1 Horizontal analysis [5–10 min]

McCormick, Corp., reported the following on its comparative income statement:

Requirement

1. Prepare a horizontal analysis of revenues and gross profit—both in dollar amounts and in percentages—for 2012 and 2011.

Financial Statement Analysis 751

A car manufacturer recognizes the sale of 40,000 cars in its income statement. All cars have been prepaid but not yet shipped to the customer. Assuming that sale is profitable, the accelerated recognition of this sale as revenue is likely to lead to the distortions in the following ratios:

• Net Income higher – no effect – lower

• Asset turnover higher – no effect- lower

• Debt-to-equity higher – no effect - lower

Consider the following two businesses:

• Beauty Salon
• Restaurant

Explore Industry Canada website, online reports, and other possible resources. Prepare an analysis to compare the two businesses in terms of revenue, growth, profitability, return on interest, attractiveness for investors and so on.

Make sure your report is presentable, with proper referencing, and accurate numbers.

Submit your report in MS word format.

Required information The year-end financial statements of Grunewald Company contained the following elements and corresponding amounts. Assets = $21,800; Common Stock = $5,000; Revenue = $10,880; Dividends = $720; Beginning Retained Earnings = $3,855; Ending Retained Earnings = $6,375. Based on this information, the amount of expenses on Grunewald's income statement was? AND The amount of liabilities reported on the end-of-period balance sheet was?

PLEASE ANSWER ASAP******

Using the following information for a periodic inventory system, what is the amount of net income?

a.$29,487

b.$16,494

c.$940

d.$33,735

James Audio Co Uses the Periodic inventory system. James reported these amounts on June 30, 2009:

Inventory, June 30 2008 $20,000

Inventory, June 30 2009 $22,000

Purchase (of inventory) $85000

Purchase Discount 4000

Purchase Return 9000

Frieght in 5000

Sales Revenue 190,000

Sales Returns 20,000

Compute James' inventory turnover ratio.

In analyzing company operations, the controller of the Jason Corporation found a $250,000 favorable flexible budget revenue variance. The variance was calculated by comparing the actual results with the flexible budget. This variance can be wholly explained by

Select one:

a. the total flexible budget variance

b. the total static budget variance

c. changes in unit selling prices

d. changes in the number of units sold

Within which of the closing entry steps is it possible to have income summary recorded as either a debit or a credit in the closing entry?

Multiple Choice

• Step 1: Transfer Revenue Account Balances

• Step 2: Transfer Expense Account Balances

• Step 3: Transfer Net Income or Net Loss to Owner’s Equity

• Step 4: Transfer the Drawing Account Balance to Capital

Lexington hospital has the following departments: administration, housekeeping, marketing, medical/surgical unit, intensive care unit.

List each of three cost allocation methods, and use diagrams to describe each. Waht cost driver would you use to allocate costs for each of the non-revenue producing departments? Why did you choose each cost driver?