ACC 123 Five Problems Assignment
Chapter 13 Retirement Savings and Deferred Compensation
July 11, 2018Chapter 14 Tax Consequences of Home Ownership
July 11, 2018A.
A comparative balance sheet
for kenneth Corporation is presented below:
Kenneth Corporation
Comparative
Balance Sheets
Assets
2011
2010
Cash
$36,000
$31,000
Accounts receivables
80,000
60,000
Prepaid Insurance
25,000
17,000
Land
18,000
40,000
Equipment
70,000
60,000
Accum Depreciation
(20,000)
(13,000)
Total
Assets
209,000
195,000
Liabilities and Stockholdersâ Equity
Accounts payable
$11,000
$ 6,000
Bonds payable
27,000
19,000
Common stock
140,000
115,000
Retained earnings
31,000
55,000
Total Liab. And SE
equity
209,000
195,000
>
Additional information:
1. Net loss for 2011 is $15,000.
2. Cash dividends of $9,000 were declared and paid in 2011.
3. Land was sold for cash at a loss of $7,000. This was the only land
transaction during the year.
4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was
sold for $5,000 cash. Depreciation expense was 17000
5. $12,000 of bonds were retired during the year at carrying (book) value.
6. Equipment was acquired for common stock. The fair market value of the stock
at the time of the exchange was $25,000.
Instructions
Prepare a statement of cash flows for the year ended 2011, using the indirect
method
B.
Using the data presented for Ruez
Company, prepare a schedule showing a vertical analysis for 2010 and 2011.
2010
2011
Net sales
350,000
320,000
Cost of goods sold
200,000
180,000
Gross profit
150,000
140,000
Operating expenses
120,000
100,000
Net Income
30,000
40,000
C.
The financial statements of
Hampton Company appear below:
Hampton Company
Comparative Balance Sheet
December
31,
ASSETS
2009
2008
Cash
$ 35,000
$ 40,000
Short-term investments
15,000
60,000
Accounts receivables
50,000
30,000
Inventory
50,000
70,000
Property, plant & equip (net)
250,000
300,000
Total
assets
400,000
500,000
LIAB & Stockholders
Equity
Accounts payable
10,000
30,000
Short-term notes payable
40,000
90,000
Bonds payable
88,000
160,000
Common stock
160,000
145,000
Retained earnings
102,000
75,000
Total Liab & SE
400,000
500,000
Hampton
Company
Income
Statement
For
the year ended December 31, 2009
Net Sales
360,000
Cost of Goods Sold
198,000
Gross Profit
162,000
Expenses
Interest Expense
12,000
Selling Expense
40,000
Admin. Expense
59,000
Total Expense
111,000
Income before income taxes
51,000
Income tax expense
15,000
Net Income
36,000
Additional Information:
a. Cash dividends of
$9,000 were declared and paid in 2009.
b. Weighted Average
number of shares of common stock outstanding during 2008 was 30,000 shares.
c. Market value of
common stock on December 31,2009 was $21 per share.
Instructions
Using the financial
statements and additional information, compute the following ratios for Hampton
Company for 2009. Show all computations.
1. Current ratio:
_________________
2. Return on Common
stockholders equity__________________
3. Price-earnings ratio
_______________
4. Acid-test ratio
_______________
5. Receivables turnover
______________
6. TImes interest
earned ______________
7. Profit margin
__________—-
8. Days in inventory
______________
9. Payout ratio
______________
10.
Return on assets ___________
D.
Horizontal
and vertical analyses are analytical tools frequently used to analyze financial
statements. What type of information or insights can be obtained by using these
two techniques? Explain how the output of horizontal analysis and
vertical analysis can be compared to industry averages and/or competitive
companies.
E.
The following items were taken from the financial
statements of Horace, Inc., over a three-year period:
Item
2009 200 8
2007
Net sales
355,000 336,000 300,000
CGS
214,000 206,000
186,000
Gross profit
141,000 130,000 114,000
>
Instructions
Compute the following for each of the above time periods.
a. The amount and percentage change from 2007 to 2008.
b. The amount and percentage change from 2008 to 2009.