The following data are available for Mart Jacks, INC.
Year 2 Year 1
Sales $1,139,600 $1,192,320
Beginning Inventory 80,000 64,000
Cost of Goods Sold 500,800 606,000
Ending Inventory 72,000 80,000
1) determine for each year:
a) the inventory turnover
b) the number of days' sales in inventory ( Round intermediate calculation to the nearest whole number and your final answer to one decimal place)
2) What conclusions can be drawn from these data concerning the inventories?
In: Accounting
On January 1, the first day of its fiscal year, Pretender Company issued $18,400,000 of five-year, 12% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 14%, resulting in Pretender Company receiving cash of $17,107,672.
Required:
| A. | Journalize the entries to
record the following (refer to the Chart of Accounts for exact
wording of account titles):
|
||||||
| B. | Determine the amount of the bond interest expense for the first year. | ||||||
| C. | Explain why the company was able to issue the bonds for only $17,107,672 rather than for the face amount of $18,400,000. |
In: Accounting
A 5-year Treasury bond has a 4.8% yield. A 10-year Treasury bond yields 6.95%, and a 10-year corporate bond yields 9%. The market expects that inflation will average 2.55% over the next 10 years (IP10 = 2.55%). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r*, will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP = LP = 0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. What is the yield on this 5-year corporate bond? Round your answer to two decimal places.
In: Finance
Comparative financial statement data for Carmono Company follow:
| This Year | Last Year | ||||
| Assets | |||||
| Cash | $ | 8.50 | $ | 16.00 | |
| Accounts receivable | 54.00 | 47.00 | |||
| Inventory | 97.50 | 84.40 | |||
| Total current assets | 160.00 | 147.40 | |||
| Property, plant, and equipment | 237.00 | 198.00 | |||
| Less accumulated depreciation | 47.20 | 35.40 | |||
| Net property, plant, and equipment | 189.80 | 162.60 | |||
| Total assets | $ | 349.80 | $ | 310.00 | |
| Liabilities and Stockholders’ Equity | |||||
| Accounts payable | $ | 58.50 | $ | 48.00 | |
| Common stock | 126.00 | 97.00 | |||
| Retained earnings | 165.30 | 165.00 | |||
| Total liabilities and stockholders’ equity | $ | 349.80 | $ | 310.00 | |
For this year, the company reported net income as follows:
| Sales | $ | 950.00 |
| Cost of goods sold | 570.00 | |
| Gross margin | 380.00 | |
| Selling and administrative expenses | 360.00 | |
| Net income | $ | 20.00 |
This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.
Required:
1. Using the indirect method, prepare a statement of cash flows for this year.
2. Compute Carmono’s free cash flow for this year.
In: Accounting
A 30-year annuity has end-of-month payments. The first year the payments are $120 each. In subsequent years the monthly payment increases by $5 over what it was the previous year.
Find the accumulated value of this annuity if AEIR=3%
| A. |
84,820 |
|
| B. |
42,390 |
|
| C. |
105,070 |
|
| D. |
100,620 |
|
| E. |
41,560 |
In: Math
On July 1, Year 1, Danzer Industries Inc. issued $40,000,000 of 10-year, 7% bonds at a market (effective) interest rate of 8%, receiving cash of $37,282,062. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.*
2. Journalize the entries to record the following:*
a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.)
b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.)
3. Determine the total interest expense for Year 1.
4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute the price of $37,282,062 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)
*Refer to the Chart of Accounts for exact wording of account titles.
In: Accounting
The following accounts and corresponding balances were drawn from Thornton Company’s Year 2 and Year 1 year-end balance sheets.
| Account Title | Year 2 | Year 1 | ||||
| Accounts receivable | $ | 73,700 | $ | 80,300 | ||
| Prepaid rent | 520 | 930 | ||||
| Utilities payable | 1,790 | 1,020 | ||||
| Other operating expenses payable | 31,400 | 34,400 | ||||
The Year 2 income statement is shown as follows.
| Income Statement | |||
| Sales | $ | 297,000 | |
| Rent expense | (23,000 | ) | |
| Utilities expense | (35,800 | ) | |
| Other operating expenses | (166,400 | ) | |
| Net Income | $ | 71,800 | |
Required
Prepare the operating activities section of the statement of cash flows using the direct method.
Prepare the operating activities section of the statement of cash flows using the indirect method.
In: Accounting
Loan 3: 15-year versus 30-year mortgage
Amortize a mortgage for a $225,000 house with a 20% down payment for both a 15-year mortgage at 3.625% and a 30-year mortgage at 4.125%.
In: Finance
Income statements for Gibson Company for Year 3 and Year 4
follow:
| GIBSON COMPANY Income Statements |
|||||||
| Year 4 | Year 3 | ||||||
| Sales | $ | 200,000 | $ | 180,000 | |||
| Cost of goods sold | 143,400 | 121,400 | |||||
| Selling expenses | 22,000 | 20,000 | |||||
| Administrative expenses | 12,900 | 14,900 | |||||
| Interest expense | 3,800 | 5,800 | |||||
| Total expenses | $ | 182,100 | $ | 162,100 | |||
| Income before taxes | 17,900 | 17,900 | |||||
| Income taxes expense | 5,400 | 3,500 | |||||
| Net income | $ | 12,500 | $ | 14,400 | |||
Required
a. Perform a horizontal analysis, showing the
percentage change in each income statement component between Year 3
and Year 4.
b. Perform a vertical analysis, showing each
income statement component as a percentage of sales for each
year.
In: Accounting
The following financial statements apply to Trenton Company:
| Year 4 | Year 3 | ||||||
| Revenues | |||||||
| Net sales | $ | 210,100 | $ | 175,600 | |||
| Other revenues | 8,600 | 6,600 | |||||
| Total revenues | 218,700 | 182,200 | |||||
| Expenses | |||||||
| Cost of goods sold | 125,900 | 102,500 | |||||
| Selling expenses | 19,900 | 17,900 | |||||
| General and administrative expenses | 10,100 | 9,100 | |||||
| Interest expense | 1,500 | 1,500 | |||||
| Income tax expense | 19,300 | 17,300 | |||||
| Total expenses | 176,700 | 148,300 | |||||
| Net income | $ | 42,000 | $ | 33,900 | |||
| Assets | |||||||
| Current assets | |||||||
| Cash | $ | 5,400 | $ | 6,400 | |||
| Marketable securities | 1,200 | 1,200 | |||||
| Accounts receivable | 36,300 | 31,500 | |||||
| Inventories | 101,800 | 95,000 | |||||
| Prepaid expenses | 3,700 | 2,700 | |||||
| Total current assets | 148,400 | 136,800 | |||||
| Plant and equipment (net) | 106,500 | 106,500 | |||||
| Intangibles | 21,100 | 0 | |||||
| Total assets | $ | 276,000 | $ | 243,300 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Liabilities | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 38,500 | $ | 55,500 | |||
| Other | 15,800 | 16,600 | |||||
| Total current liabilities | 54,300 | 72,100 | |||||
| Bonds payable | 65,600 | 66,600 | |||||
| Total liabilities | 119,900 | 138,700 | |||||
| Stockholders’ equity | |||||||
| Common stock (43,000 shares) | 113,000 | 113,000 | |||||
| Retained earnings | 43,100 | (8,400 | ) | ||||
| Total stockholders’ equity | 156,100 | 104,600 | |||||
| Total liabilities and stockholders’ equity | $ | 276,000 | $ | 243,300 | |||
Required
Calculate the following ratios for Year 3 and Year 4. Since Year 2
numbers are not presented do not use averages when calculating the
ratios for Year 3. Instead, use the number presented on the Year 3
balance sheet.
a. Net margin. (Round your answers to 2
decimal places.)
b. Return on investment. (Round your
answers to 2 decimal places.)
c. Return on equity. (Round your answers
to 2 decimal places.)
d. Earnings per share. (Round your answers
to 2 decimal places.)
e. Price-earnings ratio (market prices at the end
of Year 3 and Year 4 were $5.95 and $4.94, respectively).
(Round your intermediate calculations and final answers to
2 decimal places.)
f. Book value per share of common stock.
(Round your answers to 2 decimal places.)
g. Times interest earned. Exclude extraordinary
income in the calculation as they cannot be expected to recur and,
therefore, will not be available to satisfy future interest
payments. (Round your answers to 2 decimal
places.)
h. Working capital.
i. Current ratio. (Round your answers to 2
decimal places.)
j. Quick (acid-test) ratio. (Round your
answers to 2 decimal places.)
k. Accounts receivable turnover. (Round
your answers to 2 decimal places.)
l. Inventory turnover. (Round your answers
to 2 decimal places.)
m. Debt-to-equity ratio. (Round your
answers to 2 decimal places.)
n. Debt-to-assets ratio. (Round your
answers to the nearest whole percent.)
In: Accounting