Details of this Paper

Accounting homework

Description

solution


Question

Problem 14-4A Financial information for Ernie Bishop Company is presented below.;ERNIE BISHOP COMPANY;Balance Sheets;December 31;Assets 2013 2012;Cash $ 70,000 $ 65,000;Short-term investments 52,000 40,000;Receivables (net) 98,000 80,000;Inventory 125,000 135,000;Prepaid expenses 29,000 23,000;Land 130,000 130,000;Building and equipment (net) 168,000 175,000;$672,000 $648,000;Liabilities and Stockholders? Equity;Notes payable $100,000 100,000;Accounts payable 48,000 42,000;Accrued liabilities 44,000 40,000;Bonds payable, due 2016 150,000 150,000;Common stock, $10 par 200,000 200,000;Retained earnings 130,000 116,000;$672,000 $648,000;ERNIE BISHOP COMPANY;Income Statement;For the Years Ended December 31;2013 2012;Net sales $858,000 $798,000;Cost of goods sold 611,000 575,000;Gross profit 247,000 223,000;Operating expenses 204,500 181,000;Net income $ 42,500 $ 42,000;Additional information;1. Inventory at the beginning of 2012 was $118,000.;2. Total assets at the beginning of 2012 were $632,000.;3. No common stock transactions occurred during 2012 or 2013.;4. All sales were on account.;5. Receivables (net) at the beginning of 2012 were $88,000.;(a) Indicate, by using ratios, the change in liquidity and profitability of Ernie Bishop Company from 2012 to 2013. (Round Earnings per share to 2 decimal places, e.g. 1.65, and all others to 1 decimal place, e.g. 6.8 or 6.8%.);2012 2013 Change;LIQUIDITY;Current :1 :1;Acid-test :1 :1;Receivables turnover times times;Inventory turnover times times;PROFITABILITY;Profit margin % %;Asset turnover times times;Return on assets % %;Earnings per share $ $;(b) Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2013, and (2) as of December 31, 2014, after giving effect to the situation. Net income for 2014 was $50,000. Total assets on December 31, 2014, were $700,000.;Situation Ratio;(1) 18,000 shares of common stock were sold at par on July 1, 2014. Return on common stockholders? equity;(2) All of the notes payable were paid in 2014. The only change in liabilities was that the notes payable were paid. Debt to total assets;(3) Market price of common stock was $9 on December 31, 2013, and $12.50 on December 31, 2014. Price-earnings ratio;2013 2014 Change;Return on common stockholders? equity % %;Debt to total assets % %;Price-earnings ratio times times;Click if you would like to Show Work for this question: Open Show Work

 

Paper#74386 | Written in 18-Jul-2015

Price : $22
SiteLock