Problem
2-3 Classified Balance Sheet
The following balance sheet items, listed in alphabetical order, are available from the records of Ruth Corporation at December 31, 2012:
Accounts payable $ 18,255 Income taxes payable 6,200
Accounts receivable 23,450 Interest payable 1,500
Accumulated depreciation Inventory 45,730
The following balance sheet items, listed in alphabetical order, are available from the records of Ruth Corporation at December 31, 2012:
Accounts payable $ 18,255 Income taxes payable 6,200
Accounts receivable 23,450 Interest payable 1,500
Accumulated depreciation Inventory 45,730
—automobiles
22,500 Land
250,000
Accumulated depreciation Long-term investments 85,000
—buildings 40,000 Notes payable, due June 30, 2015 10,000
Automobiles 112,500 Office supplies 2,340
Bonds payable, due Paid-in capital in excess of par value 50,000
Accumulated depreciation Long-term investments 85,000
—buildings 40,000 Notes payable, due June 30, 2015 10,000
Automobiles 112,500 Office supplies 2,340
Bonds payable, due Paid-in capital in excess of par value 50,000
December
31, 2018 160,000 Patents 40,000
Buildings 200,000 Prepaid rent 1,500
Capital stock, $10 par value 150,000 Retained earnings 311,095
Cash 13,230 Salaries and wages payable 4,200
Required
1. Prepare in good form a classified balance sheet as of December 31, 2012.
2. Compute Ruth’s current ratio.
3. On the basis of your answer to (2), does Ruth appear to be liquid? What other information do you need to fully answer that question?
Buildings 200,000 Prepaid rent 1,500
Capital stock, $10 par value 150,000 Retained earnings 311,095
Cash 13,230 Salaries and wages payable 4,200
Required
1. Prepare in good form a classified balance sheet as of December 31, 2012.
2. Compute Ruth’s current ratio.
3. On the basis of your answer to (2), does Ruth appear to be liquid? What other information do you need to fully answer that question?
Hint: First determine
if an account is an Asset (current or long-term), a Liability (current or
long-term), or Stockholders' Equity, then put a check mark by each item as you
use it in preparing the financial statement to be sure you account for
everything. Format is important including proper heading so users of the
statement know what they are reading.
Problem
2-6 Single-Step Income Statement
The
following income statement items, arranged in alphabetical order, are taken
from the records of Shaw Corporation for the year ended December 31, 2012:
Advertising
expense $ 1,500 Interest
expense $ 1,400
Commissions
expense 2,415 Interest
revenue 1,340
Cost
of goods sold 29,200 Rent revenue
6,700
Depreciation
expense - office Salaries
and wages
building
2,900 expense - office 12,560
Income
tax expense 1,540 Sales revenue 48,300
Insurance
expense – Supplies
expense office 890
Salesperson’s
auto 2,250
Required
1.
Prepare a single-step income statement for the year ended December 31, 2012.
2.
What weaknesses do you see in this form for the income statement?
Hint: First determine
if the account is revenue or expense. Is it operating revenue or other revenue?
Is it operating expense or other expense? Then again mark them off as you use
them in the financial statement to be sure you don't miss anything.
Problem 2-7 Multiple-Step Income Statement and
Profit Margin
Refer to the list of income statement items in
Problem 2-6. Assume that Shaw Corporation classifies all operating expenses
into two categories: (1) selling and (2) general and administrative.
Required
1. Prepare a multiple-step income statement for the
year ended December 31, 2012.
2. What advantages do you see in this form for the
income statement?
3. Compute Shaw’s profit margin.
4. Comment on Shaw’s profitability. What other
factors need to be taken into account to assess
Shaw’s profitability
Hint: Same as for Problem 2-6.
TUTORIAL PREVIEW
Revenues:
Sales $48,300
Interest 1,340
Rent 6,700
Total revenues $56,340
File name: mgmt 210 2-4
assignment homework 2.docx File type: . docx PRICE:$15
