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ACCT 2001 Chapter : Chapter 2 Study Guide Notes

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azuremammoth471
15 Mar 2019
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LSU
Department
Accounting
Course
ACCT 2001
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All

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Document Summary

A classified balance sheet groups together similar assets and similar liabilities, using a number of standard classifications and sections, will contain, assets: Long term investments: current assets, property, plant, and equipment. Liabilities and stockholders" equity: current liabilities, current assets: Investments (short term u. s. government securities: cash, receivables (accounts receivable, notes receivable, and interest receivables, prepaid expenses (insurance and supplies) Inventories: companies list current assets in the order in which they expect to convert them into cash. Furniture: depreciation is the allocation of the cost of an asset to a number of years, the accumulated depreciation account shows the total amount of depreciation that the company has expensed thus far in the asset"s life. Salaries and wages payable: accounts payable, notes payable. Long-term liabilities: are obligations that company expects to pay after one year, can include, bonds payable, mortgages payable, pension liabilities long-term notes payable. Intra-company comparison covering two years for the same company.

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Related Questions

WeaverCorporation's stock is selling for $16 per share. Weaver providedthe following financial statements. Use these statements to preparecomprehensive ratio analysis tables similar to those illustrated inthe chapter.
WEAVER CORPORATION
Comparative Balance Sheet
December 31, 20X3 and 20X2
Assets 20X3 20X2
Current assets
Cash $ 500,000 $ 370,000
Accounts receivable 350,000 290,000
Inventories 90,000 110,000
Total current assets $ 940,000 $ 770,000
Property, plant, & equipment
Land $ 200,000 $ 200,000
Building 650,000 650,000
Equipment 950,000 900,000
$ 1,800,000 $ 1,750,000
Less: Accumulated depreciation (365,000) (325,000)
Total property, plant, & equipment $ 1,435,000 $ 1,425,000
Total assets $ 2,375,000 $ 2,195,000
Liabilities
Current liabilities
Accounts payable $ 160,000 $ 200,000
Interest payable 40,000 30,000
Total current liabilities $ 200,000 $ 230,000
Long-term liabilities
Long-term note payable 800,000 700,000
Total liabilities $ 1,000,000 $ 930,000
Stockholders' equity
Common stock ($0.50 par) $ 100,000 $ 100,000
Paid-in capital in excess of par 655,000 655,000
Retained earnings 620,000 510,000
Total stockholders' equity $ 1,375,000 $ 1,265,000
Total liabilities and equity $ 2,375,000 $ 2,195,000
WEAVER CORPORATION
Statement of RetainedEarnings
For the Year Ending December 31,20X3
Beginning retained earnings, January 1 $ 510,000
Plus: Net income 160,000
$ 670,000
Less: Dividends 50,000
Ending retained earnings, December 31 $ 620,000
WEAVER CORPORATION
Income Statement
For the year ending December 31,20X3
Revenues $ 1,685,000
Cost of goods sold 980,000
Gross profit $ 705,000
Operating expenses
Salaries $ 245,000
Interest 65,000
Depreciation 40,000
Other operating expenses 155,000 505,000
Income before income taxes $ 200,000
Less: Income taxes 40,000
Net income $ 160,000
Current Ratio 4.70
Current Assets ÷ CurrentLiabilities $940,000 ÷ $200,000
Quick Ratio
Debt to Total AssetsRatio
Debt to Total EquityRatio
Times Interest EarnedRatio
Accounts Receivable TurnoverRatio
Inventory TurnoverRatio
Net Profit on Sales
Gross Profit Margin
Return on Assets
Return on Equity
EPS
P/E
Dividend Rate/Yield
Dividend PayoutRatio
Book Value Per Share

Mary Walker, president of Rusco Company, considers $28,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $23,000 in cash was available at the end of this year. Since the company reported a large net income for the year, and also issued both bonds and common stock, the sharp decline in cash is puzzling to Ms. Walker.

Rusco Company
Comparative Balance Sheet
at July 31
This Year Last Year
Assets
Current assets:
Cash $ 23,000 $ 42,600
Accounts Receivable 231,200 220,400
Inventory 257,200 200,800
Prepaid expenses 12,600 24,600
Total current assets 524,000 488,400
Long-term investments 114,000 160,000
Plant and equipment 876,000 758,000
Less accumulated depreciation 214,000 192,400
Net plant and equipment 662,000 565,600
Total assets $ 1,300,000 $ 1,214,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 295,400 $ 238,800
Accrued liabilities 8,800 16,600
Income taxes payable 48,400 43,000
Total current liabilities 352,600 298,400
Bonds Payable 224,000 116,000
Total liabilities 576,600 414,400
Stockholders’ equity:
Common stock 665,000 640,000
Retained earnings 58,400 159,600
Total stockholders' equity 723,400 799,600
Total liabilities and stockholders' equity $ 1,300,000 $ 1,214,000
Rusco Company
Income Statement
For This Year Ended July 31
Sales $ 960,000
Cost of goods sold 600,000
Gross margin 360,000
Selling and administrative expenses 256,800
Net operating income 103,200
Nonoperating items:
Gain on sale of investments $ 24,000
Loss on sale of equipment (7,600 ) 16,400
Income before taxes 119,600
Income taxes 35,840
Net income $ 83,760

The following additional information is available for this year.

The company declared and paid a cash dividend.

Equipment was sold during the year for $50,400. The equipment originally cost $106,000 and had accumulated depreciation of $48,000.

Long-term investments that cost $46,000 were sold during the year for $70,000.

The company did not retire any bonds payable or repurchase any of its common stock.

Required:

1. Using the indirect method, compute the net cash provided by/used in operating activities for this year.

2. Prepare a statement of cash flows for this year.

3. Compute free cash flow for this year.

Income Statement

All numbers in thousands

Revenue

‎12‎/‎31‎/‎2015

‎12‎/‎31‎/‎2014

‎12‎/‎31‎/‎2013

Total Revenue

2,068,100

2,118,300

2,069,600

Cost of Revenue

1,199,000

1,264,600

1,208,100

Gross Profit

869,100

853,700

861,500

Operating Expenses

Research Development

-

-

-

Selling General and Administrative

510,500

527,400

483,100

Non Recurring

-

-

137,600

Others

-

-

-

Total Operating Expenses

-

-

-

Operating Income or Loss

358,600

326,300

240,800

Income from Continuing Operations

Total Other Income/Expenses Net

-96,400

-4,600

-7,200

Earnings Before Interest and Taxes

262,200

321,700

233,600

Interest Expense

52,900

53,800

10,200

Income Before Tax

209,300

267,900

223,400

Income Tax Expense

54,600

84,200

175,000

Minority Interest

4,100

23,300

31,100

Net Income From Continuing Ops

154,700

183,700

48,400

Non-recurring Events

Discontinued Operations

-400

-11,100

-3,600

Extraordinary Items

-

-

-

Effect Of Accounting Changes

-

-

-

Other Items

-

-

-

Net Income

Net Income

153,900

175,200

32,300

Preferred Stock And Other Adjustments

-

-

-

Net Income Applicable To Common Shares

153,900

175,200

32,300

Balance Sheet

All numbers in thousands

Period Ending

‎12‎/‎31‎/‎2015

‎12‎/‎31‎/‎2014

‎12‎/‎31‎/‎2013

Current Assets

Cash And Cash Equivalents

199,700

290,500

267,600

Short Term Investments

-

-

-

Net Receivables

313,900

263,100

456,900

Inventory

204,100

169,300

187,500

Other Current Assets

17,400

278,800

34,800

Total Current Assets

735,100

1,001,700

946,800

Long Term Investments

-

-

-

Property Plant and Equipment

224,800

207,200

200,200

Goodwill

714,100

484,400

504,900

Intangible Assets

372,400

125,400

146,100

Accumulated Amortization

-

-

-

Other Assets

147,000

125,000

124,100

Deferred Long Term Asset Charges

91,900

72,200

78,500

Total Assets

2,285,300

2,015,900

2,000,600

Current Liabilities

Accounts Payable

381,500

379,400

418,500

Short/Current Long Term Debt

65,600

49,600

71,900

Other Current Liabilities

-

103,500

100

Total Current Liabilities

447,100

532,500

490,500

Long Term Debt

1,479,800

1,215,000

1,272,000

Other Liabilities

208,700

192,900

186,400

Deferred Long Term Liability Charges

120,000

57,000

86,700

Minority Interest

4,100

23,300

31,100

Negative Goodwill

-

-

-

Total Liabilities

2,259,700

2,020,700

2,066,700

Stockholders' Equity

Misc. Stocks Options Warrants

-

-

-

Redeemable Preferred Stock

-

-

-

Preferred Stock

-

-

-

Common Stock

1,000

1,000

1,000

Retained Earnings

232,400

142,400

1,100

Treasury Stock

-

-

-

Capital Surplus

24,400

24,400

28,500

Other Stockholder Equity

-232,200

-148,200

-96,700

Total Stockholder Equity

25,600

-4,800

-66,100

Net Tangible Assets

-1,060,900

-614,600

-717,100

Please, pretty please help me determine (rounding to one decimalplace). I am in Survey of Accounting chapter 9

8. Ratio of fixed assets to long term liabilities

9. Ratio of liabilities to stockholders’equity

10. Number of times interest charges earned

11. Number of times preferred dividends earned

12. Ratio of net sales to assets

13. Rate earned on total assets

14. Rate earned on stockholders’equity

15. Rate earned on common stockholders’equity

16. Earnings per share on common stock

17. Price-earnings ratio

18. Dividends per share of common stock

19. Dividend yield