acg2071-accounting problems with all solutions

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Description

GERALDO CORPORATION
Comparative Income Statements
For Years Ended December 31, 2011 and 2010

2011

2010

Sales

$

676,000

$

520,000

Cost of
goods sold

405,600

312,000





Gross
profit

270,400

208,000

Operating expenses

156,000

104,000





Net income

$

114,400

$

104,000










Express the above comparative income statements in common-size
percents.(Round
your answers to 1 decimal place. Omit the “%” sign in your
response.)

2011

2010

Sales

100.0

%

100.0

%

Cost of
goods sold





Gross
profit

Operating
expenses





Net income

%

%










The company’s
situation in the most recent year has:

Remained
unchanged

Improved

Worsened

2.

Common-Size Percents

Trend Percents













2012

2011

2010

2012

2011

2010

Sales

100.0

%

100.0

%

100.0

%

104.5

%

103.3

%

100.0

%

Cost of
goods sold

62.5

61.0

58.2

102.1

108.2

100.0

Total
expenses

14.3

13.8

14.1

106.1

101.1

100.0


Determine net income
as a percent of sales for the following years.(Round your intermediate
calculations to 1 decimal place and final answers to 2 decimal places.
Omit the “%” sign in your response.)

Years

Net income

2010

%

2011

%

2012

%


Should the net
income increased, decreased, or remained unchanged in this three-year period.

Remained
unchanged

Net income
increased

Net income
decreased

3.

Sanderson Company’s
year-end balance sheets follow.

At December 31

2012

2011

2010

Assets

Cash

$

28,553

$

33,376

$

33,390

Accounts receivable,
net

80,297

57,251

46,355

Merchandise inventory

100,959

74,889

48,386

Prepaid expenses

8,922

8,761

3,939

Plant assets, net

260,428

238,791

215,630







Total assets

$

479,159

$

413,068

$

347,700













Liabilities and Equity

Accounts payable

$

115,731

$

68,412

$

46,814

Long-term notes
payable secured by
mortgages on plant assets

90,082

94,056

75,305

Common stock, $10 par
value

162,500

162,500

162,500

Retained earnings

110,846

88,100

63,081







Total liabilities and
equity

$

479,159

$

413,068

$

347,700














The company’s income
statements for the years ended December 31, 2012 and 2011, follow.

For Year Ended December 31

2012

2011

Sales

$

622,907

$

491,551

Cost of
goods sold

$

379,973

$

319,508

Other
operating expenses

193,101

124,362

Interest
expense

10,589

11,306

Income
taxes

8,098

7,373





Total
costs and expenses

591,761

462,549





Net income

$

31,146

$

29,002









Earnings
per share

$

1.92

$

1.78










Additional information
about the company follows.

Common
stock market price, December 31, 2012

$32.00

Common
stock market price, December 31, 2011

30.00

Annual
cash dividends per share in 2012

0.26

Annual
cash dividends per share in 2011

0.13


To help evaluate the
company’s profitability, compute the following ratios for 2012 and 2011:

(1)

Return on common
stockholders’ equity.(Do not round intermediate calculations and round your
final answers to 1 decimal place. Omit the “%” sign in
your response.)

2012

%

2011

%


(2)

Price-earnings ratio
on December 31.(Round your answers to 1 decimal place.)

2012

2011


(3)

Dividend yield.(Round your answers to 1
decimal place. Omit the “%” sign in your response.)

2012

%

2011

%


4.

2013

2012

2011

2010

2009

Sales

$ 582,382

$ 378,170

$ 297,772

$ 205,360

$ 151,000

Cost of
goods sold

293,641

190,685

152,336

104,630

75,500

Accounts
receivable

28,362

22,161

20,457

11,972

10,343


Compute trend percents
for the above accounts, using 2009 as the base year.(Round your answers to
the nearest whole percent. Omit the “%” sign in your response.)

2013

2012

2011

2010

2009

Sales

%

%

%

%

100%

Cost of
goods sold

%

%

%

%

100%

Accounts
receivable

%

%

%

%

100%

5.

Sanderson Company’s
year-end balance sheets follow.

At December 31

2012

2011

2010

Assets

Cash

$

27,330

$

32,598

$

32,951

Accounts receivable,
net

82,443

58,187

44,378

Merchandise inventory

99,592

76,137

46,786

Prepaid expenses

8,891

8,386

3,772

Plant assets, net

254,414

232,166

208,313







Total assets

$

472,670

$

407,474

$

336,200













Liabilities and Equity

Accounts payable

$

116,518

$

70,240

$

43,491

Long-term notes
payable secured by
mortgages on plant assets

91,528

92,782

74,300

Common stock, $10 par
value

162,500

162,500

162,500

Retained earnings

102,124

81,952

55,909







Total liabilities and
equity

$

472,670

$

407,474

$

336,200














(1)

Compute the current ratio for the year ended 2012, 2011, and
2010.(Round
your answers to 2 decimal places.)

2012

to

2011

to

2010

to


(2)

Compute the acid-test ratio for the year ended 2012, 2011, and
2010.(Round
your answers to 2 decimal places.)

2012

to

2011

to

2010

to


6.

Selected comparative financial
statements of Bennington Company follow:

BENNINGTON
COMPANY

Comparative
Income Statements

For
Years Ended December 31, 2012, 2011, and 2010

2012

2011

2010

Sales

$

493,386

$

377,974

$

262,300

Cost of goods sold

297,018

237,368

167,872







Gross profit

196,368

140,606

94,428

Selling expenses

70,061

52,160

34,624

Administrative
expenses

44,405

33,262

21,771







Total expenses

114,466

85,422

56,395







Income before taxes

81,902

55,184

38,033

Income taxes

15,234

11,313

7,721







Net income

$

66,668

$

43,871

$

30,312














BENNINGTON
COMPANY

Comparative
Balance Sheets

December
31, 2012, 2011, and 2010

2012

2011

2010

Assets

Current assets

$

52,110

$

40,770

$

54,499

Long-term investments

0

600

3,030

Plant assets, net

96,775

103,203

62,250







Total assets

$

148,885

$

144,573

$

119,779













Liabilities and Equity

Current liabilities

$

21,737

$

21,541

$

20,961

Common stock

72,000

72,000

54,000

Other paid-in capital

9,000

9,000

6,000

Retained earnings

46,148

42,032

38,818







Total liabilities and
equity

$

148,885

$

144,573

$

119,779













6.

value:
10.00 points

Problem 13-1A Part 1

Required:

1.

Compute each year’s current
ratio. (Round your answers to 1 decimal
place.)

Current
ratio

December
31, 2012:

to

Current
ratio

December
31, 2011:

to

Current
ratio

December
31, 2010:

to

7.

value:
10.00 points

Problem 13-1A Part 2

2.

Express the income statement data
in common-size percents. (Round your answers
to 2 decimal places. Omit the “%” sign in your response.)

BENNINGTON
COMPANY
Common-Size Comparative Income Statements
For Years Ended December 31, 2012, 2011, and 2010

2012

2011

2010

Sales

%

%

%

Cost of goods sold




Gross profit

Selling expenses

Administrative
expenses




Total expenses




Income before taxes

Income taxes




Net income

%

%

%








8.

value:
10.00 points

Problem 13-1A Part 3

3.

Express the balance sheet data in
trend percents with 2010 as the base year. (Round
your answers to 2 decimal places. Leave no cells blank – be certain to enter
“0” wherever required. Omit the “%” sign in your
response.)

BENNINGTON
COMPANY
Balance Sheet Data in Trend Percents
December 31, 2012, 2011, and 2010

2012

2011

2010

Assets

Current assets

%

%

%

Long-term investments

Plant assets




Total assets







Liabilities and Equity

Current liabilities

%

%

%

Common stock

Other contributed
capital

Retained earnings




Total liabilities and
equity





9.

Park Corporation began
the month of May with $700,000 of current assets, a current ratio of 2.30:1,
and an acid-test ratio of 1.20:1. During the month, it completed the
following transactions (the company uses a perpetual inventory system).

May

2

Purchased
$55,000 of merchandise inventory on credit.

8

Sold merchandise
inventory that cost $50,000 for $150,000 cash.

10

Collected
$29,000 cash on an account receivable.

15

Paid $24,000
cash to settle an account payable.

17

Wrote off a
$5,000 bad debt against the Allowance for Doubtful Accounts account.

22

Declared a $1
per share cash dividend on its 70,000 shares of outstanding common stock.

26

Paid the
dividend declared on May 22.

27

Borrowed $85,000
cash by giving the bank a 30-day, 10% note.

28

Borrowed $115,000
cash by signing a long-term secured note.

29

Used the
$200,000 cash proceeds from the notes to buy new machinery.

Required:

Prepare a table
showing Park’s (1) current ratio, (2) acid-test ratio, and (3) working
capital, after each transaction.(Do not round intermediate calculations. Round
your ratios to 2 decimal places and the working capitals to nearest dollar
amount. Omit the “$” sign in your response.)

Transaction

Current Ratio

Acid-Test Ratio

Working Capital

Beginning

$

May 2

May 8

May 10

May 15

May 17

May 22

May 26

May 27

May 28

May 29

$


10.

Selected year-end
financial statements of McCord Corporation follow. (All sales were on credit;
selected balance sheet amounts at December 31, 2010, were inventory, $51,900;
total assets, $219,400; common stock, $95,000; and retained earnings,
$52,948.)

McCORD CORPORATION
Income Statement
For Year Ended December 31, 2011

Sales

$

451,600

Cost of
goods sold

297,650



Gross
profit

153,950

Operating
expenses

98,800

Interest
expense

3,900



Income
before taxes

51,250

Income
taxes

20,646



Net income

$

30,604






McCORD CORPORATION
Balance Sheet
December 31, 2011

Assets

Liabilities
and Equity

Cash

$

10,000

Accounts
payable

$

21,500

Short-term
investments

8,200

Accrued
wages payable

2,800

Accounts
receivable, net

31,400

Income
taxes payable

4,400

Notes
receivable (trade)*

3,500

Long-term
note payable, secured

Merchandise
inventory

38,150

by
mortgage on plant assets

63,400

Prepaid
expenses

2,600

Common
stock

95,000

Plant
assets, net

151,300

Retained
earnings

58,050





Total
assets

$

245,150

Total
liabilities and equity

$

245,150










* These are short-term
notes receivable arising from customer (trade) sales.

Required:

Compute the
following.(Use 365 days a year. Do not round intermediate calculations and
round your final answers to 1 decimal place. Omit the “%” sign in your
response)
:

(1)

Current
ratio

to

(2)

Acid-test
ratio

to

(3)

Days’
sales uncollected

days

(4)

Inventory
turnover

times

(5)

Days’
sales in inventory

days

(6)

Debt-to-equity
ratio

to

(7)

Times
interest earned

times

(8)

Profit
margin ratio

%

(9)

Total
asset turnover

times

(10)

Return on
total assets

%

(11)

Return on
common stockholders’ equity

%

14.

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