please answer from no. 5 to 7

Accounting 122 Group Project Problem 1 100 Points The comparative financial statements of the Summer Company are as follows The market price of the Summer Company common stock was $36 on December 31, 2016 and $11.20 on December 31, 2017. Current Assets Cash Accounts Receivable Merchandise Inventory Prepaid Expenses Total Current Assets Plant Assets Less: Accumulated Depreciation Plant Assets (net) Total Assets Current Liabilites Accounts Payable Accrued Liabilities Dividends Payable Total Current Liabilities Liabilities and Stockholder's Equity Long-Term Liabilities Mortgage Note Payable Bonds Payable Less: Discount on Bonds Payable ASSETS Total Long-Term Liabilities Total Liabilities Stockholders' Equity Common Stock, $10 Par Paid in Capital in Excess of Par Retained Earnings Less: Treasury Stock Total Stockholders' Equity Total Liabilities and Stockholders' Equity Retained Earnings Jan 1, Add: Net Income Less: Dividends Declared Retained Earnings Dec. 31 Summer Company Comparative Balance Sheet December 31, 2017, 2016 and 2015 2017 2016 $176,200 $253,100 238,850 31,850 62,500 42,500 700 1,700 2015 $478,250 $329,150 $226,050 696,100 726,100 786,100 (70,000) (60,000) (80,000) 626,100 666,100 706,100 $1,104,350 $995,250 $932,150 $26,500 67,350 130,000 2,200 $55,000 $30,000 $60,000 1,000 8,000 12,000 0 10,000 2,000 $56,000 $48,000 $74,000 $9,000 $29,000 $49,000 240,000 340,000 290,000 (4.500) (5.500) (4.500) $244,500 $363,500 $334,500 $300,500 $411,500 $408,500 $411,900 $311,900 $311.900 162,350 72,350 72,350 236,600 209,500 149,400 (7.000) (10.000) (10.000) $803,850 $583,750 $523,650 $1,104,350 $995,250 $932,150 $209,500 $149,400 27,100 70,100 The Summer Company Retained Earnings Statement For the years Ended December 31, 2017 and 2016 2017 2016 (10,000) $236,600 $209,500 Sales less: Cost of Merchandise Sold The Summer Company Income Statement For the years ended December 31, 2017 and 2016 2017 2016 Gross Profit less: Operating Expenses; excluding De Depreciation Expense Income from Operations Add: Other Income Gain on sale of equ Less: Other Expenses: Loss on sale of equipment Less: Interest Expense Income before Income Tax Less: Income Tax expense Add: Cash Flow From Operating Activities: Net Income The Summer Company Statement of Cash Flows For the year ended December 31, 2016 Net decrease in Accounts Receivable Net decrease in Merchandise Inventory Net decrease in Prepaid Expenses Loss on Sale of Plant Assets (1) Depreciation Expense (1) Amortization of Bond Discoun (2) Deduct Decrease in Accounts Payable Decrease in Accrued Liabilities Cash Flow From Operating Activities Cash Flow from Investing Activities: Sale of Plant Assets for cast (1) Cash Flow from Investing Activities Cash Flow from Financing Activities Issued Bonds for cash (2) Deduct Cash Dividends Paid Mortgage paid Cash Flow from Financing Activities Net Increase in Cash 1/1/2016 Cash Balance 12/31/2016 Cash Balance Sold Plant Assets with a book value of $20,000. issued bonds for $48,000. Face Value $50,000 $260,000 $521,000 200,000 387,500 60,000 133,500 11,000 8,500 20,000 20,000 $29,000 $105,000 10,000 8,000 $39,000 $97,000 3,900 5,900 $35,100 $91,100 8,000 21,000 $27,100 $70,100 G. Amortized the Discount on Bonds Payable. H. Issued common stock, receiving cash. $35,500 87,500 500 8,000 20,000 1,000 $30,000 4.000 12,000 48,000 0 2,000 20,000 22,000 $70,100 152,500 222,600 34,000 188,600 12,000 (1) (2) The following transactions occurred during 2017 to assist you in preparing the Statement of Cash Flows for 2017. 26,000 226,600 26.500 253.100 A. Dividends were declared in 2016 and paid 2017. B. Purchased Treasury Stock for $10,000 on 1/1/2017. C. Sold Treasury Stock receiving cash. D. Sold Plant Assets, receiving cash. The net book value of the plant asset was $20,000. E. Paid off a portion of the age note. F. Retired bonds at their maturity value. Required 1. Prepare the Statement of Cash Flows for the year ended December 31, 2017. (Show all required computations). Assume that your manager, who has a marketing background ask you the following questions 2-5, after reviewing the Statement of Cash Flows for 2017 and 2016. As you can see from the premise of the questions, that your manager does not have a basic understanding of the statement of cash flows. Take that into consideration when answering questions 2-5. 2. "How can Depreciation be a cash flow"? 3. "How can a gain on the sale of non-current assets be a deduction from Net Income in determining the Cash Flow from Operating Activities 4. "How can a Loss on the sale of non current assets be be an addition to Net Income in determining Cash Flow from Operating Activities? 5. "Why does the bank need a Statement of Cash Flows anyway? They can compute the increase or decrease in cash flow from the Balance Sheet for the last two years"? 6. Prepare the following financial statement analysis for the 2017 and 2016. Define each measure and whether the Summer Company did better or worse and why? A. Current ratio. B. Quick ratio. C. Rate of Return on Total Assets. D. Rate of Return on Common Stockholders' Equity. E. Earnings Per Share on Common Sock. (When computing the earnings per share assume there is no Treasury Stock). Use the outstanding shares as of 12/31/2017 for 2017 and the outstanding shares as of 12/31/2016 for 2016. Do not use the weighted average outstanding shares. F. Accounts Receivable Turnover. Assume all Sales are on account. G. Average collection period. Assume all Sales are on account. H. Inventory Turnover. 1. Debt to equity ratio J. Times Interest Earned Ratio. K. Price Earnings Ratio. L. Operating Cash Flow to current liability ratio M. Vertical analysis for the Income Statement for 2017 and 2016. Below is an example of how you should present the information. 2011 Working Capital: Current Assets Current Liabilities Net Working Capital $478,250 56,000 422,250 2010 $329,150 48,000 281,150 Strength or Weakness Working Capital measures the ability of a company to meet it's short-term obligations with current assets. In 2011 Summer is performing much better since they have more current assets available to meet their short-term obligations. 7. From your analysis, summarize the major strenths and weaknesses comparing Summer's 2017 and 2016 performance. Summarize part 6 A through M. Accounting 122 Group Project Problem 1 100 Points The comparative financial statements of the Summer Company are as follows The market price of the Summer Company common stock was $36 on December 31, 2016 and $11.20 on December 31, 2017. Current Assets Cash Accounts Receivable Merchandise Inventory Prepaid Expenses Total Current Assets Plant Assets Less: Accumulated Depreciation Plant Assets (net) Total Assets Current Liabilites Accounts Payable Accrued Liabilities Dividends Payable Total Current Liabilities Liabilities and Stockholder's Equity Long-Term Liabilities Mortgage Note Payable Bonds Payable Less: Discount on Bonds Payable ASSETS Total Long-Term Liabilities Total Liabilities Stockholders' Equity Common Stock, $10 Par Paid in Capital in Excess of Par Retained Earnings Less: Treasury Stock Total Stockholders' Equity Total Liabilities and Stockholders' Equity Retained Earnings Jan 1, Add: Net Income Less: Dividends Declared Retained Earnings Dec. 31 Summer Company Comparative Balance Sheet December 31, 2017, 2016 and 2015 2017 2016 $176,200 $253,100 238,850 31,850 62,500 42,500 700 1,700 2015 $478,250 $329,150 $226,050 696,100 726,100 786,100 (70,000) (60,000) (80,000) 626,100 666,100 706,100 $1,104,350 $995,250 $932,150 $26,500 67,350 130,000 2,200 $55,000 $30,000 $60,000 1,000 8,000 12,000 0 10,000 2,000 $56,000 $48,000 $74,000 $9,000 $29,000 $49,000 240,000 340,000 290,000 (4.500) (5.500) (4.500) $244,500 $363,500 $334,500 $300,500 $411,500 $408,500 $411,900 $311,900 $311.900 162,350 72,350 72,350 236,600 209,500 149,400 (7.000) (10.000) (10.000) $803,850 $583,750 $523,650 $1,104,350 $995,250 $932,150 $209,500 $149,400 27,100 70,100 The Summer Company Retained Earnings Statement For the years Ended December 31, 2017 and 2016 2017 2016 (10,000) $236,600 $209,500 Sales less: Cost of Merchandise Sold The Summer Company Income Statement For the years ended December 31, 2017 and 2016 2017 2016 Gross Profit less: Operating Expenses; excluding De Depreciation Expense Income from Operations Add: Other Income Gain on sale of equ Less: Other Expenses: Loss on sale of equipment Less: Interest Expense Income before Income Tax Less: Income Tax expense Add: Cash Flow From Operating Activities: Net Income The Summer Company Statement of Cash Flows For the year ended December 31, 2016 Net decrease in Accounts Receivable Net decrease in Merchandise Inventory Net decrease in Prepaid Expenses Loss on Sale of Plant Assets (1) Depreciation Expense (1) Amortization of Bond Discoun (2) Deduct Decrease in Accounts Payable Decrease in Accrued Liabilities Cash Flow From Operating Activities Cash Flow from Investing Activities: Sale of Plant Assets for cast (1) Cash Flow from Investing Activities Cash Flow from Financing Activities Issued Bonds for cash (2) Deduct Cash Dividends Paid Mortgage paid Cash Flow from Financing Activities Net Increase in Cash 1/1/2016 Cash Balance 12/31/2016 Cash Balance Sold Plant Assets with a book value of $20,000. issued bonds for $48,000. Face Value $50,000 $260,000 $521,000 200,000 387,500 60,000 133,500 11,000 8,500 20,000 20,000 $29,000 $105,000 10,000 8,000 $39,000 $97,000 3,900 5,900 $35,100 $91,100 8,000 21,000 $27,100 $70,100 G. Amortized the Discount on Bonds Payable. H. Issued common stock, receiving cash. $35,500 87,500 500 8,000 20,000 1,000 $30,000 4.000 12,000 48,000 0 2,000 20,000 22,000 $70,100 152,500 222,600 34,000 188,600 12,000 (1) (2) The following transactions occurred during 2017 to assist you in preparing the Statement of Cash Flows for 2017. 26,000 226,600 26.500 253.100 A. Dividends were declared in 2016 and paid 2017. B. Purchased Treasury Stock for $10,000 on 1/1/2017. C. Sold Treasury Stock receiving cash. D. Sold Plant Assets, receiving cash. The net book value of the plant asset was $20,000. E. Paid off a portion of the age note. F. Retired bonds at their maturity value. Required 1. Prepare the Statement of Cash Flows for the year ended December 31, 2017. (Show all required computations). Assume that your manager, who has a marketing background ask you the following questions 2-5, after reviewing the Statement of Cash Flows for 2017 and 2016. As you can see from the premise of the questions, that your manager does not have a basic understanding of the statement of cash flows. Take that into consideration when answering questions 2-5. 2. "How can Depreciation be a cash flow"? 3. "How can a gain on the sale of non-current assets be a deduction from Net Income in determining the Cash Flow from Operating Activities 4. "How can a Loss on the sale of non current assets be be an addition to Net Income in determining Cash Flow from Operating Activities? 5. "Why does the bank need a Statement of Cash Flows anyway? They can compute the increase or decrease in cash flow from the Balance Sheet for the last two years"? 6. Prepare the following financial statement analysis for the 2017 and 2016. Define each measure and whether the Summer Company did better or worse and why? A. Current ratio. B. Quick ratio. C. Rate of Return on Total Assets. D. Rate of Return on Common Stockholders' Equity. E. Earnings Per Share on Common Sock. (When computing the earnings per share assume there is no Treasury Stock). Use the outstanding shares as of 12/31/2017 for 2017 and the outstanding shares as of 12/31/2016 for 2016. Do not use the weighted average outstanding shares. F. Accounts Receivable Turnover. Assume all Sales are on account. G. Average collection period. Assume all Sales are on account. H. Inventory Turnover. 1. Debt to equity ratio J. Times Interest Earned Ratio. K. Price Earnings Ratio. L. Operating Cash Flow to current liability ratio M. Vertical analysis for the Income Statement for 2017 and 2016. Below is an example of how you should present the information. 2011 Working Capital: Current Assets Current Liabilities Net Working Capital $478,250 56,000 422,250 2010 $329,150 48,000 281,150 Strength or Weakness Working Capital measures the ability of a company to meet it's short-term obligations with current assets. In 2011 Summer is performing much better since they have more current assets available to meet their short-term obligations. 7. From your analysis, summarize the major strenths and weaknesses comparing Summer's 2017 and 2016 performance. Summarize part 6 A through M