Accounting and Financial Management Assignment -
Answer ALL 3 questions.
Question 1: The income statement for Short Way Inc., a publicly traded company following IFRS, is presented here:
Short Way Inc. Income Statement Year Ended December 31, 2016
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Sales
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$5,350,000
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Cost of Goods Sold
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$3,250,000
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Gross Profit
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$2,100,000
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Operating Expenses
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$1,150,000
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Profit from Operations
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$950,000
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Interest Expense
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$130,000
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Profit before Income Taxes
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$820,000
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Income Taxes
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$320,000
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Profit
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$500,000
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Additional Information:
1. Operating expenses include $50,000 of depreciation expense and a $43,000 impairment loss on property, plant and equipment.
2. Accounts Receivable decreased by $125,000
3. Merchandise Inventory increased by $58,000
4. Prepaid expenses related to operating expenses decreased by $47,000
5. Accounts Payable to suppliers of merchandise decreased by $115,000
6. Accrued liabilities related to operating expenses increased by $58,000
7. Interest Payable decreased by $57,000
8. Income tax payable increased by $35,000
Required: Prepare the operating activities section of the statement of cash flows using the Indirect Method.
Question 2: On September 30, 2016, the Radison Avenue Incorporated post-closing trial balance was as follows. The company adjusts its accounts monthly.
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Account
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Debit
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Credit
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Cash
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16,300
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|
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Accounts Receivable
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14,500
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|
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Supplies
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3,800
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|
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Equipment
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17,000
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|
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Accumulated Depreciation - Equipment
|
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3,550
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Accounts Payable
|
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4,200
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Salaries Payable
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1,000
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Unearned Revenue
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1,350
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Common Shares
|
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9,200
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Retained Earnings
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32,300
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$51,600
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$51,600
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During October, the following transactions were completed:
October 8 Paid $2,300 to employees for salaries due, of which $1,000 is for September salaries payable and $1,300 for October
October 11 Issued common shares for $4,500
October 13 Received $11,300 cash from customers in payment of accounts October 15 Received $12,500 cash for services performed in October October 19 Purchased supplies on account, $575
October 20 Paid creditors $3,900 of accounts payable due October 21 Paid October rent, $500
October 22 Paid salaries, $2,150
October 23 Performed services on account, $3,150 October 25 Paid a cash dividend, $500
October 30 Received $1,300 from customers for services to be provided in the future
Adjustment data for the month:
1. Accrued salaries payable are $1,100
2. Unearned revenue of $750 was earned during the month
3. Income tax payable is estimated to be $500
Required: In good format, and making whatever assumption you feel appropriate, prepare an accrual-based Income Statement and Statement of Financial Position (Balance Sheet) for the month ending October 2016.
Question 3: Selected financial information of Long Way Inc. is presented below:
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2016
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2015
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Cash
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44,500
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39,500
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Accounts Receivable
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23,500
|
14,200
|
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Inventory
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20,000
|
23,500
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Prepaid Insurance
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5,000
|
4,250
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Building
|
345,000
|
345,000
|
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Accumulated Depreciation - Building
|
168,600
|
160,000
|
|
Accounts Payable
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41,250
|
39,500
|
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Mortgage Payable
|
100,000
|
105,000
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Common Shares
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29,000
|
29,000
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Net Sales
|
103,000
|
99,500
|
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Cost of Goods Sold
|
58,500
|
55,500
|
|
Interest Expense
|
5,500
|
5,250
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|
Income Tax Expense
|
9,200
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8,100
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|
Profit (loss)
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29,800
|
30,650
|
Required:
1. Calculate the following for 2016 and 2015:
i. Current ratio
ii. Gross Profit Margin
iii. Profit Margin
iv. Debt to Total Assets
v. Times Interest Earned
2. Calculate the following for 2016
i. Accounts Receivable Turnover
ii. Inventory Turnover