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The comparative statements of Lucille Company are presented here.

P13‑2A The comparative statements of Lucille Company are presented here.

LUCILLE COMPANY
Income Statements
For the Years Ended December 31

2012
2011
Net sales
$1,890,540
$1,750,500
Cost of goods sold
1,058,540
1,006,000
Gross profit
832,000
744,500
Selling and administrative expenses
500,000
479,000
Income from operations
332,000
265,500
Other expenses and losses Interest expense
22,000
20,000
Income before income taxes
310,000
245,500
Income tax expense
92,000
73,000
Net income
$ 218,000
$ 172,500
Compute ratios from balance sheets and income statements. (SO 6), AP

LUCILLE COMPANY
Balance Sheets
December 31
Assets
2012
2011
Current assets



Cash
$ 60,100
$ 64,200

Short-term investments
74,000
50,000

Accounts receivable
117,800
102,800

Inventory
126,000
115,500


Total current assets
377,900
332,500
Plant assets (net)
649,000
520,300
Total assets
$1,026,900
$852,800
Liabilities and Stockholders’ Equity


Current liabilities



Accounts payable
$ 160,000
$145,400

Income taxes payable
43,500
42,000


Total current liabilities
203,500
187,400
Bonds payable
220,000
200,000


Total liabilities
423,500
387,400
Stockholders’ equity



Common stock ($5 par)
290,000
300,000

Retained earnings
313,400
165,400


Total stockholders’ equity
603,400
465,400
Total liabilities and stockholders’ equity
$1,026,900
$852,800






All sales were on account. Net cash provided by operating activities for 2012 was $220,000. Capital expenditures were $136,000, and cash dividends were $70,000.

Instructions
Compute the following ratios for 2012.
1. Earnings per share.
2. Return on common stockholders’ equity.
3. Return on assets.
4. Current ratio.
5. Receivables turnover.
6. Average collection period.
7. Inventory turnover.
8. Days in inventory.
9. Times interest earned.
10. Asset turnover.
11. Debt to total assets.
12. Current cash debt coverage.
13. Cash debt coverage.
14. Free cash flow.

TUTORIAL PREVIEW

(a)        Earnings per share = Net Income/ Average no. of common shares
No. of shares in
2011 = $300,000/ $5 = 60,000 shares
2012 = $290,000/ $5 = 58,000 shares
Average no. of shares = (60,000 + 58,000)/ 2


File name: P13-2A-Lucille.doc File type: DOC PRICE: $10

Condensed balance sheet and income statement data for Sievert Corporation are presented here and on the next page

P2‑6A Condensed balance sheet and income statement data for Sievert Corporation are presented here and on the next page.

SIEVERT CORPORATION
Balance Sheets
December 31
Assets
2012
2011
Cash
$ 28,000
$ 20,000
Receivables (net)
70,000
62,000
Other current assets
90,000
73,000
Long-term investments
62,000
60,000
Plant and equipment (net)
510,000
470,000
Total assets
$760,000
$685,000
Liabilities and Stockholders’ Equity


Current liabilities
$ 75,000
$ 70,000
Long-term debt
80,000
90,000
Common stock
330,000
300,000
Retained earnings
275,000
225,000
Total liabilities and stockholders’ equity
$760,000
$685,000


SIEVERT CORPORATION
Income StatementsFor the Years Ended December 31

2012
2011
Sales
$750,000
$680,000
Cost of goods sold
440,000
400,000
Operating expenses (including income taxes)
240,000
220,000
Net income
$ 70,000
$ 60,000


Additional information:
Cash from operating activities
$82,000
$56,000
Cash used for capital expenditures
$45,000
$38,000
Dividends paid
$20,000
$15,000
Average number of shares outstanding
33,000
30,000


Compute and interpret liquidity, solvency, and profitability ratios.
(SO 2, 4, 5), AP
Instructions
Compute these values and ratios for 2011 and 2012.
1. Earnings per share.
2. Working capital.
3. Current ratio.
4. Debt to total assets ratio.
5. Free cash flow.
6. Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2011 to 2012 of Sievert Corporation.

TUTORIAL PREVIEW

Formula
2011
2012
(a)
Earnings per share= Net Income/ No. of common shares

$60,000/ 30,000 shares
   = $2.00
$70,000/ 30,000 shares
    = $2.33


File name: P2-6A-Condensed.doc File type: DOC  PRICE: $7

On May 5, 2013, Gina Ennabeortiz started a carpet cleaning business called Ennabeortiz Family Carpet Cleaning. She completed the following transactions during the month:

On May 5, 2013, Gina Ennabeortiz started a carpet cleaning business called Ennabeortiz Family Carpet Cleaning. She completed the following transactions during the month:

a. Ginainvested $16,500 cash and a small truck with a value of $8,000 to start her business.
b. Prepaid $3,500 cash for 12 months’ rent on a small office.
c. Purchased office supplies for cash, $575.
d. Purchased equipment on account, $4,000.
e. Received cash for services performed, $3,350.
f. Performed services on credit, $2,350.
g. Purchased truck supplies on account, $125.
h. Received $15,350 cash in advance of providing cleaning services to a customer.
i. Paid $2,500 cash for the premium on a 6-month insurance policy.
j. Paid salary of employee, $1,550.
k. Purchased $2,500 of additional equipment by paying $400 cash and signing a long-term note payable for $2,100.
l. Paid for repairs to truck, $225.
m. Received $1,350 for the services performed in transaction f.
n. Paid utilities, $315.
o. Completed cleaning services and immediately collected $10,500.
p. Paid creditor $675 on the purchase in transaction d.
q. Provided $2,000 of cleaning services from transaction h.
r. Gina withdrew cash for personal use, $2,775.
s. Paid $5,000 cash for advertisements on the local television station during May.

Required:
1. Prepare general journal entries to record these transactions (use the account titles listed in part 2).

2. Open a set of T accounts with the following titles: Cash (101), Accounts Receivable (106); Office Supplies (124); Truck Supplies(128); Equipment (131); Prepaid Rent (140); Prepaid Insurance (150); Truck (163); Accounts Payable (201); Notes Payable (202); Unearned Cleaning Revenue (203); GinaEnnabeortiz, Capital (301); GinaEnnabeortiz, Drawing (302); Cleaning Revenue (403); Salaries Expense (620); Truck Expense (630); Utilities Expense (640) and Advertising Expense (650). Post journal entries from Part 1 to the T accounts and calculate the account balance for each account.

3. Prepare a trial balance as of the end of this month’s operations.

4. Using the trial balance created above, prepare an income statement, statement of owner’s equity and a balance sheet for the month ended May 31st

TUTORIAL PREVIEW
Part 1
a.
Cash
101
16,500
Truck
163
8,000
         GinaEnnabeortiz, Capital
301
24,500
Owner invested cash and equipment.
b.
Prepaid Rent
140
3,500
      Cash
101
3,500
Prepaid twelve months’ rent.

 File name: GinaEnnabeortiz.xls File type: XLS Price: $20





Doubletree Company’s financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors

Doubletree Company’s financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors
P6-4A Analysis of inventory errors

P6-4A Doubletree Company’s financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Inventory on December 31, 2010, is understated by $50,000, and inventory on December 31, 2011, is overstated by $20,000.

Required
1. For each key financial statement figure — (a), (b), (c), and (d) above — prepare a table similar to the following to show the adjustments necessary to correct the reported amounts.

For Year Ended December 31
2010
2011
2012
(a) Cost of goods sold . . . . . . . . . . . . . . . .
$725,000
$955,000
$790,000
(b) Net income . . . . . . . . . . . . . . . . . . . . . .
268,000
275,000
250,000
(c) Total current assets . . . . . . . . . . . . . . . .
1,247,000
1,360,000
1,230,000
(d) Total equity . . . . . . . . . . . . . . . . . . . . . .
1,387,000
1,580,000
1,245,000

Reported amount . . . . . . . . . . . . . . . . . . . . . .
Adjustments for: 12/31/2010 error . . . . . . . . .
12/31/2011 error . . . . . . . .
Corrected amount . . . . . . . . . . . . . . . . . . . . .

Analysis Component
2. What is the error in total net income for the combined three-year period resulting from the inventory errors? Explain.
3. Explain why the understatement of inventory by $50,000 at the end of 2010 results in an understatement of equity by the same amount in that year.
Check (1) Corrected net income: 2010, $318,000; 2011, $205,000; 2012, $270,000

TUTORIAL PREVIEW

DOUBLETREE COMPANY
Adjustments to Correct Inventory Errors

(a)




Cost of goods sold:
2010
2011
2011

Reported amount
$     725,000
 $     955,000
 $     790,000

Adjustments for 12/31/2010 error
         (50,000)
          50,000


12/31/2011 error

          20,000
         (20,000)

Corrected
 $     675,000
 $   1,025,000
 $     770,000


Correct!
Correct!
Correct!



 File name: P6-4A-Doubletree.xls File type: XLS Price: $10