Horizontal Analysis of the Income Statement
Income statement data for Boone Company for two recent years ended December 31, are as follows:
| Current Year | Previous Year | ||||
| Sales | $486,400 | $380,000 | |||
| Cost of goods sold | 415,800 | 330,000 | |||
| Gross profit | $70,600 | $50,000 | |||
| Selling expenses | $21,240 | $18,000 | |||
| Administrative expenses | 18,900 | 15,000 | |||
| Total operating expenses | $40,140 | $33,000 | |||
| Income before income tax | $30,460 | $17,000 | |||
| Income tax expenses | 12,200 | 6,800 | |||
| Net income | $18,260 | $10,200 | |||
a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.
| Boone Company | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31 | ||||
| Current year Amount | Previous year Amount | Increase (Decrease) Amount | Increase (Decrease) Percent | |
| Sales | $486,400 | $380,000 | $ | % |
| Cost of goods sold | 415,800 | 330,000 | % | |
| Gross profit | $70,600 | $50,000 | $ | % |
| Selling expenses | 21,240 | 18,000 | % | |
| Administrative expenses | 18,900 | 15,000 | % | |
| Total operating expenses | $40,140 | $33,000 | $ | % |
| Income before income tax | $30,460 | $17,000 | $ | % |
| Income tax expense | 12,200 | 6,800 | % | |
| Net income | $18,260 | $10,200 | $ | % |
b. The net income for Boone Company increased by 79% between years. This increase was the combined result of an in sales of 28% and percentage in cost of goods sold. The cost of goods sold increased at a rate than the increase in sales, thus causing the percentage increase in gross profit to be than the percentage increase in sales.
In: Accounting
Please answer questions 1 and 2 at the bottom.
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Read Case 3, Charitable Contributions and Debt: A Comparison of St. Jude Children's Research Hospital/ALSAC and Universal Health Services in the Mastery of the Financial Accounting Research System (FARS) Through Cases book.
Write a response of 700 to 1,050 words in which you address the following questions from Case 3, Charitable Contributions and Debt: A Comparison of St. Jude Children's Research Hospital/ALSAC and Universal Health Services:
Requirement B: Revenue Mix (Strategy-Related Considerations)
The 10-K filing of Universal Health Services, Inc. describes the mix of revenue sources, as depicted in Table 5.3-3.
Table 5.3-3: Patient Revenue Mix
|
PERCENTAGE OF NET PATIENT REVENUES |
|||||
|---|---|---|---|---|---|
|
2000 |
1999 |
1998 |
1997 |
1996 |
|
|
N/A-Not available (Source: 10-K filed 3/28/2001) |
|||||
|
Third Party Payors |
|||||
|
Medicare |
32.3% |
33.5% |
34.3% |
35.6% |
35.6% |
|
Medicaid |
11.5% |
12.6% |
11.3% |
14.5% |
15.3% |
|
Managed Care (HMOs and PPOs) |
34.5% |
31.5% |
27.2% |
19.1% |
N/A |
|
Other Sources |
21.7% |
22.4% |
27.2% |
30.8% |
49.1% |
|
Total |
100% |
100% |
100% |
100% |
100% |
In: Accounting
In: Accounting
In 500 words minimum: Evaluate when dividends are taxable, who they are taxable to, and the related tax consequences or benefits.
In: Accounting
Van Rushing Hunting Goods’ fiscal year ends on December 31. At the end of the 2021 fiscal year, the company had notes payable of $20.0 million due on February 8, 2022. Rushing sold 5.5 million shares of its $0.25 par, common stock on February 3, 2022, for $16.5 million. The proceeds from that sale along with $3.5 million from the maturation of some 3-month CDs were used to pay the notes payable on February 8. Through his attorney, one of Rushing’s construction workers notified management on January 5, 2022, that he planned to sue the company for $1 million related to a work-site injury on December 20, 2021. As of December 31, 2021, management had been unaware of the injury, but reached an agreement on February 23, 2022, to settle the matter by paying the employee’s medical bills of $84,500. Rushing’s financial statements were finalized on March 3, 2022. Required:
1. What amount(s) if any, related to the situations described should Rushing report among current liabilities in its balance sheet at December 31, 2021?
2. What amount(s) if any, related to the situations described should Rushing report among long-term liabilities in its balance sheet at December 31, 2021?
3. What amount(s) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2021 if the settlement agreement had occurred on March 15, 2022, instead?
4. What amount(s) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2021 if the work-site injury had occurred on January 3, 2022, instead? (For all requirements, enter your answers in whole dollars.)
1 Current liability
2 Long-term liability
3 Current liability
Long term liability
4 Current liability
Long-term liability
In: Accounting
You are encouraged to research outside sources and, of course, cite them. Do not, however, quote sources word-for-word, but rather, respond to the Discussion Forum Question in your own words.
1. Identify four reasons that capital budgeting decisions by managers are risky.
2. Why is an investment more attractive to management if it has a shorter payback period?
3. Why should managers set the required rate of return higher than the rate at which money can be borrowed when making a typical capital budgeting decision?
4. Why does the use of the
accelerated depreciation method (instead of straight line) for
income tax reporting increase an investment’s value?
After you’ve completed the questions above, please provide a brief explanation of how this information is important in managerial decision making. (500 minimum word count, references excluded)
In: Accounting
|
Bay Area Limos operates transportation services to Bay City airport. The price of service is fixed at a flat rate for each trip and most costs of providing the service are fixed for each trip. Betty Smith, the owner, forecasts income by estimating two factors that fluctuate with the economy: the fuel cost associated with the trip and the number of customers who would take trips. Looking at next year, Betty develops the following estimates of contribution margin (price less variable costs, including fuel) for the estimated number of customers. For simplicity, she assumes that the fuel costs (therefore the contribution margin per ride) and the number of customers are independent. |
| Contribution Margin per Ride |
||
| Scenario | (Price - Variable cost) | Number of Customers |
| Excellent | $ 45 | 5,500 |
| Fair | 35 | 2,800 |
| Poor | 20 | 2,200 |
|
In addition to the costs of a ride, Betty estimates that other service costs are $42,000 plus $6 for each customer (ride) in excess of 2,800 rides. Annual administrative and marketing costs are estimated to be $20,000 plus 10 percent of the contribution margin. |
| Required: |
|
Compute the total contribution, costs and operating profit for each of the scenario and each group of customer. (Input all amounts as positive values except losses which should be indicated with a minus sign. Omit the "$" sign in your response.) |
| Contribution Margin | Number of Customers |
Total Contribution Margin |
Service Costs | Marketing & Admin. |
Operating Profit(Loss) |
||||||
| Poor | $ | 20 | 2,200 | $ | $ | $ | $ | ||||
| Fair | $ | 35 | 2,200 | $ | $ | $ | $ | ||||
| Excellent | $ | 45 | 2,200 | $ | $ | $ | $ | ||||
| Poor | $ | 20 | 2,800 | $ | $ | $ | $ | ||||
| Fair | $ | 35 | 2,800 | $ | $ | $ | $ | ||||
| Excellent | $ | 45 | 2,800 | $ | $ | $ | $ | ||||
| Poor | $ | 20 | 5,500 | $ | $ | $ | $ | ||||
| Fair | $ | 35 | 5,500 | $ | $ | $ | $ | ||||
| Excellent | $ | 45 | 5,500 | $ | $ | $ | $ | ||||
In: Accounting
Randolph runs a lemonade stand and wants to make $150 in the next week. He sells each cup of lemonade for $0.75, while the variable cost is $0.15 for the cups and ingredients. Fixed costs such as posters and signs are $15.
Calculate the following:
a. Contribution margin per unit sold
b. Contribution margin ratio
c. Breakeven point in units
d. Units to be sold to earn the targeted operating income
In: Accounting
You are the director of international operations for North and South America for Lenovo. In 2015 you developed a five-year marketing plan to aggressively market personal computers in Canada, Mexico and Brazil. A key element of your plan called for meeting the competitive prices of HP and local manufacturers every step of the way. In addition you planned to spend heavily on marketing. Your yearly budget for marketing in the major target markets was set as follows:
Canada C$ 2,000,000
Mexico Pesos 5,000,000
Brazil Reals 1,000,000
Your 2015 price set in U.S.$ for your top selling laptop was $2,000 in each market. Market prices have declined 20% on a U.S$ basis over the years.
1. What do your marketing budgets look like in 2015 and today in US$?
2. What do the computer prices look like in local currencies in 2015 and today?
3. What actions would you plan to take in each market to fulfill your goals while
addressing current conditions? (Hint: look at the marketing expenditures and the prices together).
CURRENCY PROBLEM 2
You are the director of U.S. operations for Nissan. In 2015, you developed plans for a new sports truck model, the Nissan Minimax to be sold at $30,000. This model can be made in both the U.S. and Japan. Gross margin (meaning margin after all direct costs) is approximately 50%.
1. What is the cost of the Minimax to Nissan if it is made in
Japan vs. made in the U.S. in 2015 and 2020, assuming
no inflation?
2. What actions would you recommend to the home office in
Tokyo to address the current situation?
SPOT RATES FOR CURRENCY EXERCISE
Country Spot Rates (3-11-15) Spot Rates (3-11-20)
Canada C$ 0.7683 0.7282
Mexico pesos 0.0646 0.0474
Brazil reals 0.3315 0.2133
Japan yen 0.0083 0.0095
In: Accounting
Security Technology Inc. (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military applications. The part sells for $48 per unit and had sales of 24,950 units in the current year, 2018. STI has no inventory on hand at the beginning of 2018 and is projecting sales of 28,850 units in 2019. STI is planning the same production level for 2019 as in 2018, 26,900 units. The variable manufacturing costs for STI are $19, and the variable selling costs are only $0.30 per unit. The fixed manufacturing costs are $215,200 per year, and the fixed selling costs are $690 per year.
Required:
1. Prepare an income statement for each year using full costing.
2. Prepare an income statement for each year using variable costing.
3. Prepare a reconciliation of the difference each year in the operating income resulting from the full and variable costing methods.
In: Accounting
Selected financial statement data for Homer Company are
presented below.
Net sales $1,500,000
Cost of goods sold 700,000
Interest expense 10,000
Net income 205,000
Current Assets (ending) $300,000
Fixed Assets (net) $400,000
Total assets (ending) $900,000
Current Liabilities $150,000
Long-term Liabilities $150,000
Total liabilities (ending) $300,000
Total stockholders' equity (ending) $600,000
Total assets at the beginning of the year were $800,000; total
common stockholders' equity was $500,000 at the beginning of the
period.
Instructions
Compute each of the following:
(a) Asset turnover
(b) Working Capital
(c) Return on assets
(d) Return on common stockholders' equity
(e) Current Ratio
(f) Ratio of Fixed Assets to Long-term Liabilities
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1. what is the difference between sole proprietorships and partnerships?briefly
2. what is the components balance sheet and the income statement
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What are the major similarities and differences between IAS 32 Financial Instruments: Disclosure and Presentation and IFRS 7 Financial Instruments: Disclosures?
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The chosen Company is Amazon. Financial statements for the years 2016, 2017 and 2018.
A. Analyze the income statement for any potential risk factors and compliance issues with Generally Accepted Accounting Principles (GAAP) or International Financial Recording Standards (IFRS).
B. Analyze the risk factors and compliance issues with GAAP or IFRS on the balance sheet.
C. Using the internal control, analyze the cash and revenue for potential risk factors.
1. What risks need to be documented?
2. How does this information compare to the company or industry averages, or the company’s past performance?
D. Explain the audit universe and how you identified it.
E. Based on your analysis of risk, devise a sampling program for the audit universe.
F. Choose the most preferable audit testing procedures that could be used in the field, based on the audit universe items sampled in this situation.
Please do not copy and paste.
Thank you
In: Accounting
The London Private Hospital has 3 patient services departments – Adult Medicine, Obstetrics and Paediatrics. It also has 3 patient support departments – administration, Facilities and Finance. The revenues of the three patient services departments are:
Adult medicine $12 million
Obstetrics $6 million
Paediatrics $2 million
The direct costs of all 6 departments are:
Adult medicine $6 million
Obstetrics $3.6 million
Paediatrics $1.2 million
Administration $1 million
Facilities $4.4 million
Finance $1.8 million
Direct costs of the support departments are allocated to patient services departments using the direct method on the basis of the % of services provided to the support departments to the patient service departments.
The table below gives the percentages of support provided by the support departments to both each other and the services departments. For example, 10% of admin’s services are provided to the finance department and 20% to obstetrics
| % of services provided by | |||
| service to provide | admin | facilities | finance |
| admin | 0 | 5 | 5 |
| facilities | 10 | 0 | 5 |
| finance | 10 | 10 | 0 |
| adult medicine | 35 | 55 | 50 |
| obstetrics | 20 | 10 | 25 |
| paediatrics | 25 | 20 | 15 |
| Total | 100 | 100 | 100 |
Allocate the support overheads to the 3 patient service departments on the basis of the % of services provided.
b. Calculate the profit and loss position for each of the patient service departments and the hospital as a whole.
c. Should the hospital consider closing down any or all of the patient service departments to increase its profitability or reduce its losses? Explain why or why not.
Hint: All costs of the supporting units are to be allocated to cost objects.
Hint: Allocations rate depends solely on each cost object's cost driver and how much in total is allocated to cost objects
Hint: Allocation rates have a numerator and denominator component. The key is to adjust these based on information provided in the question.
In: Accounting