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1. The following are Lozier's 2010 and 2011 balance sheets and income statements for the years ended December 31, 2010 and December 31, 2011, respectively.

 

2010

 

2011

Cash

$  200,000

 

$ 325,000

Accounts Receivable

400,000

 

450,000

Inventory

400,000

 

325,000

Intangible Assets

60,000

 

54,000

Total Assets

$1,060,000

 

$1,154,000

 

 

 

 

Accounts Payable

$   396,000

 

$ 420,000

Short-term Notes Payable

100,000

 

100,000

Common Stock

3,000

 

3,000

Retained Earnings

564,000

 

636,000

Total Liabilities and Owner's Equity

$1,063,000

 

$1,159,000

 

 

 

 

 

2010

 

2011

Sales Revenue

$ 945,000

 

$1,190,000

Cost of Goods Sold

(400,000)

 

(500,000)

Advertising Expense

(20,000)

 

(25,000)

Office Supplies Expense

(10,000)

 

(13,000)

Interest Expense

(5,000)

 

(5,000)

Net Income

$   510,000

 

$ 647,000

Required:

Using an Excel spreadsheet, calculate the following ratios for 2010 and 2011:

1. Quick ratio

2. Accounts receivable turnover ratio

3. Average age of  receivables. Assume a 360-day calendar year.

4. Inventory turnover ratio.

5. Calculate the average age of Lozier's inventory for 2010 and 2011. Assume a 360-day calendar year.

6. Given your calculations in parts 1-5, what conclusions might you draw about Lozier's business operations?

3. On January 1, 2010, LoCoco Corporation purchased a new assembly line for $100,000 cash and a $200,000, 10%, 5-year note payable.  The assembly line has an estimated salvage value of $20,000 and an estimated useful life of 14 years.

Required:

1. Prepare a journal entry to record the acquisition of the assembly line.

2. Assume that LoCoco depreciates its assets using the straight-line method.

a. Compute depreciation expense for 2010 and 2011. Prepare a journal entry to record 2011 depreciation expense.

b. Compute accumulated depreciation at the end of 2010 and 2011.

c. Compute the assembly line's book value at the end of 2010 and 2011.

4

Pullam's weekly 5-day payroll includes the following:

Gross Pay                 $28,000

Less: Payroll Deductions

FICA Taxes         $2,200

Federal Income Tax Withholdings   2,000

State Income Tax Withholdings    1,800

Health Insurance Premiums      1,000  (7,000)

Net Payroll                  $21,000

Prepare the necessary journal entries for the payroll paid on Friday, December 27, 2011.

5.

Ratio Analysis

The following are Brenham Corporation's 2010 and 2011 balance sheets and income statements.

 

2010

 

2011

Cash

$120,000

 

  $140,000

Accounts Receivable

190,000

 

215,000

Inventory

240,000

 

260,000

Buildings and Equipment

275,000

 

250,000

Intangible Assets

75,000

 

67,500

Total Assets

$900,000

 

   $932,500

 

 

 

 

Accounts Payable

$400,000

 

   $420,000

Bonds Payable (Long-Term)

200,000

 

125,000

Common Stock

30,000

 

30,000

Additional Paid-In Capital

175,000

 

175,000

Retained Earnings

95,000

 

182,500

Total Liabilities and Stockholders' Equity

$900,000

 

   $932,500

 

 

2010

 

2011

Sales

$1,000,000

 

$1,200,000

Cost of Goods Sold

(600,000)

 

(784,000)

Gross Profit

$400,000

 

 $416,000

Advertising Expense

(25,000)

 

(65,000)

Depreciation Expense

(40,000)

 

(51,040)

Office Supplies Expense

(20,000)

 

(22,500)

Interest Expense

(40,000)

 

(30,000)

Provision for Income Tax Expense

(189,000)

 

(159,960)

Net Income

$86,000

 

$87,500

(a) Calculate Brenham's current ratio at Dec 31, 2010 and Dec 31, 2011.

(b) Calculate Brenham's working capital at Dec 31, 2010 and Dec 31, 2011.

(c) Calculate Brenham's debt to equity ratio at Dec 31, 2010 and Dec 31, 2011.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M9746401

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