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PROBLEM A:

Below is the Trial Balance for Clay Employment Services, year ending December 31, 2011.  Previous period’s information were as follows: net receivables, $290,000 and inventory, $82,000.  Total revenues were $350,000 for 2010, 360,000 for 2009, and 295,000 for 2008.

Requirements:

1) Prepare the income statement, statement of retained earnings, and balance sheet.

2) find out the following ratios: current ratio, quick ratio, debt ratio, accounts receivable turnover, and inventory turnover. Briefly describe your answers.

3) find out the vertical analysis for total current assets.

4) find out the horizontal analysis on total revenues from 2008 thru 2011.

1223_horizontal analysis.jpg

PROBLEM B:

ABC Corporation accountants have assembled the following data for the year ended December 31, 2007.

REQUIRED:

Prepare ABC Corporation’s statement of cash flows using the indirect method.  Include an accompanying schedule of noncash investing and financing activities.

                                                  12/31/07       12/31/06
Current Accounts:
Current assets:

   Cash and cash equivalents            $85,000        $22,000
   Accounts receivable                     69,200          64,200
   Inventories                                 80,000          83,000

Current liabilities:       

    Accounts payable                       $57,800        $55,800
    Income tax payable                     14,700          16,700

Transaction data for 2007:

Net income                                     $  57,000               Purchase of treasury stock         $14,000
Issuance of common stock for cash    41,000                   Loss on sale of equipment          11,000
Depreciation expense                       21,000                   Payment of cash dividends         18,000   
Purchase of building                         125,000                 Issuance of long-term note       
Retirement of bonds payable by                                     payable to borrow cash              34,000
Issuing common stock                      65,000                   Sale of equipment                     58,000

 PROBLEM C:

At the beginning of the current year, MegaSounds opened a music store that sells compact disks. At the end of the year, a physical inventory count revealed that 2,500 of those disks are on hand.

969_physical inventory count.jpg

Required:

1) find out the total cost for each purchase date.

2) find out the ending inventory using (a) FIFO, (b) LIFO, and Average Cost methods.

PROBLEM D: Machinery purchased on January 1, 2011:

Cost of machinery                  250,000
Estimated residual value          10,000
Estimated useful life:
    Years                                6 years
    Units of production              200,000 machine hours

Required:

find out depreciation at each year end that applies:

1) Straight-line method.

2) Units of production method.

Assumption: Machinery machine hours on the 1st year, 66,000; 2nd  year, 60,000; 3rd year, 38,000; 4th year, 22,000; 5th year, 8,000; and 6th year, 6,000

3) Double-declining method.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91353

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