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Question;Problem 23.01ATHE LACAL COMPANYComparative Income StatementFor the Years Ended December 31, 2013 and 2012Percentof Sales2012Increaseor DecreaseAmountPercentPercent ofTotal Assets20132012Increaseor DecreaseAmountPercentAmountsRevenue:SalesLess Sales Returns and AllowancesNet Sales2013905,00015,000890,0002012765,0009,000756,000Cost of Goods SoldMerchandise Inventory, January 1Net PurchasesTotal Merchandise Available for SaleLess Merchandise Inventory, December 31Cost of Goods Sold84,000306,000390,00086,000304,00080,000262,000342,00084,000258,000Gross Profit on Sales586,000498,000Operating ExpensesSelling ExpensesSales Salary ExpensesPayroll Tax-Expense-SellingOther Selling ExpensesTotal Selling Expenses87,0008,70025,200120,90080,0008,00015,200103,200General and Administrative ExpensesOfficers Salary ExpensePayroll Tax Expense-AdministrativeDepreciation ExpenseOther General and Administrative ExpensesTotal General and Administrative Expenses130,00013,0008,2509,450160,700110,00011,0008,2507,000136,250Total Operating Expenses281,600239,450Net Income Before Income Taxes304,40091,320213,080258,55077,565180,985Net Income After Income TaxesCorrect!2013Correct!THE LACAL COMPANYComparative Balance SheetDecember 31, 2013 and 2012AssetsCurrent AssetsCashAccounts ReceivableMerchandise InventoryPrepaid ExpensesSuppliesTotal Current AssetsProperty, Plant, and EquipmentLandBuilding and EquipmentLess Accumulated DepreciationNet-Book Value-Building and EquipmentTotal Property, Plant, and EquipmentTotal AssetsAmounts2013111,02295,00086,0009,5001,200302,722201246,27587,50084,0005,000500223,27575,00082,500(33,000)49,500124,50075,00082,50024,75057,750132,750427,222Correct!356,025Correct!Liabilities and Stockholders' EquityCurrent LiabilitiesAccounts PayableSales Tax PayablePayroll Taxes AvailableIncome Taxes PayableTotal Current Liabilities27,0001,0001,1421,00030,14257,0003,0001,0255,00066,025Long-Term LiabilitiesMortgage PayableTotal Long-Term Liabilities39,00039,00045,00045,000Total Liabilities69,142111,02510,00010,000338,080358,08010,00010,000225,000245,000Stockholders' EquityCommon Stock ($1 par, 10,000 shares authorized,10,000 shares issued and outstanding)Paid-in Captial-Common StockRetained EarningsTotal Stockholders' EquityTotal Liabilities and Stockholders' Equity427,222Correct!356,025Correct!(35,883)Given Data P23.01ATHE LACAL COMPANYComparative Income StatementFor the Years Ended December 31, 2013 and 2012Revenue:SalesLess Sales Returns and AllowancesNet Sales2013905,00015,000890,0002012765,0009,000756,000Cost of Goods SoldMerchandise Inventory, January 1Net PurchasesTotal Merchandise Available for SaleLess Merchandise Inventory, December 31Cost of Goods SoldGross Profit on Sales84,000306,000390,00086,000304,000586,00080,000262,000342,00084,000258,000498,000Operating ExpensesSelling ExpensesSales Salaries ExpensePayroll Tax Expense-SellingOther Selling ExpensesTotal Selling Expenses87,0008,70025,200120,90080,0008,00015,200103,200General and Administrative ExpensesOfficers Salaries ExpensePayroll Tax Expense-AdministrativeDepreciation ExpenseOther General and Administrative ExpensesTotal General and Administrative Expenses130,00013,0008,2509,450160,700110,00011,0008,2507,000136,250Total Operating Expenses281,600239,450Net Income Before Income TaxesIncome Tax ExpenseNet Income After Income Taxes304,40091,320213,080258,55077,565180,985THE LACAL COMPANYComparative Balance SheetDecember 31, 2013 and 2012AssetsCurrent AssetsCashAccounts ReceivableMerchandise InventoryPrepaid ExpensesSuppliesTotal Current Assets111,02295,00086,0009,5001,200302,72246,27587,50084,0005,000500223,275Property, Plant, and EquipmentLandBuilding and EquipmentLess Accumulated DepreciationNet Book Value-Building and EquipmentTotal Property, Plant, and Equipment75,00082,500(33,000)49,500124,50075,00082,500(24,750)57,750132,750Total Assets427,222356,025Liabilities and Stockholders' EquityCurrent LiabilitiesAccounts PayableSales Tax PayablePayroll Taxes PayableIncome Taxes PayableTotal Current Liabilities27,0001,0001,1421,00030,14257,0003,0001,0255,00066,025Long-Term LiabilitiesMortgage PayableTotal Long-Term Liabilities39,00039,00045,00045,000Total Liabilities69,142111,025Stockholders' EquityCommon Stock ($1 par, 10,000 shares authorized10,000 shares issued and outstanding)Paid-in-Capital - Common StockRetained EarningsTotal Stockholders' Equity10,00010,000338,080358,08010,00010,000225,000245,000Total Liabilities and Stockholders' Equity427,222356,025Student Name:Class:Problem 23.02APart I:THE LACAL COMPANYFinancial Ratios20132012Current Ratio=Current AssetsCurrent Liabilities==Acid Test Ratio=Cash + Receivables + Marketable SecuritiesCurrent Liabilities===Inventory Turnover=Cost of Goods SoldAverage Merchandise Inventory===Return on Sales=Net Income after TaxesNet Sales===Earnings per share ofCommon Stock=Net Income after Taxes - Preferred Dividend RequirementAverage number of shares of Common Stock===Book Value per Share ofCommon Stock=Total Stockholders' Equity - Equity of Preferred StockNumber of Common Stock shares outstanding===Return on Total Assets=Net Income before interest and taxesTotal Assets===Ratio of Stockholder's Equity=to Total EquitiesStockholders' EquityTotal Equities===Rate of Net Income on Total=Stockholders' EquityNet IncomeStockholders' Equity===Net SalesTotal Assets===Asset Turnover=Part II:1. Rate of return on stockholders' equity2. Stockholders' equity to total equities3. Asset turnover4. Merchandise inventory turnoverAnalyze: Expected return on sales if net sales and net income after taxes increase by 5% in 2014:1=:1Given Data P23.02ATHE LACAL COMPANYComparative Income StatementFor the Years Ended December 31, 2013 and 2012Revenue:SalesLess Sales Returns and AllowancesNet Sales2013905,00015,000890,0002012765,0009,000756,000Cost of Goods SoldMerchandise Inventory, January 1Net PurchasesTotal Merchandise Available for SaleLess Merchandise Inventory, December 31Cost of Goods SoldGross Profit on Sales84,000306,000390,00086,000304,000586,00080,000262,000342,00084,000258,000498,000Operating ExpensesSelling ExpensesSales Salaries ExpensePayroll Tax Expense-SellingOther Selling ExpensesTotal Selling Expenses87,0008,70025,200120,90080,0008,00015,200103,200General and Administrative ExpensesOfficers Salaries ExpensePayroll Tax Expense-AdministrativeDepreciation ExpenseOther General and Administrative ExpensesTotal General and Administrative Expenses130,00013,0008,2509,450160,700110,00011,0008,2507,000136,250Total Operating Expenses281,600239,450Net Income Before Income TaxesIncome Tax ExpenseNet Income After Income Taxes304,40091,320213,080258,55077,565180,985THE LACAL COMPANYComparative Balance SheetDecember 31, 2013 and 2012AssetsCurrent AssetsCashAccounts ReceivableMerchandise InventoryPrepaid ExpensesSuppliesTotal Current Assets111,02295,00086,0009,5001,200302,72246,27587,50084,0005,000500223,275Property, Plant, and EquipmentLandBuilding and EquipmentLess Accumulated DepreciationNet Book Value-Building and EquipmentTotal Property, Plant, and Equipment75,00082,500(33,000)49,500124,50075,00082,500(24,750)57,750132,750Total Assets427,222356,025Liabilities and Stockholders' EquityCurrent LiabilitiesAccounts PayableSales Tax PayablePayroll Taxes PayableIncome Taxes PayableTotal Current Liabilities27,0001,0001,1421,00030,14257,0003,0001,0255,00066,025Long-Term LiabilitiesMortgage PayableTotal Long-Term Liabilities39,00039,00045,00045,000Total Liabilities69,142111,025Stockholders' EquityCommon Stock ($1 par, 10,000 shares authorized10,000 shares issued and outstanding)Paid-in-Capital - Common StockRetained EarningsTotal Stockholders' Equity10,00010,000338,080358,08010,00010,000225,000245,000Total Liabilities and Stockholders' Equity427,222356,025Additional Information:Selected ratios for other common-size companies in the same industry:1. Rate of return on stockholders' equity45%2. Stockholders' equity to total equities0.6 to 13. Asset turnover2.5 to 14. Merchandise inventory turnover4.5 timesStudent Name:Class:Problem 23.03AFIVE, INC. and SIX, INC.Financial RatiosFive, Inc.a.b.c.d.e.f.g.h.Rate of Return on Net SaleSix, Inc.====Rate of Return on Total Assets ====Rate of Return onStockholders' Equity====Earnings per share====Stockholder's Equity to Total=Equities===Current Ratio====Asset Turnover====Book Value per Share ofCommon Stock====2. Comment on similarities or differences in the two companies' ratios.3. From the investors' point of view, is one company more at risk than the other?4. Would you grant a five-year loan to either company? Explain.Analyze: Discuss the implications to the rate of return on sales and earnings per share if the company can cut cost of goods by 5% in 2014while maintaining net sales and operating expenses at 2013 levels. Assume a tax rate of 25%.SalesCost of Goods SoldGross ProfitOperating ExpensesNet Income from OperationsInterest ExpenseNet Income Before Income TaxesIncome TaxNet Income After Income TaxGiven Data P23.03AFIVE, INC. and SIX, INC.Condensed Financial StatementsIncome StatementsYear Ended December 31, 2013Five, Inc.$795,000505,000290,000169,500120,50010,000110,50027,625$82,875Sales (net)Cost of Goods SoldGross ProfitOperating ExpensesNet Income From OperationsInterest ExpenseNet Income Before Income TaxesIncome TaxNet Income After Income TaxesSix, Inc.$650,000350,000300,000125,000175,000175,00043,750$131,250Five, Inc.$125,000225,000$350,000Six, Inc.$104,900196,000$300,900$98,500100,000198,500$79,80079,80020,000131,500151,500$350,00020,000201,100221,100$300,900Balance SheetsDecember 31, 2013AssetsCurrent AssetsProperty, Plant, and Equipment (net)Total AssetsLiabilities and Stockholders' EquityLiabilitiesCurrent LiabilitiesTotal Long-Term Liabilities (Bonds Payable)Total LiabilitiesStockholders' EquityCommon Stock ($10 par value)Retained EarningsTotal Stockholders' EquityTotal Liabilities and Stockholders' Equity

 

Paper#38823 | Written in 18-Jul-2015

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