The following ratios have been computed for Piper Company for 20 12 times 10. Question 1 (15 marks) 2.5:1 Current ratio Debt to total assets ratio 20% 24% Profit margin ratio Times interest earned Receivable turnover ratio 5 times The 2010 financial statements for Piper Company with missing information follows: PIPER COMPANY Comparative Balance Sheet December 31, Assets -2010 25,000 35,000 15,000 ? (6) 50,000 ? (7) 50,000 160,000 (8) 310000 Cash Marketable securities 15,000 200,000 Property, plant, and equipment (net)00 Total assets. Liabilities and stockholders equs 15.000 25,000 S 15,000 35,000 Accounts payable... Short-term notes payable. Bonds payable. Common stock. Retained eanings 30,000 ? (9) 20,000 200,000 .200,000 Total liabilities and stockholders' equity.. $ 2 (10) $310,000 PIPER COMPANY Income Statement For the Year Ended December 31, 2010 Net sales Cost of goods sold Gross profi.. $200,000 100,000 100,000 Depreciation expense.. Interest expense 5,000 10,000 Administrative expenses15,000 Total expenses. Income before income taxes Income tax expense ? (2) Net income S 2(D) Question 2 (21 marks) PolyU Corporation opened on business, the following events and transactions occurred: February 1, 2010. During the first month of the operation of the February l: stockholders invested S 14,000 cash in exchange for 1: hi common stock of the corporation. red a secretary-receptionist at a salary of S 400 per week, payable monthly. 2: paid office rent for the month S 1000. 3: purchased office supplies on account from CityU Corporation $2000. 10: provided service for Hong Kong government and will get $3000 11: received $800 cash in advance from Mr. Fung to complete a questionnaire service. 20: received $ 2800 cash for services completed and delivered to Miss Rose 29: paid secretary-receptionist for the month salary $ 1600 29: paid S 600 to CityU Corporation for accounts payable due. Instructions Journalize the transactions, including explanations. Question 3 (20 marks) Below is a partial listing of the adjusted account balances of the Hydell Department Storea year-end on December 31, 2010. Accounts Receivable Cost of Goods Sold Selling Expenses (includes depreciation) Interest Expense Accumulated Depreciation-Building Sales Discounts Merchandise Inventory Administrative Expenses (includes depreciation) Sales Accounts Payable Interest Revenue $ 18,000 255,000 35,000 2,000 10,000 32,000 44,000 17,000 360,000 15,000 700 Instructions Using whatever data you believe appropriate, prepare a multiple-step income statement Hydell Department Store for the year ended December 31,2010. Question 4 (24 marks) Presented below is information related to the operations of Myers Corpora December 20102009 Cash Inventoryeceivabl00 Prepaid expenses $400,000 190,000 210,000 15,000 S 65,000 S 40,000 Sales 55,000 48,000 Cost of goods sold 37,000 22,000 Gross profit 17,000 20,000 Depreciation expense 36,000 20,000 Other operating expenses 141.000 Building Accumulated depreciation- 54,000 Income from operations Loss on equipment sale 100,000 100,000 (17,000) (8,000) Income before income taxes 51,000 58,000 80,000 Income tax expense building 16,000 Equipment Accumulated depreciation- Net income equipment (17,000) -(20,000) Total 34,000 S30 s 45,000 39,000 0 100,000 200,000 100,000 89,00063,000 Accounts payable Bonds payable Common stock Retained earnings Total 34,000 S302,000 Additional information: (a) In 2010, Myers declared and paid a cash dividend of $9,000. (b) The company converted $100,000 of bonds into common stock. (c) Equipment with a cost of $22,000 and a book value of $13,000 was sold for $10,000. Land was acquired for cash. Prepaid expenses pertain to operating expenses; accounts payable pertains to merchandise purchases. (d) Instructions Solve either (a) or (b), but (a) Prepare a statement of cash flows in proper form for 2010, using the indirect method. (b) Prepare a statement of cash flows in proper form for 2010, using the direct method. Question 5 (20 marks) statement and statement of financial position data for Cardinal six-item outer- Corporation are presented below. The company, beginning 15 years ago with a wear collection of clothing, has expanded to include a wide assortment of fashion-oriented men's apparel, and now has three distinct brands and a significant international presence. Cardinal Corporation adopts LIFO method in the inventory control CARDINAL CORPORATION Consolidated Income Statement December 31 (amounts in thousands, except share data) 2010 $ 817,359 (156,238) 2009 S 653,246 (90,286) 2008 S 552,431 (60,172) 10.310 484,832 Sales return and allowance Sales discount Net sales Cost of goods sold Gross profit (7.427 621,286 (323,195) 298,091 (178,625) (51,350) 5.748 73,864 252,698 232,134 (105,052) (43,992) ( 287,021 265,629 (134,256) (44,037) 5,281 92,617 Selling expense Administrative expense Income from other operating activity Operating profit 88,828 Other income Investment income, net 2,067 4,016 405 3,781 Minority interest in loss of consolidated 785 93,394 (38,330) 36,976) subsidiary Earnings before provision for income75,931 97,038 taxes Provision for income taxes Net income (29.768) $ 46,163 3 58,708 56,418 Weighted-average number of common share outstanding Basic Diluted 34,805,000 36,597,000 38,430,000 40,529,000 39,081,000 41.729,000 CARDINAL CORPORATION Consolidated Statements of Financial Position December 31 (amounts in thousands, except share data) Long-term Asset Property, plant and equipment-at cost, $ 81,674 S 64,524 less accumulated depreciation and amortization Other assets 13,808 11,777 Current Assets Deferred tax benefit Prepaid expenses and other current assets Inventories 5,453 73,879 107,609 7,369 5,434 70,212 102,471 Accounts receivable-net of allowances of $ 9,046 in 2010 and $ 5,640 in 2009 Short-term investments Cash and cash equivalents 33,991 27,143 351,938 55,049 15.498 332,334 Total Asset Stockholder's equity Preferred stock-par value $0.01; authorized, 2,000,000 shares; no shares issued Common stock- par value $ 0.10; 4,270 authorized, 100,000,000 shares; issued, 42,696,000 shares in 2010 and 42,604,000 shares in 2009 Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Common stock in treasury at cost; 8,964,000 shares 67,559 66,813 322,045 (130,161) 263,713 275,882 91,103) 255817 in 2010 and 5,596,000 shares in 2009 Total Equity Long-term debt-net Current liabilities 49,384 9,793 40,298 6,523 Accrued expenses and other current liabilities Income taxes payable Current maturities of long-term debt Accounts payable-trade 29.596 Total Liabilities Total Liabilities and Equity 29,048 88,225 $ 351,938 $332,334 ei) Compute the following ratios for Cardinal Corporation for 2010. Round to the nearest two decimal places. (5 marks) (1) Current ratio (2) Quick ratio (3) Total debt to total assets (4) Inventory turnover (5) Average collection period* (6) Profit margin (7) Gross profit ratio (8) Return on equity (9) Return on asset (10) Earnings per share (basic) Note: ['] Use 365 days in a year