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Financial statement data for Delicious Dishes, Inc. are given below. All figures are in dollars. Use this data to construct an Income Statement for

FI 3300 - CORPORATION FINANCE Take-Home Problem Set One (THPS-1) Summer 2017 Directions: This problem set covers chapter 2 (Accounting Review) in the textbook and basic math skills that you will use throughout this course. Determine or compute an answer for each question/problem. After you have computed an answer for every question, enter your answers online via the \"quiz\" function entitled \"THPS 1 ANSWER SUBMISSION FORM.\" See course calendar for due date and for chat session dates during which I will answer questions about the THPS and/or provide hints for how to solve certain problems. This is a take-home, open book, open notes financial statement analysis problem set. Work on this Assignment is to be yours alone - any discussion of either the questions on the assignment or your answers with anyone other than your instructor will be considered as cheating and, thus, as a violation of the GSU honor code. _____________________________________________________________ Financial statement data for Delicious Dishes, Inc. are given below. All figures are in dollars. Use this data to construct an Income Statement for the year ending December 31, 2016 and use your constructed statement to answer the following 4 questions. Advertising Beginning of year inventory Depreciation End of year inventory General and administrative expenses Gross sales Interest expense Lease payments Management salaries Purchases Research and development Returns and allowances Taxes 16,400 128,700 5,200 124,600 21,900 824,500 21,700 12,000 104,600 524,700 12,600 3,600 35,900 1. What was gross profit from income statement for the year ending December 31, 2016? 2. What was operating profit (i.e., EBIT) from Delicious Dishes income statement for the year ending December 31, 2016? 3. What was profit before taxes (i.e., EBT) from Delicious Dishes income statement for the year ending December 31, 2016? 4. What was net income from Delicious Dishes income statement for the year ending December 31, 2016? 5. On December 10, 2016, Jennings, Inc. paid out total dividends of $550,000 (this was the only dividend payment made during the year). If Jennings reported Retained earnings of $2,168,000 for 2015 and Retained earnings of $2,380,000 for 2016, what was Jennings reported net income in 2016? 6. In 2016, Variman, Incorporated had Gross Accounts receivable of $136,200 and management estimated the Allowance for Doubtful accounts to be $12,500. Compute the ratio of Allowance of Doubtful accounts to Net Accounts receivable for Variman, Inc. for 2016 (that is, compute Allowance/Net Accounts receivable - record your answer as a percent rounded to one decimal place; for example, record 0.234567 as 23.5%). 1 7. In 2016, the Whaddock Company purchased 10,200,000 units from its supplier at a cost of $10.00 per unit. Whaddock sold 10,525,000 units of its product in 2016 at a price of $14.50 per unit. Whaddock began 2016 with 1,425,000 units in inventory (inventory is carried at a cost of $10.00 per unit). Using this information, compute Whaddock's gross profit for 2016. 8. Referring back to the previous question, compute Whaddock's 2016 ending inventory balance in dollars (valued at cost per unit of $10.00). 9. In 2016, Timmers, Inc. (a retail clothing company) sold 500,000 units of its product at an average price of $50.00 per unit. The company reported estimated returns and allowances in 2016 of 1.5 percent of gross revenue. Timmers actually purchased 510,000 units of its product from its manufacturer in 2016 at an average cost of $35.00 per unit. Timmers began 2016 with 52,000 units of its product in inventory (carried at an average cost of $35.00 per unit). Operating expenses (excluding depreciation) for Timmers, Inc. in 2016 were $2,250,000 and depreciation expense was $750,000. Timmers had $8,400,000 in debt outstanding throughout all of 2016. This debt carried an average interest rate of 7.5 percent. Finally, Timmers' tax rate was 40 percent. Timmers' fiscal year runs from January 1 through December 31. Given this information, compute net income for Timmers for 2016. 10. Referring back to the previous problem, compute Timmers' ending inventory balance for 2016 (that is, what did Timmers report as inventory on its December 31, 2016 balance sheet). Financial data for Jade's Jeans are given below. All figures are in dollars. Use this data to construct a Balance Sheet for the company for the year ending December 31, 2016 and use your constructed statement to answer the following 5 questions (i.e., 11 through 15). NOTE: Not every item in the list below belongs on the balance sheet - you have to use some given data to determine needed accounts for the balance sheet. However, other than what is listed and/or can be derived, there are no other accounts on Jade's balance sheet - use cash as a plug figure to balance the balance sheet. Accounts payable Accruals Accumulated depreciation Additional paid in capital Beginning of year inventory Common stock ($2.00 par value) Cost of goods sold Current portion of Long-term debt Gross accounts receivable Gross fixed assets Long-term debt (excluding current portion) Purchases Retained earnings Returns and allowances Short-term bank loan Cash 955,000 294,600 12,975,300 19,476,200 9,471,600 14,200,000 71,359,800 1,475,600 1,995,600 64,851,200 15,148,600 70,384,700 11,017,600 12,600 866,000 ??? 11. What did Jade's Jeans record as Total Current Assets on December 31, 2016 balance sheet? 12. What did Jade's Jeans record as Total Current Liabilities on December 31, 2016 balance sheet? 13. What did Jade's Jeans record as Total Assets on December 31, 2016 balance sheet? 2 14. What was Total Shareholder's Equity on Jade's Jeans December 31, 2016 balance sheet? 15. Jade's Jeans Company reported net income for 2016 of $71,800 and the company paid dividends of $0.60 per share in 2016. Given this information (along with the data provided above), compute what Jade's Jeans Company reported as retained earnings on its December 31, 2015 balance sheet? (Assume that no additional shares of stock were issued between December 31, 2015 and December 31, 2016). 16. The year-end 2016 balance sheet for Brad's Copy, Inc. lists common stock ($1.25 par value) at $7,626,000 capital surplus at $86,543,126 and retained earnings at $218,546,280. On the 2015 year-end balance sheet, retained earnings is listed as $214,368,900. The firm's net income in 2016 was $12,050,120. No stock was issued or repurchased in 2016. What were dividends per share paid by the firm in 2016 (rounded to the nearest cent)? 17. The Lunder Company has total assets of $21,542,000, current liabilities of $2,547,000, and long-term liabilities of $7,410,000. The firm has 1,280,000 shares of common stock outstanding. Compute the firm's book value per share. 18. Referring back to the previous question, if Lunder's net income equals $1,600,000 and Lunder has a P/E ratio of 17.0 (note that P/E ratio = stock price per share divided by earnings per share), what is the current price of the stock? USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 19 - 22 The Devlin Corporation, a diversified distribution company, purchases cartons of canned tennis balls from the Questor Company and markets the balls under the Devlin brand name. Devlin started operations on January 1, 2016. In the table below, Quarter 1 represents the time period from January 1, 2016 to March 31, 2016 and Quarter 2 represents the time period from April 1, 2016 to June 30, 2016. Devlin began operations on January 1, 2016 with no inventory. Purchases and sales data for Devlin's first two quarters of business are shown below: Quarter 1 Sales Purchases Quarter 2 Sales Purchases January February March 24,000 cartons at $50 per carton 9,000 cartons at $25 10,000 cartons at $30 12,000 cartons at $35 April May June 56,000 cartons at $65 per carton 14,000 cartons at $40 16,000 cartons at $45 20,000 cartons at $50 19. Calculate the Quarter 2 ending inventories (in dollars) using the LIFO inventory valuation method. 20. Calculate Quarter 2 GROSS PROFIT using the LIFO inventory valuation method. 21. Calculate the Quarter 2 ending inventories (in dollars) using the FIFO inventory valuation method. 22. Calculate Quarter 2 GROSS PROFIT using the FIFO inventory valuation method. 3 For each of the algebra problems below, round your answer to 2 decimal places and record your answer on D2L without (if applicable) a comma. Thus, enter 3.24765 as 3.25 or .18763 as 0.19 or 3,214.842876 as 3214.85. 23. 24. 25. 26. 27. 28. Suppose that A = D + E and that D/A = 0.55. Solve for A/E. Suppose that A = D + E and that D/A = 0.40. Solve for D/E. Suppose that D + E = A, that N/A = .15 and that D/A = 0.75. Solve for N/E. Suppose that S/A = 5.0 and N/S = .08. Solve for N/A. Suppose A - D = E, that N = 20,000, E/A = .75 and N/E = .40. Compute D/A. Assume that S/A = 6.5, D/A = .40, N/E = .75 and A = D + E. Solve for N/S. 29. 30. 31. 32. Given that: 2y + 10x + 18 = 4 and 4x - y + 11 = 0, solve for x. Referring back to the prior problem, what is y? Given that: 4(3g + 104) - 90 = 504 + 6(g - 14), solve for g. Bill can mow his mother's lawn in 45 minutes. His brother Jim can mow it in 75 minutes. How long will it take them to do it together, if each has his own lawnmower? (Record your answer in minutes rounded to one decimal place. For example, if the answer you find is 14.2835 minutes, record 14.3). On a particular day, the campus bookstore sold 30 T-shirts. White ones cost $9.95 and yellow ones cost $10.50. Total sales of T-shits were $310.60. How many white shirts were sold? Referring back to the prior problem, how many yellow shirts were sold? If working alone, Marcus can paint a room in 3.15 hours. Working together with Claudia, they can both paint the room in 2.09 hours. How long would it take Claudia working alone to paint the room? The weight of a bag of bricks plus 20% of its weight is 30 pounds. How much does the bag of bricks weigh, in pounds? A rich merchant had collected many gold coins. He did not want anybody to know about them. One day, his wife asked, "How many gold coins do you have?" After pausing a moment, he replied, "Well! If I divide the coins into two unequal numbers, then 25 times the difference between the two numbers equals the difference between the squares of the two numbers." How many gold coins does the rich merchant have? Suppose that you go out and buy 100 lbs. of cucumbers that are 99% water. Unfortunately, you do not observe the rules of caring for your cucumbers so after some time they dehydrate until they are only 98% water. How much do they then weigh? Ed invests $57,000 in stocks paying 8%. How much additional money should he invest in certificates of deposit paying 3% so that the average return on Ed's investments is 4%? In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake? 33. 34. 35. 36. 37. 38. 39. 40. 4