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My Acctng Lab Mod 1




Question;1. 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;Income;Statement;Verifine;Department Stores, Inc.;Income;Statement Compared with Industry Average;Year;Ended December 31, 2010;Industry;Verifine;Average;Net;sales;$778,000;100.0;%;Cost;of goods sold;524,372;65.8;Gross;profit;253,628;34.2;Operating;expenses;159,490;19.7;Operating;income;94,138;14.5;Other;expenses;5,446;0.4;Net;income;$88,692;14.1;%;Verifine;Department Stores, Inc.;Balance;Sheet Compared with Industry Average;December;31, 2010;Industry;Verifine;Average;Current;assets;$285,180;70.9;%;Fixed;assets, net;109,200;23.6;Intangible;assets, net;3,360;0.8;Other;assets;22,260;4.7;Total;assets;$420,000;100.0;%;Current;liabilities;$192,360;48.1;%;Long?term;liabilities;94,080;16.6;Stockholders;equity;133,560;35.3;Total;liabilities and stockholders' equity;$420,000;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?;2.) Financial Statement Data of;Modern Traveler Magazine include the following items (dollars in thousands);Cash;$22,000;Accounts;receivable, net;$80,000;Inventories;$185,000;Total;assets;$636,000;Short?term;notes payable;$50,000;Accounts;payable;$102,000;Accrued;liabilities;$39,000;Long?term;liabilities;$222,000;Net;income;$72,000;Common;shares outstanding;50,000;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 $48,000;on account.;b.;Borrowed $123,000 on a;long-term note payable.;c.;Issued 5,000 shares of common;stock, receiving cash of $102,000.;d.;Received cash on account;$2,000.;3.) Tree Time provide;tree-spraying services in the company?s home county. George Smith, the owner, incurred the;following operating costs for the month of;May 2012.;Tree Time earned $26,000 in revenues for;the month of May by spraying trees totaling 20,000 feet in height.;Provide;information;Salaries;and wages;$10,000;Chemicals;4,900;Depreciation;on truck;300;Depreciation;on building and equipment;800;Supplies;expense;600;Gasoline;and utilities;1,080;Requirements;1.;Prepare an income statement for;the month of May. Compute the ratio of;total operating expense to total revenue and operating income to total revenue.;2.;Compute the unit operating cost;of spraying one foot of tree height.;3.;The manager of Tree Time must;keep unit operating cost below $0.70 per foot in order to get his bonus. Did he meet the goal?;4.;What kind of system could Tree;Time use to integrate all it?s data?;4.) In 2011 Cam;Gonzales opened Cam?s Pets, a small retail shop selling pet supplies. On December 31, 2011, Cams accounting records;showed the following;Inventory;on December 31, 2011;$10,600;Inventory;on January 1, 2011;15,200;Sales;revenue;56,000;Utilities;for shop;3,100;Rent;for shop;4,400;Sales;commissions;2,150;Purchases;of merchandise;29,000;Requirements;1.;Prepare an income statement for;Cam?s Pet?s, a merchandiser, for the year ended December 31st 2011.;5.) Charlie?s Pet?s;succeeded so well that Charlie decided to manufacture it?s own brand of chewing;bone - Denim Bone. At the end of 2011;his accounting records showed the following;Inventories;Beginning;Ending;Materials;$13,800;$7,500;Work;in process;0;3,500;Finished;goods;0;6,000;Other;information;Direct;material purchases;$37,000;Utilities;for plant;$1,300;Plant;janitorial services;300;Rent;on plant;16,000;Sales;salaries expense;5,100;Customer;service hotline expense;1,700;Delivery;expense;1,600;Direct;labor;21,000;Sales;revenue;105,000;Requirements;1.;Prepare a schedule of cost?s of;goods manufactured for Denim Bones for the year ended December 31, 2011.;2.;Prepare an income statement for;Denim Bones for the year ended December 31, 2011.;3.;How does the format for the;income statement of Denim Bones differ from the income statement of a;merchandiser?;4.;Denim Bones manufactured 17,300;units of it?s product in 2011. Compute;the company?s unit product cost for the year.


Paper#41392 | Written in 18-Jul-2015

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