ACC 557 Week 10 Homework Problems – Strayer

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Chapter 14

Exercise 14-3

	Your answer is correct.

The comparative condensed balance sheets of Garcia Corporation are presented below.

GARCIA CORPORATION Comparative Condensed Balance Sheets December 31
		2014		2013
Assets
Current assets		$ 76,000		$ 80,000
Property, plant, and equipment (net)		100,000		90,000
Intangibles		24,000		40,000
Total assets		$200,000		$210,000
Liabilities and stockholders’ equity
Current liabilities		$ 40,000		$ 48,000
Long-term liabilities		140,000		150,000
Stockholders’ equity		20,000		12,000
Total liabilities and stockholders’ equity		$200,000		$210,000

(a) Prepare a horizontal analysis of the balance sheet data for Garcia Corporation using 2013 as a base. (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000). (20%). Round percentages to 1 decimal place, e.g. 12.3%.)

(b) Prepare a vertical analysis of the balance sheet data for Garcia Corporation in columnar form for 2014. (Round percentages to 0 decimal places, e.g. 12%.)

Exercise 14-4

	Your answer is correct.

The comparative condensed income statements of Hendi Corporation are shown below.

HENDI CORPORATION Comparative Condensed Income Statements For the Years Ended December 31
		2014		2013
Net sales		$600,000		$500,000
Cost of goods sold		468,000		400,000
Gross profit		132,000		100,000
Operating expenses		60,000		54,000
Net income		$ 72,000		$ 46,000

(a) Prepare a horizontal analysis of the income statement data for Hendi Corporation using 2013 as a base. (Show the amounts of increase or decrease.) (If amount and percentage are a decrease show the numbers as negative, e.g. -55,000, -20% or (55,000). (20%). Round percentages to 1 decimal place, e.g. 12.3%.)

(b) Prepare a vertical analysis of the income statement data for Hendi Corporation in columnar form for both years. (Round percentages to 1 decimal place, e.g. 12.3%.)

  

Exercise 14-13

Maulder Corporation has income from continuing operations of $290,000 for the year ended December 31, 2014. It also has the following items (before considering income taxes).

1.		An extraordinary loss of $70,000.
2.		A gain of $35,000 on the discontinuance of a division.
3.		A correction of an error in last year’s financial statements that resulted in a $25,000 understatement of 2013 net income.

Assume all items are subject to income taxes at a 30% tax rate.

Prepare an income statement, beginning with income from continuing operations.

Problem 14-6A

The comparative statements of Beulah Company are presented below.

BEULAH COMPANY Income Statement For the Years Ended December 31
		2014		2013
Net sales (all on account)		$500,000		$420,000
Expenses
Cost of goods sold		315,000		254,000
Selling and administrative		120,800		114,800
Interest expense		7,500		6,500
Income tax expense		20,000		15,000
Total expenses		463,300		390,300
Net income		$ 36,700		$ 29,700

BEULAH COMPANY Balance Sheets December 31
Assets		2014		2013
Current assets
Cash		$ 21,000		$ 18,000
Short-term investments		18,000		15,000
Accounts receivable (net)		85,000		75,000
Inventory		80,000		60,000
Total current assets		204,000		168,000
Plant assets (net)		423,000		383,000
Total assets		$627,000		$551,000
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$122,000		$110,000
Income taxes payable		12,000		11,000
Total current liabilities		134,000		121,000
Long-term liabilities
Bonds payable		120,000		80,000
Total liabilities		254,000		201,000
Stockholders’ equity
Common stock ($5 par)		150,000		150,000
Retained earnings		223,000		200,000
Total stockholders’ equity		373,000		350,000
Total liabilities and stockholders’ equity		$627,000		$551,000

Additional data:

The common stock recently sold at $19.50 per share.

Compute the following ratios for 2014. (Round Earnings per share and Acid-test ratio to 2 decimal places, e.g. 1.65, and all others to 1 decimal place, e.g. 6.8 or 6.8% .)