Question

Green Mountain Coffee Roasters is a specialty coffee roaster and manufacturer of coffee makers. Using the following information, class notes, and the posted PowerPoint slides as resources complete the following:

I. Constructing a Balance Sheet

1. Use the information below to construct and balance sheet and a common sized balance sheet for the corporation (note the information here is not necessarily provided in the order in which it should appear on a balance statement.

a. Gross fixed assets: $110,000

b. Cash $100,000

c. Accounts payable: $43,000

d. Retained earnings: $25,000

e. Accumulated depreciation $42,000

f. Accounts receivable $75,000

g. Long-term bank loan $29,000; $15,000 of which will be due within the next 12 months.

h. Mortgage (long-term) $50,000

i. Common Stock $105,000

j. Inventories $36,000

k. Notes payable (short-term) $27,000 2. What is the firm's net working capital? (the difference between current assets and current liabilities). 3. Does the firm use more equity or debt (as a percent of total assets) to finance its business?

• A common-sized balance sheet is a balance sheet in which a firm's assets and sources of debt and equity are expressed as a percentage of its total assets.

• The debt ratio- is a firm's total liabilities divided by its total assets. It is a ratio that measures the extent to which a firm has been financed with debt.

Use the following to answer questions 29-37: Use the information and your calculations from the Balance Sheet and Statement of Cash Flows exercise posted on Canvas to answer the following questions:

29. Net fixed assets are: A) $68,000 B) $211,000 C) $237,000 D) $279,000

30. Long-term liabilities equal: A) $29,000 B) $64,000 C) $79,000 D) $149,000

31. Shareholder's equity is equal to: A) $25,000 B) $105,000 C) $130,000 D) $279,000

32. The firm uses more debt than equity to finance their business. A) True B) False

33. The firm's net working capital was: A) $85,000 B) $211,000 C) $209,000 D) $126,000

34. The corporation had cash flow from operating activities of: A) $9,000 B) $21,000 C) $33,000 D) $59,000

35. The corporation had cash outflow from investing activities of: A) $38,000 B) $35,000 C) $3,000 D) $0

36. The corporation had cash flow from financing activities of: A) $35,000 B) $32,000 C) $3,000 D) $49,000 Page 8

37. The corporation's cash _______________ by __________________. A) increased, $30,000 B) increased, $18,000 C) decreased, $30,000 D) decreased $18,000

Use the following to answer questions 38-50: Use the information and your calculations from the Calculating Income Tax and Constructing Income Statements exercise posted on Canvas to answer the following questions:

38. The depreciation expense for Duff''s bottling equipment in year 3 (using MACRS) was: A) $40,000 B) $38,400 C) $142,400 D) $25,000

  

39. The total amount of depreciation for the bottling equipment (using the straight-line method) was: A) $40,000 B) $120,000 C) $200,000 D) $320,000

40. Under the MACRS depreciation method, the bottling equipment was depreciated over ______ years. A) 8 years B) 6 years C) 5 years D) 11 years

41. Under the straight-line depreciation method, the bottling equipment was depreciated over ______ years. A) 8 years B) 6 years C) 5 years D) 11 years Page 9

42. What was Duff Beer's depreciation expense in year 3 using the straight-line depreciation method? A) $40,000 B) $38,400 C) $142,400 D) $25,000

43. The marginal tax rate for Duff beer was: A) 15% B) 25% C) 31% D) 34% E) 35%

44. The average tax rate for Duff Beer was: A) 24.67% B) 30.62% C) 30.97% D) 34.00%

45. How much did Duff Beer save in taxes by investing in the bottling equipment? A) $13,600 B) $38,400 C) $40,000 D) Duff did not save anything on taxes because they didn't finance the equipment. 46. How much net income did Duff Beer make on a per share basis? A) $0.16 B) $0.30 C) $0.44 D) $1.82 47.

46. How much net income did Duff Beer make on a per share basis? A) $0.16 B) $0.30 C) $0.44 D) $1.82

47. Referring to the income statement you constructed, what is Duff Beer's dividend payout ratio? A) $0.30 B) $72,000 C) 26.92% D) 29.82%

48. The operating profit margin for Duff Beer is: A) 42.2% B) 30.5% C) 34.5% D) 24.1%

49. The net profit margin for Duff beer is: A) 24.1% B) 42.2% C) 25.84% D) 30.5%

50. Duff Beer is distributing most of their earnings to shareholders. A) True B) False

Answer 1

Solution:

Part 1 – Balance Sheet

Balance Sheet
Assets:
Current Assets
Cash	$100,000
Accounts Receivable	$75,000
Inventories	$36,000
Total Current Assets		$211,000
Gross Fixed Assets	$110,000
Less: Accumulated Depreciation	-$42,000	$68,000
Total Assets		$279,000
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable	$43,000
Notes Payable	$27,000
Current Potion Due of Long Term Loan	$15,000
Total Current Liabilities		$85,000
Long Term Borrowings
Long Term Bank Loan	$14,000
Mortgage	$50,000
Total Long Term Liabilities		$64,000
Total Liabilities		$149,000
Stockholders' Equity
Common Stock	$105,000
Retained Earnings	$25,000
Total Stockholders' Equity		$130,000
Total Liabilities and Stockholders' Equity		$279,000

Part 2 --- What is the firm's net working capital? (the difference between current assets and current liabilities).

Total Current Assets = $211,000

Total Current Liabilities = $70,000

Net Working Capital = Total Current Assets – Total Current

= $211,000 – 85,000

= $126,000

Part 3. Does the firm use more equity or debt (as a percent of total assets) to finance its business?

The firm use more equity.

29. Net fixed assets are: A) $68,000 B) $211,000 C) $237,000 D) $279,000

Correct option is A) $68,000

30. Long-term liabilities equal: A) $29,000 B) $64,000 C) $79,000 D) $149,000

The correct option is B) $64,000

31. Shareholder's equity is equal to: A) $25,000 B) $105,000 C) $130,000 D) $279,000

The correct option is C) $130,000

32. The firm uses more debt than equity to finance their business. A) True B) False

B) FALSE

33. The firm's net working capital was: A) $85,000 B) $211,000 C) $209,000 D) $126,000

The correct option is D) $126,000

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Pls ask separate question for remaining parts.