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AC 499 Unit 4 Practice Activity Analysis ? Rainbow Paint Co.




Question;Analysis ? Rainbow Paint Co.Note: This is a practice activity to be performed before completing the Assignment for this unit. Also,this is the data to be used as the basis for your Unit 9 Final Project. The solutions for the Unit 4Practice activity are located here.Rainbow Paint Co.'s comparative financial statements for the years ending December 31,2013 and 2012 are as follows. The market price of Rainbow Paint Co.'s common stock was$30 on December 31, 1999 and $25 on December 31, 2013.Rainbow Paint Co.Comparative Income StatementFor the Years Ended December 31, 2013 and 2012SalesSales returns and allowancesNet salesCost of goods soldGross profitSelling expensesAdministrative expensesTotal operating expensesIncome from operationsOther incomeIncome before Interest & Taxes650,000Other expense (interest)Income before income taxIncome tax expenseNet income2013$ 5,125,000125,000$ 5,000,0003,400,000$ 1,600,000650,000325,000$ 975,000$ 625,00025,000$105,000545,000300,000$ 245,000========$Rainbow Paint Co.Comparative Retained Earnings StatementFor the Years Ended December 31, 2013 and 20122013Retained earnings, January 1$ 723,000Add net income for year245,000Total$ 968,000Deduct dividends:$40,000On preferred stock45,000On common stock$85,000TotalRetained earnings, December 31$ 883,000========2012$ 3,257,60057,600$ 3,200,0002,080,000$ 1,120,000464,000224,000$ 688,000$ 432,00019,200$ 451,20064,000387,200176,000$ 211,200========$$$$2012581,800211,200793,00040,00030,000$70,000$ 723,000========Unit 4[AC499: Bachelor?s Capstone in Accounting]Rainbow Paint C0,Comparative Balance SheetDecember 31, 2013 and 2012AssetsCurrent assets:CashMarketable securitiesAccounts receivable (net)InventoriesPrepaid expensesTotal current assetsLong-term investmentsProperty, plant, and equipment (net)Total assetsLiabilitiesCurrent liabilitiesLong-term liabilities:Mortgage note payable, 10%, due 2016Bonds payable, 8%, due 2017Total long-term liabilitiesTotal liabilitiesStockholders' EquityPreferred 8% stock, $100 parCommon stock, $10 parRetained earningsTotal stockholders' equityTotal liabilities and stockholders' equity2013$ 175,000150,000425,000720,00030,000$ 1,500,000250,0002,093,000$ 3,843,000========$$ 750,000$$ 410,000800,000$ 1,210,000$ 1,960,000$ 500,000500,000883,000$ 1,883,000$ 3,843,000========Instructions: Determine the following measures for 2013:1. Working capital2. Current ratio3. Quick ratio4. Accounts receivable turnover5. Number of days' sales in receivables6. Inventory turnover7. Number of days' sales in inventory8. Ratio of fixed assets to long-term liabilities2012125,00050,000325,000480,00020,000$ 1,000,000225,0001,948,000$ 3,173,000========650,000$800,000$800,000$ 1,450,000$500,000500,000723,000$ 1,723,000$ 3,173,000=========Unit 4[AC499: Bachelor?s Capstone in Accounting]9. Ratio of liabilities to stockholders' equity10. Number of times interest charges earned11. Number of times preferred dividends earned12. Ratio of net sales to assets13. Rate earned on total assets14. Rate earned on stockholders' equity15. Rate earned on common stockholders' equity16. Earnings per share on common stock17. Price-earnings ratio18. Dividends per share of common stock19. Dividend yield


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