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

Towne Architects incorporated as licensed architects on April 1, 2012. During the first month of the operation of the business, these events and transactions occurred:

P3-5A Towne Architects incorporated as licensed architects on April 1, 2012. During the first month of the operation of the business, these events and transactions occurred:

 

Apr.     1          Stockholders invested $18,000 cash in exchange for common stock of the corporation.

1          Hired a secretary-receptionist at a salary of $375 per week, payable monthly.

2          Paid office rent for the month $900.

3          Purchased architectural supplies on account from Spring Green Company $1,300.

10        Completed blueprints on a carport and billed client $1,900 for services.

11        Received $700 cash advance from J. Madison to design a new home.

20        Received $2,800 cash for services completed and delivered to M. Svetlana.

30        Paid secretary-receptionist for the month $1,500.

30        Paid $300 to Spring Green Company for accounts payable due.

 

The company uses these accounts: Cash, Accounts Receivable, Supplies, Accounts Payable, Unearned Service Revenue, Common Stock, Service Revenue, Salaries and Wages Expense, and Rent Expense.

 

Instructions

(a) Journalize the transactions, including explanations.
(b) Post to the ledger T accounts.
(c) Prepare a trial balance on April 30, 2012.
 

TUTORIAL PREVIEW

B)
	Cash				Salaries and Wages Expenses
4/1	18,000	4/2	900		4/30	1,500
4/11	700	4/30	1,500		Bal.	1,500
4/20	2,800	4/30	300

 

File name: P3-5A-Towne.xls File type: XLS  Price: $10