Please complete the second part of the "Inv worksheet"

Name(s): Anchor Down Company Income Statement For the Year Ended December 31, 2016 $ Sales Revenue Less: COGS Gross Margin Salaries Expense Bad Debt Expense Insurance Expense Depreciation Expense Amortization Expense Other Operating Expense Operating Income Interest Expense Loss (gain) on Disposal of Plant Assets Income before Tax Income Tax Expense Net Income Anchor Down Company Statement of Retained Earnings For the Year Ended December 31, 2016 Retained Earnings, January 1, 2016 Add: Net Income Less: Dividends Retained Earnings, December 31, 2016 % of Revenue Anchor Down Company Balance Sheet December 31, 2016 % of Assets Assets Cash Accounts Recievable Allowance for Doubtful Accounts Inventory Pre-Paid Insurance Total Current Assets Land Buildings Accumulated Depreciation - Buildings Equipment Accumulated Depreciation - Equipment Patents Total Assets Liabilities Accounts Payable Salaries Payable Interest Payable Notes Payable (due in 2016) Income Taxes Payable Total Current Liabilities Notes Payable (due after 2025) Total Liabilities Stockholders' Equity Captial Stock Retained Earnings Total Stockholders' Equity Total Liabilities & Stockholders' Equity Name(s): 2016 Ratios: Current Ratio Quick Ratio Gross Profit Margin Operations Margin Accounts receivable (net) turnover (no. of times) Days' sales in accounts receivable Inventory turnover Days' sales in inventory Operating cycle (days) Fixed asset turnover Average Life of GROSS Fixed Assets Average age of equipment ONLY Average age of all depreciable fixed assets Remaining life of all depreciable fixed assets - Current ratio - Quick ratio - Gross Profit Margin % - Operating Margin % - AR Turnover and days - Inventory Turnover and days - Operating cycle -Fixed asset turnover - Average life of gross fixed assets - Average age of equipment - Age of total fixed assets - Remaining life of all fixed assets - Which average age ratio is better? - Overall: Would you invest or lend money to this company? 2015 2.0 1.0 47% 20% 5.9 62 3.4 107 169 0.9 13.0 2.0 5.5 7.5 2014 2.5 2.0 45% 25% 7.0 52 3.0 122 174 0.8 10.5 2.1 6.0 4.5 Industry Delete hints and notes for presentation 3.0 1.5 HINT: use only cash and NET A/R 43% 25% 10.0 HINT: use net A/R and don't calculate avera 37 4.0 HINT: don't calculate average 91 128 1.0 HINT: for simplicity, don't calculate average 12.0 HINT: don't include land, this is how long yo 2.0 This is how old your equipment is 5.0 This is how old your assets are 7.0 Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Prepaid Insurance Land Buildings Equipment Patents Accumulated Depreciation-Buildings Accumulated Depreciation-Equipment Accounts Payable Income Taxes Payable Salaries and Wages Payable Notes Payable (due in 2017) Interest Payable Notes Payable (due after 2017) Common Stock Retained Earnings (1/1/2016) Dividends Sales Revenue Loss (gain) on Disposal of Assets Bad Debt Expense Cost of Goods Sold Depreciation Expense Income Tax Expense Insurance Expense Interest Expense Other Operating Expenses Amortization Expense Salaries and Wages Expense Total Balance b/f Unrecorded Trans Debit Credit $ 1,200 40,000 $ 2,000 31,350 9,000 26,000 137,500 70,000 16,000 57,500 17,500 95,000 25,000 30,000 100,000 39,050 5,000 ### 10,000 20,000 $ 366,050 $ 366,050 - Adjusted balances Debit Credit - Name(s): NOTE: You may have to record a debit and credit on one line to fit all the activity into a T-account. Bal Cash 1,200 Accounts Recievable 40,000 Bal Bal Inventory 31,350 Bal Bal Bal Prepaid Insurance 9,000 Bal Allowance for Doubtful Accounts 2,000 Bal Bal Bal Land 26,000 Bal Bal Bal Bal Buildings 137,500 Equipment 70,000 Bal Bal Patents 16,000 Bal Bal Accumulated Depr. - Buildings 57,500 Accumulated Depr. - Equipment 17,500 Bal Bal Accounts Payable 95,000 Bal Bal Bal Bal Income Taxes Payable Salaries Payable Bal Notes Payable (due after 2017) 30,000 Retained Earnings 39,050 Notes Payable (due in 2017) 25,000 Bal Interest Payable Bal Bal Bal Bal Common Stock 100,000 Bal Dividend 5,000 Bal Bal Loss (gain) on Disposal Sales Revenue Bal Bad Debt Exp Bal Bal Bal Depreciation Exp Cost of Goods Sold Bal Income Tax Exp Bal Bal Interest Exp Insurance Exp Bal Bal Amortization Exp Bal Bal Bal Bal Salaries Exp 20,000 Other Operating Exp 10,000 Bal Bal Bal Bal Name(s): a b c d e f g h i j k l m 1a 1b 2 3 4 5 6 7 8 9 10 Hint: do T accounts for A/R and Allowance Note: In this section ca balance after each trans Qty Beg. Inv. a) Qtr. 1 b) d) April Qtr. 2 e) f) July Qtr. 3 h) i) Oct. Qtr. 4 j) Dec. Purchases Per Unit Total Qty COGS Per Unit Inventory Total Qty 70 80 100 40 TOTALS 0 xxxxxxxxxxx $ FIFO COGS = Ending Inventory = $0 $0 0 xxxxxxxxxxx $ - 0 Note: In this section carryforward balance after each transaction Inventory Per Unit Total $ 105 $ 7,350 105 8,400 110 11,000 115 4,600 End Inv. Qty Sales Revenue Per Unit Total xxxxxxxxxxx $ - 0 xxxxxxxxxxx $ - Unit Beginning inventory units Cost 70 $ 105 80 105 100 110 40 115 Units Sales Sales FIFO Sold Price Revenue units sold - - Sale - 1Q Purchase - April Sale - 2Q Purchase - July Sale - 3Q Purchase - October Sale - 4Q Purchase - December 290 290 - $ FIFO FIFO $ $ units unsold 70 80 100 40 - 290 $ $ 7,350 8,400 11,000 4,600 31,350 31,350 Comprehensive Problem The Anchor Down Company sells boat anchors. Currently they are only offering one model: the VU123. Anchor Down's trial balance at December 31, 2016, is presented below. All 2016 transactions for the year have been recorded, except for the items marked with dashes and those described below. Anchor Down uses the FIFO inventory method in accounting for its inventory. All sales and all purchases of inventory are on account. The inventory of anchors consists of the following price layers at January 1, 2016: Unrecorded transactions related to sales and inventory (use inventory worksheet as a guide): a) Recorded sales for first quarter 2016, 180 units at $210 per unit. (The company uses a FIFO inventory system.) Also you will record cost of goods sold in Transaction m. below. b) Purchased 110 VU123s at a cost of $120 per unit in April 2016. c) Paid accounts payable, $15,000. d) Recorded sales for second quarter 2016, 190 units at $220 per unit. e) Purchased 290 VU123s at a cost of $120 per unit in July 2016. f) Recorded sales for third quarter 2016, 150 units at $240 per unit. g) Received notice that a retail customer owing Anchor Down $3,456 had filed bankruptcy and would be unable to pay. After exhausting all collection efforts, Anchor Down decided to write this customer's account off. h) Purchased 130 VU123s at a cost of $125 per unit in October 2016. i) Recorded sales for fourth quarter 2016, 240 units at $250 per unit. j) Purchased 120 VU123s at a cost of $130 per unit in December 2016. k) Paid accounts payable, $110,000. l) Collected $175,000 from customers on account for the year 2016. m) Record cost of goods sold based on FIFO inventory method for the whole year. Note: The inventory worksheet (whichever one you chose to use) should be turned in as support. No need to do both worksheets.) All other unrecorded transactions: 1. On April 1, 2016, Anchor Down purchased equipment for $25,000 cash and will be depreciated using the straight-line method over 5 years, with a salvage value of $5,000. Record purchase and depreciation (1a and 1b). 2. The equipment owned prior to this year (excluding transaction #1 above) is being depreciated using the straight-line method over 7 years. The salvage value is 10% of cost. 3. On July 1, 2016, Anchor Down sold for $8,500 equipment which originally cost $24,000. Accumulated depreciation on this equipment at January 1, 2016 was $7,000; 2016 depreciation (Jan - June, prior to the sale of the equipment) was $2,500 and this depreciation expense has already been recorded in transaction #2 above. 4. The balance in prepaid insurance represents the payment of a $9,000 9-month premium paid on October 1, 2016. 5. The building is being depreciated using the straight-line method over 35 years. The salvage value is $15,000. 6. The patent was acquired on January 1, 2016, and has a useful life of 10 years from that date. 7. Unpaid salaries and wages at December 31, 2016, total $8,000. 8. Both the short-term and long-term notes payable are dated January 1, 2016, and carry a 5.875% interest rate. All interest is payable in the next 12 months. 9. The company uses the aging method (percent of receivables) in estimating its allowance for doubtful accounts and bad debts expense. Anchor Down estimates that 7.5% of the ending receivables balance is deemed to be uncollectible. 10. Income tax rate is 35% for 2016. It will be paid on March 15, 2017. Instructions I. Prepare journal entries for the transactions listed above (including any adjusting entries necessary) and post to T-Accounts. II. Prepare an updated December 31, 2016, trial balance. III. Prepare a multi-step income statement for the year ended December 31, 2016. IV. Prepare a retained earnings statement for the year ended ecember 31, 2016. V. Prepare a December 31, 2016 classified balance sheet. VI. Compute Anchor Down's various ratios per the ratio tab found on the template. Explain each ratio and in doing so assess the company's liquidity, profitability, management of its receivables and inventory and the age of its fixed assets and answer any questions found on that tab? Note you are given these ratios for 2014, 2015 and industry averages in the template