ACCT 217 Lecture 2: ACCT_Lecture 2
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Lundberg Corporation's most recent balance sheet and incomestatement appear below:
Statement of Financial Position December 31, Year 2 and Year 1 (in thousands of dollars) | ||||
Year 2 | Year 1 | |||
Asset: | ||||
Current assets: | ||||
Cash | $ | 160 | $ | 170 |
Accounts receivable | 270 | 280 | ||
Inventory | 170 | 160 | ||
Prepaid expenses | 25 | 25 | ||
Total current assets | 625 | 635 | ||
Plant and equipment, net | 954 | 934 | ||
Total assets | $ | 1,579 | $ | 1,569 |
Liabilities and stockholders' equity: | ||||
Current liabilities: | ||||
Accounts payable | $ | 220 | $ | 210 |
Accrued liabilities | 110 | 110 | ||
Notes payable, short term | 160 | 170 | ||
Total current liabilities | 490 | 490 | ||
Bonds payable | 250 | 300 | ||
Total liabilities | 740 | 790 | ||
Stockholders' equity: | ||||
Preferred stock, $100 par value, 10% | 260 | 260 | ||
Common stock, $1 par value | 100 | 100 | ||
Additional paid-in capital--common stock | 110 | 110 | ||
Retained earnings | 369 | 295 | ||
Total stockholders' equity | 839 | 765 | ||
Total liabilities and stockholders' equity | $ | 1,579 | $ | 1,555 |
Income Statement For the Year Ended December 31, Year 2 (in thousands of dollars) | |||
Sales (all on account) | $ | 1,480 | |
Costof goods sold | 868 | ||
Gross margin | 612 | ||
Selling and administrative expenses | 334 | ||
Netoperating income | 278 | ||
Interest expense | 49 | ||
Netincome before taxes | 229 | ||
Income taxes (30%) | 69 | ||
Netincome | $ | 160 | |
Dividends on common stock during Year 2 totaled $60 thousand.The market price of common stock at the end of Year 2 was $9.32 pershare. |
k. | Compute theacid-test ratio for Year 2.(Round your answer to 1 decimalplace.) |
Acid-test ratio |
l. | Compute theaccounts receivable turnover for Year 2. (Round your answerto 2 decimal places.) |
Accounts receivable turnover |
m. | Compute the average collection period for Year 2. (Use365 days in a year. Do not round intermediatecalculations. Round your answer to one decimalplace.) |
Average collection period | days |
n. | Compute the inventory turnover for Year 2. (Round youranswer to 2 decimal places. Omit the "$" sign in yourresponse.) |
Inventory turnover | $ |
o. | Compute the average sale period for Year 2. (Use 365days in a year. Do not round intermediate calculations. Round youranswer to 1 decimal place.) |
Average sale period | days |
p. | Compute the times interest earned for Year 2. (Roundyour answer to 2 decimal places.) |
Times interest earned |
q. | Compute the debt-to-equity ratio for Year 2. (Round youranswer to 2 decimal places.) |
Debt-to-equity ratio |
Long-term debt ratio | 0.3 | ||
Times interest earned | 8.0 | ||
Current ratio | 1.1 | ||
Quick ratio | 1.0 | ||
Cash ratio | 0.3 | ||
Inventory turnover | 4.0 | ||
Average collection period | 73 | days | |
Use the above information from the tables to work out the following missing entries, and then calculate the company’s return on equity. Note: Turnover and the average collection period are calculated using start-of-year, not average, values. (Enter your answers in millions. Round intermediate calculations and final answers to 2 decimal places.) |
INCOME STATEMENT | |
(Figures in $ millions) | |
Net sales | $ |
Cost of goods sold |
|
Selling, general, and administrative expenses | 23.00 |
Depreciation | 33.00 |
Earnings before interest and taxes (EBIT) | $ |
Interest expense | |
Income before tax | $ |
Tax (35% of income before tax) | |
Net income | $ |
BALANCE SHEET | |||||||
(Figures in $ millions) | |||||||
This Year | Last Year | ||||||
Assets | |||||||
Cash and marketable securities | $ | $ 33 | |||||
Accounts receivable | 47 | ||||||
Inventories | 39 | ||||||
Total current assets | $ | $ 119 | |||||
Net property, plant, and equipment | 38 | ||||||
Total assets | $ | $157 | |||||
Liabilities and shareholders’ equity | |||||||
Accounts payable | $40.00 | $ 35 | |||||
Notes payable | 50.00 | 55 | |||||
Total current liabilities | 90 | ||||||
Long-term debt | 21 | ||||||
Shareholders’ equity | 46 | ||||||
Total liabilities and shareholders’ equity | $235 | $157 | |||||
please show all workings so i can see how you arrive at your answers |
Lundberg Corporation's most recent balance sheet and incomestatement appear below:
Statement of Financial Position December 31, Year 2 and Year 1 (in thousands of dollars) | ||||
Year 2 | Year 1 | |||
Asset: | ||||
Current assets: | ||||
Cash | $ | 160 | $ | 170 |
Accounts receivable | 270 | 280 | ||
Inventory | 170 | 160 | ||
Prepaid expenses | 25 | 25 | ||
Total current assets | 625 | 635 | ||
Plant and equipment, net | 954 | 934 | ||
Total assets | $ | 1,579 | $ | 1,569 |
Liabilities and stockholders' equity: | ||||
Current liabilities: | ||||
Accounts payable | $ | 220 | $ | 210 |
Accrued liabilities | 110 | 110 | ||
Notes payable, short term | 160 | 170 | ||
Total current liabilities | 490 | 490 | ||
Bonds payable | 250 | 300 | ||
Total liabilities | 740 | 790 | ||
Stockholders' equity: | ||||
Preferred stock, $100 par value, 10% | 260 | 260 | ||
Common stock, $1 par value | 100 | 100 | ||
Additional paid-in capital--common stock | 110 | 110 | ||
Retained earnings | 369 | 295 | ||
Total stockholders' equity | 839 | 765 | ||
Total liabilities and stockholders' equity | $ | 1,579 | $ | 1,555 |
Income Statement For the Year Ended December 31, Year 2 (in thousands of dollars) | |||
Sales (all on account) | $ | 1,480 | |
Costof goods sold | 868 | ||
Gross margin | 612 | ||
Selling and administrative expenses | 334 | ||
Netoperating income | 278 | ||
Interest expense | 49 | ||
Netincome before taxes | 229 | ||
Income taxes (30%) | 69 | ||
Netincome | $ | 160 | |
Dividends on common stock during Year 2 totaled $60 thousand.The market price of common stock at the end of Year 2 was $9.32 pershare. |
o. | Compute the average sale period for Year 2. (Use 365days in a year. Do not round intermediate calculations. Round youranswer to 1 decimal place.) |
Average sale period | days |
p. | Compute the times interest earned for Year 2. (Roundyour answer to 2 decimal places.) |
Times interest earned |
q. | Compute the debt-to-equity ratio for Year 2. (Round youranswer to 2 decimal places.) |
Debt-to-equity ratio |