Question
Need help in answering 5 of 7 questions. 3. The following is a partial listing of accounts for Euisara, Inc., for the year ended December
Need help in answering 5 of 7 questions.
3. The following is a partial listing of accounts for Euisara, Inc., for the year ended December 31, 2009.
Required:
Prepare a classified balance sheet in good format for December 31, 2009.
Finished Goods | $ 9,718 |
Current Maturities of Long-Term Debt | 1,257 |
Accumulated Depreciation | 9,980 |
Accounts Receivable | 24,190 |
Sales Revenue | 127,260 |
Treasury Stock | 251 |
Prepaid Expenses | 2,199 |
Deferred Taxes (long-term liability) | 8,506 |
Interest Expense | 2,410 |
Allowance for Doubtful Accounts | 915 |
Retained Earnings | 18,951 |
Raw Materials | 9,576 |
Accounts Payable | 19,021 |
Cash and Cash Equivalents | 8,527 |
Sales Salaries Expense | 872 |
Cost of Goods Sold | 82,471 |
Investment in Unconsolidated Subsidiaries | 3,559 |
Income Taxes Payable | 8,356 |
Work In Process | 1,984 |
Additional Paid-In Capital | 9,614 |
Equipment | 41,905 |
Long-Term Debt | 15,258 |
Rent Income | 2,468 |
Common Stock | 3,895 |
Notes Payable (short-term) | 6,156 |
Income Tax Expense | 2,461 |
4. Information related to Batavia Furniture Company for the year ended December 31, 2009, follows.
Cost of Goods Sold | $ 70,000 |
Dividends Declared | 5,000 |
Flood Loss (pre-tax) | 12,000 |
General Expense | 8,000 |
Other Income | 9,000 |
Other Expense | 11,000 |
Retained Earnings, January 1, 2009 | 116,000 |
Sales | 131,000 |
Selling Expense | 7,000 |
Required:
Prepare in good form a multiple-step income statement for the year 2009. Assume a 50% tax rate and that 5,000 shares of common stock were outstanding during the year.
7. Each of the following would generally be thought of as a favorable indicator of the firm's financial position:
a. | A current ratio well above 2.0, which is substantially higher than that for other firms in the industry. |
b. | Collection period significantly lower than for several recent periods. |
c. | Rapidly rising merchandise inventory turnover. |
Required:
In each case, give an example of circumstances underlying the ratio that might represent an unfavorable development.
9. How will switching from fifo to lifo for inventory valuation affect financial analysis of liquidity and profitability? Cite two ratios that will be affected and indicate how they will change. (Assume an inflationary condition).
10. Bill's Produce does 60 percent of its business during June, July, and August.
| For Year Ended | For Year Ended |
| December 31, 2006 | July 31, 2006 |
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Net Sales | $700,000 | $690,000 |
Receivables, less allowance for doubtful accounts: |
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Beginning of period | $ 45,000 | $ 80,000 |
(allowance, January 1, $2,000; August 1, $3,000) |
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End of period |
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(allowance, December 31, | $ 50,000 | $ 85,000 |
$3,000; July 31, |
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$3,500) |
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Required:
a. | Compute the days' sales in receivables for July 31, 2006, and December 31, 2006, based on the data above. |
b. | Compute the accounts receivable turnover for the period ended July 31, 2006, and December 31, 2006. |
c. | Comment on the results from (a) and (b). |
11. Alpha Company would like to estimate how long it will take to realize cash from its ending inventory. For this purpose the following data are submitted:
Accounts Receivable, less allowance for doubtful accounts of $40,000 | $660,000 | |
Ending Inventory | $750,000 | |
Net Sales | $5,650,000 | |
Cost of Goods Sold | $4,250,000 | |
Days' Sales in Inventory = | Ending Inventory |
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| Cost of Goods Sold / 365 |
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Days' Sales in Receivables = | Gross Receivables |
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| Net Sales / 365 |
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Required:
Estimate how long it will take to realize cash from the ending inventory.
12. The following are the inventory records of the Garret Company:
| Units | Cost | Total |
January 1 | 40 | $12 | $480 |
Purchases: |
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February 10 | 20 | 13 | 260 |
July 15 | 40 | 14 | 560 |
November 1 | 50 | 15 | 750 |
December 10 | 30 | 16 | 480 |
Available | 180 |
| $2,530 |
Ending inventory consists of 30 units from the July purchase.
Note: The company uses a periodic inventory system.
Required:
Calculate ending inventory and cost of sales, using: (a) FIFO, (b) LIFO, (c) average, and (d) specific identification.
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