The current asset section of Seifert & Seifert, CPA’s balance sheet consists of cash,

The current asset section of Seifert & Seifert, CPA’s balance sheet consists of cash, accounts receivable, investments, and prepaid expenses. The 2011 balance sheet reported the following: cash, $110,000; investments, $22,000; prepaid expenses, $18,000; noncurrent assets, $422,000; and shareholders’ equity, $350,000. The current ratio at the end of the year was 1.6 and the debt to equity ratio was .8.

Required: Determine the following 2011 amounts and ratios:

a. Current liabilities.

b. Long-term liabilities.

c. Accounts receivable.

d. The acid-test ratio.

TUTORIAL PREVIEW

a.         Calculation of current Liabilities:

Debt to equity ratio = Total Liabilities/ Shareholders’ equity = 0.8

Total Liabilities = 0.8 x 350,000 = 280,000

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The following information ($ in millions) comes from a recent annual report of Amazon.com, Inc.

The following information ($ in millions) comes from a recent annual report of Amazon.com, Inc.:

Net sales                                                                      $10,711
Total assets                                                                  4,363
End of year balance in cash                                         1,022
Total stockholders’ equity                                           431
Gross profit (Sales – Cost of Sales)                             2,456
Net increase in cash for the year                                  9
Operating expenses                                                      2,067
Net operating cash flow                                               702
Other income (expense), net                                        (12)

a. Compute Amazon’s balance in cash at the beginning of the year.

b. Compute Amazon’s total liabilities at the end of the year.

c. Compute cost of goods sold for the year.

d. Compute the income before income tax for Amazon.

TUTORIAL PREVIEW

a.       Ending balance in Cash = Beginning balance in Cash + Net increase in Cash Beginning balance in Cash = $1,022   9 = $1,013

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Shown below is activity for one of the products of Denver Office Equipment: January 1 balance,

Shown below is activity for one of the products of Denver Office Equipment: January 1 balance, 500 units @ $55 $27,500

Purchases January 10 500 units @ $60

January 20 1,000 units @ $63

Sales:

January 12 800 units

January 28 750 units

a. Compute the ending inventory and cost of goods sold assuming Denver uses FIFO.

b. Compute the ending inventory and cost of goods sold assuming Denver uses LIFO and a perpetual inventory system.

c. Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a periodic inventory system.

d. Compute the ending inventory and cost of goods sold assuming Denver uses average cost and a perpetual inventory system.

e. Compute the ending inventory and cost of goods sold assuming Denver uses LIFO and a periodic inventory system.

TUTORIAL PREVIEW

a.

Calculation and cost of goods sold using FIFO method(Periodic):

                                                Units                Rate                 Total cost

Beginning Inventory                500      x          $55      =          $27,500

January 10 Purchase                500      x          $60      =          $30,000

January 20 Purchase                1,000   x          $63      =          $63,000

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The following information is provided in the 2011 annual report to shareholders of paris-perfume.com

The following information is provided in the 2011 annual report to shareholders of paris-perfume.com:

                                                December 31, 2011     December 31, 2010

Accounts receivable                ???                                           $100 million

Inventory                                             $70 million                              $30 million

Other assets                             ???                                           $170 million

Total assets                                          ???                                           $300 million

Total liabilities                                     ???                                           $100 million

Total stockholders’ equity       ???                                           $200 million

For the year ended Dec. 31, 2011

Net sales                                              ???

Cost of goods sold                               ???

Net income                                          $40 million

Return on assets                                   10%

Receivables turnover               8.0

Inventory turnover                   12.0

Asset turnover                                     2.5

Return on stockholders’ equity            20%

Profit margin on sales              4%

Required: Compute the missing amount in the paris-perfume.com financial statement information, indicated by ??? in the table above.

TUTORIAL PREVIEW

(1.) Return on Assets = Net Income/ Average Total Assets = 10 %

       Average total assets = 40/10%

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The following balance sheet information (in $ millions) comes from the Annual Report to Shareholders of Marriott International Inc.

The following balance sheet information (in $ millions) comes from the Annual Report to Shareholders of Marriott International Inc. for the 2008 fiscal year. (Certain amount have been replaced with question marks to test your understanding of balance sheets.) In addition, you’re provided with The following information from an analysis of Marriott’s financial position at the same date:

Current ratio = 1.3296486

Acid-test ratio = 0.407422

Debt-to-equity ratio = 5.4514493

Compute the missing amounts (rounded to the nearest $ in millions) in the Marriott balance sheet.

Assets
Current assets

Cash and equivalents                           $134

Accounts and notes receivable                        ?

Inventory                                             ?

Other                                                   355

Total current assets                              ?

Property and equipment, net                $1,443)

Intangible assets, net                            ?)

Investments                                         346)

Notes and other receivables, net          988)

Other 1,173)

Total non-current assets ? Total assets ? Liabilities and Shareholders’ Equity Current liabilities Accounts payable $704 Accrued payroll and benefits 633 Other payables and accruals 1,196 Total current liabilities 2,533 Long-term debt ?) Other long-term liabilities 2,015) Total long-term liabilities ? Total liabilities ? Shareholders’ equity  Class A common stock 5) Additional paid-in capital 3,590) Retained earnings 3,565) Treasury stock and other (5,780) Total shareholders’ equity 1,380 Total liabilities and shareholders’ equity $8,903

TUTORIAL PREVIEW

Debt to equity ratio = Total Liabilities/ Shareholders’ equity = 5.4514493

Total Liabilities or long term debt        = 5.4514493 x 1,380

                                                            = 7,523

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