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Post Test Question Accounting

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Question;14a. The Verifine Department Stores Inc., chief;executive officer (CEO) has asked you to compare the company?s profit;performance and financial position with the average for the industry. The CEO has given you the company?s income statement;and balance sheet as well as the industries average data for retailers.;Provided;information;Verifine;Department Stores, Inc.;Income;Statement Compared with Industry Average;Year;Ended December 31, 2010;Industry;Verifine;Average;Net;sales;$780,000;100.0;%;Cost;of goods sold;525,720;65.8;Gross;profit;254,280;34.2;Operating;expenses;162,240;19.7;Operating;income;92,040;14.5;Other;expenses;4,680;0.4;Net;income;$87,360;14.1;%;Verifine;Department Stores, Inc.;Balance;Sheet Compared with Industry Average;December;31, 2010;Industry;Verifine;Average;Current;assets;$311,880;70.9;%;Fixed;assets, net;115,920;23.6;Intangible;assets, net;9,660;0.8;Other;assets;22,540;4.7;Total;assets;$460,000;100.0;%;Current;liabilities;$215,280;48.1;%;Long?term;liabilities;105,800;16.6;Stockholders;equity;138,920;35.3;Total;liabilities and stockholders' equity;$460,000;100.0;%;Requirements;1.;Prepare a common-size income statement and;balance sheet for Verifine. The first;column of each statement should present Verifine?s common-size statement, and;the second column, the industry averages.;2.;For the profitability analysis, compute;Verifine?s (a) ratio of gross profit to net sales, (b) ratio of operating income;to net sales, and (c) ratio of net income to net sales. Compare these figures;with the industry averages. Is Verifine?s profit performance better or worse;than the industry average?;3.;For the analysis of financial position, compute;Verifine?s (a) ratio of current assets to total assets and (b) ratio of;stockholders? equity to total assets.;Compare these ratios with the industry averages. Is Verifine?s financial position better or;worse than the industry averages?;14b.) Financial Statement Data of Modern Traveler;Magazine include the following items (dollars in thousands);Cash;$18,000;Accounts;receivable, net;$81,000;Inventories;$183,000;Total;assets;$635,000;Short?term;notes payable;$45,000;Accounts;payable;$104,000;Accrued;liabilities;$38,000;Long?term;liabilities;$223,000;Net;income;$70,000;Common;shares outstanding;60,000;Requirements;1.;Compute Modern Travelers current ratio, debt;ratio and earnings per share. Round all ratios to 2 decimal places.;2.;Compute the 3 ratios after evaluating the effect;of each transaction as follows. Consider each transaction separately.;a.;Purchased inventory of $44,000 on account.;b.;Borrowed $124,000 on a long-term note payable.;c.;Issued 6,000 shares of common stock, receiving;cash of $108,000.;d.;Received cash on account $4,000.;16a) Hummingbird;design Inc. is a website design and consulting firm. The firm uses a job order costing system, in;which each client is a different job.;Hummingbird design traces direct labor, licensing costs, and travel;costs directly to each job. It allocates;indirect costs to jobs based on predetermined indirect cost allocation rate;computed as a percentage of direct labor costs.;Information Given;Direct;labor hours (professional);7,500 hrs;Direct;labor costs (professional);$1,500,000;Support;staff salaries;180,000;Computer;leases;46,000;Office;supplies;24,000;Office;rent;65,000;Maynard;Delightful Dining;Chocolates;Direct;labor hours;730;hours;30;hours;Software;licensing costs;$2,100;$300;Travel;costs;11,000;?;Requirements;1.;Compute Hummingbird Design?s predetermined;indirect cost allocation rate for 2011.;2.;Compute the total cost of each job.;3.;If Jacquin wants to earn profits equal to 20% of;service revenue, how much (what fee) should it charge each of these 2 clients?;4.;Why does Hummingbird design assign costs to;jobs?;16b) Sloan manufacturing makes carrying cases;for portable devices. It?s costing;records yield the following information.;Information provided;Total;Total;Manufacturing;Job;Date;Cost of Job;Costs Added;No.;Started;Finished;Sold;at November 30;in December;1;11/3;11/12;11/13;$1,100;2;11/3;11/30;12/1;2,000;3;11/17;12/24;12/27;300;$1,300;4;11/29;12/29;1/3;800;1,300;5;12/8;12/12;12/14;650;6;12/23;1/6;1/9;100;Requirements;1.;Which type of costing system is Sloan using?;What piece of data did you base your answer on?;2.;Using the dates provided to identify the status;of each job, compute Sloans account balances at November 30 for work in process;inventory, finished inventory and costs of goods sold. Compute account balances;at December 31 for work in process inventory and cost of goods sold.;3.;Record summary journal entries for the transfer;of completed units from work in process to finished goods for November and;December.;4.;Record the sale of Job 3 for $1900.;5.;What is the gross profit for Job 3? What other;cost?s must this gross profit cover?

 

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