QUESTION 2
The list of accounts and balances for Stewart Car Servicing Pty Ltd for the year ended 30 June 2015 is presented below.
|
ACCOUNT |
$ |
|
Accounts Payable |
8,000 |
|
Accumulated Depreciation - Building |
12,000 |
|
Bank Loan |
80,000 |
|
Building |
70,000 |
|
Capital |
20,000 |
|
Cash |
33,000 |
|
Cost of Sales |
30,000 |
|
Depreciation Expense |
4,000 |
|
Dividends |
2,000 |
|
Inventory |
26,000 |
|
Land |
80,000 |
|
Other Expenses |
18,000 |
|
Rent Revenue |
30,000 |
|
Rent Revenue Received in Advance |
2,000 |
|
Retained Earnings 1/7/2014 |
74,000 |
|
Salaries Expense |
25,000 |
|
Sales Revenue |
62,000 |
Required:
Prepare a Statement of Profit or Loss for the year.
Prepare a Calculation of Retained Earnings for the year.
Prepare a classified Statement of Financial Position for the year.
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Stewart Car Servicing Pty Ltd Statement of Profit or Loss for the year ended 30 June 2015 |
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$ |
$ |
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Revenues: |
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Expenses: |
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Stewart Car Servicing Pty Ltd Calculation of Retained Earnings for the year ended 30 June 2015 |
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|
$ |
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Stewart Car Servicing Pty Ltd |
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Statement of Financial Position |
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as at 30 June 2015 |
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$ |
$ |
$ |
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Current Assets: |
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Total Current Assets |
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Non-Current Assets: |
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Total Non-Current Assets |
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Total Assets |
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Current Liabilities: |
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Total Current Liabilities |
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Non-Current Liabilities |
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Total Non-Current Liabilities |
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Total Liabilities |
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Net Assets |
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Equity |
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Total Equity |
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(Total marks for Question 2 = 17 marks)
In: Accounting
Jim has recently opened a dry fruits wholesale company dedicated to the sale of peanuts, almonds and pistachios. During its first month of activity, the company has made the following transactions:
February 2: KG PRICE PER KG AMOUNT
Purchase of Pistachios: 2500 $12 $30,000
Purchase of Almonds 4000
$7 $28,000
Purchase of Peanuts 6000 $5 $30,000
February 3: KG PRICE PER KG AMOUNT
Purchase of Pistachios: 1500 $14 $21,000
Purchase of
Almonds: 2000 $8 $16,000
Purchas of
Peanuts: 2000 $6 $12,000
February 6: Sold to several clients:
KG PRICE PER KG AMOUNT
Pistachios: 2000 $22 $44,000
Almonds: 2500 $13 $32,500
Peanuts: 3000 $9 $27,000
February 6: Sold to Fruits Lovers Inc:
KG PRICE PER KG AMOUNT
Pistachios: 500 $22 $11,000
Almonds: 1000 $13 $13,000
Peanuts: 1500 $10 $15,000
February 12:
KG PRICE PER KG AMOUNT
Purchase of Pistachios: 1500 $16 $24,000
Purchase of Almonds: 2000 $10 $20,000
February 13: Sale of peanuts to peanuts lovers Inc...:
KG PRICE PER KG AMOUNT
3500 $10 $35,000
February 14: Purchase of Peanuts
KG PRICE PER KG AMOUNT
6000 $6 $36,000
February 19: Sold to several clients:
KG PRICE PER KG AMOUNT
PISTACHIOS: 1000 $23 $23,000
Almonds: 1500 $15 $22,500
Peanuts: 3000 $11 $33,000
February 25: Purchased from various suppliers:
KG PRICE PER KG AMOUNT
Pistachios: 1000 $15 $15,000
Almonds: 1000 $11 $11,000
Peanuts: 1000 $6 $6,000
Besides these transactions, the company has had the following expenses:
Salaries: $3650
Electricity bill: $360
Renting of equipment: $950
Rent of warehouse and office: $1.650
Miscellaneous: $1.250
Jim’s accountant recommended that he should use the average cost method in order to determine the cost of the inventory sold but he is not sure about the consequences it may have on his financial situation.
Relying on your accounting knowledge, Jim asks you the following questions:
1: Why in your opinion did Jim’s accountant recommend the average cost method and what difference is there with the three other methods? Explain the main characteristics of each method of valuation of the inventory and the consequences they may have on the valuation of the inventory and determination of the net income in case of price fluctuation. (20 points)
2: Prepare an Income statement of the company at the end of February using as method of valuation of the inventory the average cost method, FIFO and LIFO for each one of the products sold by Jim, and calculate the balance of the inventory at the end of the month. Explain the calculations. (40 points: 30 points for the calculation and 10 for explanations)
In: Accounting
1. What components of final expenditure (C, I, G, NX) if any, would the following transactions change? (provide numerical values for parts g and k)
a. A U.S. family buys a new refrigerator made in Illinois
b. A U.S. family buys a new refrigerator made in China
c. You buy a new house in Chicago
d. You buy a pizza from Dominos
e. California repaves U.S. highway one.
f. GM sells a car from its inventory of cars
g. You buy a house built in 2000. The house cost $120,000 in 2000, your purchase price is $200,000, of which $10,000 goes to a real estate agent as sales commission.
h. U.S. government spending for unemployment benefits increases because of increasing unemployment.
i. A parent pays $1,000 for daycare for their child.
j. Ben and Jerrys buy milk to make ice cream.
k. You buy $20 of yarn at a craft store. You use the yarn to make a sweater, which would cost $80 if sold at Target.
l. You pay rent for an apartment in a building that was built in 2002.
m. Fifth third bank lends a manufacturer $1,000,000.
n. The City of Chicago purchases new police cars
o. Wildfires destroy homes in California (do not count the cost of fighting the fires).
1. What components of final expenditure (C, I, G, NX) if any, would the following transactions change? (provide numerical values for parts g and k)
a. A U.S. family buys a new refrigerator made in Illinois
b. A U.S. family buys a new refrigerator made in China
c. You buy a new house in Chicago
d. You buy a pizza from Dominos
e. California repaves U.S. highway one.
f. GM sells a car from its inventory of cars
g. You buy a house built in 2000. The house cost $120,000 in 2000, your purchase price is $200,000, of which $10,000 goes to a real estate agent as sales commission.
h. U.S. government spending for unemployment benefits increases because of increasing unemployment.
i. A parent pays $1,000 for daycare for their child.
j. Ben and Jerrys buy milk to make ice cream.
k. You buy $20 of yarn at a craft store. You use the yarn to make a sweater, which would cost $80 if sold at Target.
l. You pay rent for an apartment in a building that was built in 2002.
m. Fifth third bank lends a manufacturer $1,000,000.
n. The City of Chicago purchases new police cars
o. Wildfires destroy homes in California (do not count the cost of fighting the fires).
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In: Economics
Income Statement for Fiscal Years Endings
(in Millions, except per share amounts)
|
Report Date |
06/30/2019 |
06/30/2018 |
06/30/2017 |
|
Net sales |
$67,684 |
$66,832 |
$65,058 |
|
Cost of products sold |
34,768 |
34,268 |
32,535 |
|
Gross profit |
$32,916 |
$32,564 |
$32,523 |
|
Selling, general & administrative expense |
19,084 |
18,853 |
18,568 |
|
Goodwill & indefinite lived intangible asset impairment charges |
8,345 |
0.00 |
0.00 |
|
Operating income |
$5,487 |
$13,711 |
$13,955 |
|
Interest expense |
509 |
506 |
465 |
|
Interest income |
220 |
247 |
171 |
|
Other non-operating income (expense), net |
871 |
-126 |
-404 |
|
Earnings from continuing operations before income taxes |
$6,069 |
$13,326 |
$13,257 |
|
Income taxes expense on continuing operations |
2,103 |
3,465 |
3,063 |
|
Net earnings from continuing operations |
$3,966 |
$9,861 |
$10,194 |
|
Net earnings (loss) from discontinued operations |
0.00 |
0.00 |
5,217 |
|
Net income (loss) |
$3,966 |
$9,861 |
$15,411 |
|
Less: net earnings attributable to noncontrolling interests |
-69 |
-111 |
-85 |
|
Net earnings attributable to Procter & Gamble Co. |
$3,897 |
$9,750 |
$15,326 |
|
Earning per share information: |
|||
|
Earnings (loss) per share from continuing operations - basic |
$1.45 |
$3.75 |
$3.79 |
|
Earnings (loss) per share from discontinued operations - basic |
0.00 |
0.00 |
2.01 |
|
Net earnings (loss) per share - basic |
$1.45 |
$3.75 |
$5.80 |
|
Earnings (loss) per share from continuing operations - diluted |
$1.43 |
$3.67 |
$3.69 |
|
Earnings (loss) per share from discontinued operations - diluted |
0.00 |
0.00 |
1.90 |
|
Net earnings (loss) per share - diluted |
$1.43 |
$3.67 |
$5.59 |
|
Other Key Metrics |
|||
|
Dividends per common share |
$2.90 |
$2.79 |
$2.70 |
|
Total number of employees |
97,000 |
92,000 |
95,000 |
Vertical Analysis for Fiscal Years Endings
(in Millions, except per share amounts)
|
For Fiscal Years Ending |
Percentages of Annual Revenue |
|||||
|
Report Date |
06/30/2019 |
06/30/2018 |
06/30/2017 |
06/30/2019 |
06/30/2018 |
06/30/2017 |
|
Net sales |
$67,684 |
$66,832 |
$65,058 |
100.00% |
100.00% |
100.00% |
|
Cost of products sold |
34,768 |
34,268 |
32,535 |
51.37% |
51.27% |
50.01% |
|
Gross profit |
$32,916 |
$32,564 |
$32,523 |
48.63% |
48.73% |
49.99% |
|
Selling, general & administrative expense |
19,084 |
18,853 |
18,568 |
28.20% |
28.21% |
28.54% |
|
Goodwill & indefinite lived intangible asset impairment charges |
8,345 |
0.00 |
0.00 |
12.33% |
0.00% |
0.00% |
|
Operating income |
$5,487 |
$13,711 |
$13,955 |
8.11% |
20.52% |
21.45% |
|
Interest expense |
509 |
506 |
465 |
0.75% |
0.76% |
0.71% |
|
Interest income |
220 |
247 |
171 |
0.33% |
0.37% |
0.26% |
|
Other non-operating income (expense), net |
871 |
-126 |
-404 |
1.29% |
-0.19% |
-0.62% |
|
Earnings from continuing operations before income taxes |
$6,069 |
$13,326 |
$13,257 |
8.97% |
19.94% |
20.38% |
|
Income taxes expense on continuing operations |
2,103 |
3,465 |
3,063 |
3.11% |
5.18% |
4.71% |
|
Net earnings from continuing operations |
$3,966 |
$9,861 |
$10,194 |
5.86% |
14.75% |
15.67% |
|
Net earnings (loss) from discontinued operations |
0.00 |
0.00 |
5,217 |
0.00% |
0.00% |
8.02% |
|
Net income (loss) |
$3,966 |
$9,861 |
$15,411 |
5.86% |
14.75% |
23.69% |
|
Less: net earnings attributable to noncontrolling interests |
-69 |
-111 |
-85 |
-0.10% |
-0.17% |
-0.13% |
|
Net earnings attributable to Procter & Gamble Co. |
$3,897 |
$9,750 |
$15,326 |
5.76% |
14.59% |
23.56% |
briefly summarize your observations about changes, i.e. financial trends, in the following Income Statement line items for the Vertical Analysis:
In: Accounting
Porter Industries Inc. began 2018 with total stockholders’ equity of $40 million. Due to a large acquisition of treasury stock and the payment of a $10 million cash dividend, the company ended that year with stockholders’ equity of only $5 million. For the year ended December 31, 2018, Porter reported net income of $10 million. What is the company's return on equity?
10%
2.25%
44.4%
Not enough information to determine
In: Accounting