The following accounts (in no particular order) are for PerfectReb Corporation for the fiscal year ended December
31, 2015. (S/T = Short-Term; L/T = Long-Term)
REQUIRED:
A) Calculate Perfect Reb Corporationâs net income or net lossfor the 2015 fiscal year. You may solve this in any
manner that you wish, but it is highly recommended to prepare amultiple step income statement.
B) Using proper form, prepare Perfect Reb Corporationâs balancesheet for 2015.
C) Using the information provided, solve for the requestedratios and respond to the corresponding questions.
Common Stock (13,000 shares
outstanding)
$52,000 Sales Discounts $5,000
Accrued Expenses (Payables)
20,000 Income Tax Expense (25% of IBIT) ???
Miscellaneous Operating Expenses
50,000 Cash 142,000
Accounts Receivable
20,000 Interest Expense 4,000
Buildings
186,000 Marketable Securities 62,000
Retained Earnings
??? Notes Payable (due in 5 years) 12,000
Wages Expense
60,000 Rent Expense 11,000
Inventory
40,000 Unearned Revenue 19,000
Accumulated Depreciation â Buildings
48,000 Allowance for Uncollectible
Accounts
15,000
Accounts Payable
41,000 Sales 433,000
Gain on Sale of Equipment
62,000 Mortgage Payable ($12,000 S/T) 144,000
Land
50,000 Sales Returns & Allowances 12,000
Bad Debt Expense
2,000 Depreciation Expense 11,000
L/T Investments
7,000 Cost of Goods Sold 109,000
Notes Receivable ($2,000 S/T)
13,000 Interest Revenue 3,000
A) NET INCOME (10 points) â SHOW ALL WORK ANDCALCULATIONS!!!!
B) CLASSIFIED BALANCE SHEET (15 points)
Perfect Reb Corporation
Balance Sheet
December 31, 2015
ASSETS LIABILITIES
Current Assets Current Liabilities
Total Current Liabilities
Total Current Assets
Long-Term Assets Long-Term Liabilities
Total Long-Term Assets Total Long Term Liabilities
Fixed Assets
Total Liabilities
EQUITY
Total Fixed Assets
Total Equity
TOTAL ASSETS
TOTAL LIABILITIES & EQUITY
C) RATIOS AND ANALYSIS (15 points):
Use the financial statements and additional information tocalculate the ratios. Round your answers to two decimal
places. Be sure to label your answer correctly (example, %,times, days, etc.). IF AN ANSWER SHOULD BE
EXPRESSED AS A PERCENTAGE, DO NOT LEAVE IT IN DECIMAL FORM!!!!(i.e. 0.5015 = 50.15%!!!!)
Previous (December 31, 2014) year end balances for:
Accounts receivable, net of allowance $2,000
Inventory 15,000
Stockholdersâ Equity 139,000
Market price per share for one share of common stock at Dec 31,2015 $94.50/share
Dividend per share for one share of common stock for FYE Dec 31,2015 $1.25/share
No new shares of common stock were issued during 2015. Thecompanyâs credit policy is net 15.
RATIO CALCULATION ANSWER
1) Quick (Acid-Test) Ratio (2 points)
2) Dividend Yield (2 points)
3) Gross Profit Percentage (2 points)
4) Average Daysâ Sales Uncollected 2 points)
5) Inventory Turnover (2 points)
6) Price-Earnings Ratio (2 points)
7) Using the liquidity ratios (and general accepted norms forthe current ratio and quick/acid-test ratio), comment
on the companyâs financial position. (3 points)
