EPS (all shares are already weighted) 5. Payout Ratio 6. Debt to Assets Ratio 7. Times Interest Earned 8. Free Cash Flow BestValue Corporation Balance Sheet 12/31/20xx Assets 1 Libilities and Stockholders' Equity COMPREHENSIVE PROJECT (Continued) Statement of Cash Flows: BESTVALUE CORPORATION Comparative Balance Sheets December 31 of the previous year $ Cash Accounts Receivable (net of AFDA) Inventory Land Buildings Equipment Accumulated Depreciation Buildings Accumulated Depreciation Equipment Accounts Payable Interest Payable Unearned Rent Revenue Dividends Payable Income Tax Payable 115,982 11,208 15,790 55,674 215,850 75,120 63,306 16,048 47,598 0 0 0 Instructions: Use the Balance Sheet for December 31, 20xx and the above ending balances for last year's Balance Sheet accounts to prepare the "Net cash provided by operating activities" section of the Cash Flow Statement below using the Indirect method. BESTVALUE CORPORATION Statement of Cash Flows December 31, 200x Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operating activities Add: Depreciation expense Add: Bad debt expense Less: Gain on sale of land Increase in accounts receivable Increase in inventory Decrease in accounts payable Increase in unearned rent revenue Increase in interest payable Increase in dividends payable Increase in income taxes payable Net cash provided by operating activities COMPREHENSIVE PROJECT (Continued) (c) Calculating Ratios: Instructions: Using the ratios as found in our textbook, calculate the following for the BestValue Corp. using the numbers you've arrived at in the project. Note: Round answers to 2 decimal places, as needed. All work must be presented! 1. Working Capital: 2. Current Ratio: 3. Return on Stockholders' Equity (use ending Common Stockholders' Equity, not average. Common Stockholders' Equity does not include par value of preferred stock.) 4. EPS: (assume all shares are already weighted) COMPREHENSIVE PROJECT (Continued) le) Calculating Ratios, cont.: Instructions: Using the ratios as found in our textbook, calculate the following for the BestValue Corp. using the numbers you've arrived at in the project. Note: Round answers to 2 decimal places, as needed. All work must be presented! 5. Payout Ratio 6. Debt to Assets Ratio: 7. Times Interest Earned: 8. Free Cash Flow (after dividends would have been paid): COMPREHENSIVE PROJECT (Continued) (N) Ratio Analysis: Instructions: For each of the ratios below, analyze and describe how BestValue's ratio compares to its nearest competitor, Apple, Inc. See Appendix A in the back of your textbook for Apple's annual financial statements. Use the most current year, 2015, for your calculations. Note: Be sure to show the calculation of Apple's ratios below! 1. Working Capital: 2. Current Ratio: 3. Return on Stockholders' Equity: (use ending Common Stockholders' Equity, not average. Common Stockholders' Equity does not include par value of preferred stock.) 4. EPS: (already calculated in Apple's Income Statement) COMPREHENSIVE PROJECT (Continued) (h) Ratio Analysis, cont.: Instructions: For each of the ratios below, analyze and describe how BestValue's ratio compares to its nearest competitor, Apple, Inc. See Appendix A in the back of your textbook for Apple's annual financial statements. Use the most current year, 2015, for your calculations. Note: Be sure to show the calculation of Apple's ratlos below! S. Payout Ratio: 6. Debt to Assets ratio: 7. Times Interest Earned: (Note: Apple's 2015 10-K shows $733 (in millions) in Interest Expense) 8. Free Cash Flow: ACC 122 Fall 2020 Comprehensive Project BestValue Corporation's Trial Balance December 31, 200 is presented below AB 2000 transactions have been recorded except for the tems described on the Credit Debit 109,890 28,789 25,540 0 55,674 215,850 75,120 $ 1,027 63,305 16,048 35,278 0 48,900 0 0 Cash Accounts Receivable Inventory Debt Investments Land Buildings Equipment Allowance for Doubtful Accounts Accumulated Depreciation Buildings Accumulated Depreciation Equipment Accounts Payable Interest Payable Unearned Rent Revenue Dividends Payable Income Tax Payable Bonds Payable Discount on Bonds Payable Common Stock (52 par) Paid in Capital in Excess of Par Common Stock Preferred Stock (560 par) Paldin Capital in Excess of Par-Preferred Stock Retained Earnings Treasury Stock Cash Dividends Sales Revenue Rent Revenue Gain on Sale of Land Bad Debt Expense Interest Expense Cost of Goods Sold Depreciation Expense Other Operating Expenses Salaries and Wages Expense Income Tax Expense Total 29,200 44,580 0 107,904 0 776,068 0 0 0 478,542 0 53,274 79,632 0 $ 1,122,311 $ 1,122,311 CONTINUED ON NEXT PAGE 2 Unrecorded transactions: Round all calculations if necessary to -6- decimals to the nearest dollar, do not show cents). 1. On january 1, 2016, Best Value issued 520 shares of 560 par, s preferred stock for $75.810 2. On January 1, 2016, Best Value also sud 5.800 shares of common stock for $42,050. 2. On January 1, 2016, Best Value issued $325,000, 5.59 year bonds when the market rate was Interest is to be paid annually on each lanuary 1, beginning 1 year from date of issue 4. Best Value racquired 1.600 shares of a common stochon lanuary 12, 2016 for $8.50 peshore 5. On December 31, 2016 Best Value declared the annual preferred Gividends a $2.75 per share dividend on the outstanding common stock, al poble in cash only 6. On December 31, 20X, Best Value estimates that the total amount of recht is uncollectible at year and is $180. 7. The building is being deprecated using the straight line method over 25 years The salvage value is $100,000 8. The equipment is being deprecated using the sight line method over years The salvage value is $15.000 9. Sold the Land for $60,000 cash 10. Bought Debt investments worth $200,000 for cash 11. The neared rent was collected on December 1, 2006. It was recept of 3 months rent in advance (December 1, 2010 through February 28 of next year) 12. The first cash interest payment on the 55 bonds is due anuary 1 of next year. The annual Interest on the bands for 20x has not yet been recorded. Use the effective interest method 13. The Best Value Corporation must make an adjusting entry to care income tax expense on Income Before Income Tax at a rate of 36%. The taxes will not be paid until March of next year. Instructions: (a) Prepare journal entries for the transactions listed above. (h) Prepare an updated December 31, 2017 trial balance (dPrepare a multiple-step income statement for the year ending December 31, 2014 d) Prepare a retained earnings statement for the year ending December 31, 2016 le) Prepare a classified balance sheet as of December 31, 2016 Prepare a Statement of Cash Flows as of December 31, 2000 e) and in calculate and analyze the following ratios, clearly presenting your work and answers 1. Working Capital 2. Current Ratio 3. Return on Stockholders' Equity (use ending Common Stockholders' Equity 4. EPS (all shares are already weighted) 5. Payout Ratio 6. Debt to Assets Ratio 7. Times Interest Earned 8. Free Cash Flow BestValue Corporation Balance Sheet 12/31/20xx Assets 1 Libilities and Stockholders' Equity COMPREHENSIVE PROJECT (Continued) Statement of Cash Flows: BESTVALUE CORPORATION Comparative Balance Sheets December 31 of the previous year $ Cash Accounts Receivable (net of AFDA) Inventory Land Buildings Equipment Accumulated Depreciation Buildings Accumulated Depreciation Equipment Accounts Payable Interest Payable Unearned Rent Revenue Dividends Payable Income Tax Payable 115,982 11,208 15,790 55,674 215,850 75,120 63,306 16,048 47,598 0 0 0 Instructions: Use the Balance Sheet for December 31, 20xx and the above ending balances for last year's Balance Sheet accounts to prepare the "Net cash provided by operating activities" section of the Cash Flow Statement below using the Indirect method. BESTVALUE CORPORATION Statement of Cash Flows December 31, 200x Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash provided by operating activities Add: Depreciation expense Add: Bad debt expense Less: Gain on sale of land Increase in accounts receivable Increase in inventory Decrease in accounts payable Increase in unearned rent revenue Increase in interest payable Increase in dividends payable Increase in income taxes payable Net cash provided by operating activities COMPREHENSIVE PROJECT (Continued) (c) Calculating Ratios: Instructions: Using the ratios as found in our textbook, calculate the following for the BestValue Corp. using the numbers you've arrived at in the project. Note: Round answers to 2 decimal places, as needed. All work must be presented! 1. Working Capital: 2. Current Ratio: 3. Return on Stockholders' Equity (use ending Common Stockholders' Equity, not average. Common Stockholders' Equity does not include par value of preferred stock.) 4. EPS: (assume all shares are already weighted) COMPREHENSIVE PROJECT (Continued) le) Calculating Ratios, cont.: Instructions: Using the ratios as found in our textbook, calculate the following for the BestValue Corp. using the numbers you've arrived at in the project. Note: Round answers to 2 decimal places, as needed. All work must be presented! 5. Payout Ratio 6. Debt to Assets Ratio: 7. Times Interest Earned: 8. Free Cash Flow (after dividends would have been paid): COMPREHENSIVE PROJECT (Continued) (N) Ratio Analysis: Instructions: For each of the ratios below, analyze and describe how BestValue's ratio compares to its nearest competitor, Apple, Inc. See Appendix A in the back of your textbook for Apple's annual financial statements. Use the most current year, 2015, for your calculations. Note: Be sure to show the calculation of Apple's ratios below! 1. Working Capital: 2. Current Ratio: 3. Return on Stockholders' Equity: (use ending Common Stockholders' Equity, not average. Common Stockholders' Equity does not include par value of preferred stock.) 4. EPS: (already calculated in Apple's Income Statement) COMPREHENSIVE PROJECT (Continued) (h) Ratio Analysis, cont.: Instructions: For each of the ratios below, analyze and describe how BestValue's ratio compares to its nearest competitor, Apple, Inc. See Appendix A in the back of your textbook for Apple's annual financial statements. Use the most current year, 2015, for your calculations. Note: Be sure to show the calculation of Apple's ratlos below! S. Payout Ratio: 6. Debt to Assets ratio: 7. Times Interest Earned: (Note: Apple's 2015 10-K shows $733 (in millions) in Interest Expense) 8. Free Cash Flow