Income Statement Preparation
Watson Corporation has several subsidiaries and the accounts below reflect their combined amounts before income taxes and excluding the amounts noted. Watson Corporation's capital structure consists of 20,000 shares of common stock. At December 31, 2018, an analysis of the accounts and discussions with company officials revealed the following information:
|
Sales |
1,375,000 |
|
Purchases |
820,000 |
|
Purchase Discounts |
5,000 |
|
Purchase Returns |
15,000 |
|
Freight in |
11,000 |
|
Freight Out |
8,000 |
|
Hurricane Loss |
22,000 |
|
Selling Expenses |
110,000 |
|
Bad Debt Expense |
12,000 |
|
Cash |
60,000 |
|
Accounts Receivable |
90,000 |
|
Common Stock |
200,000 |
|
Preferred Stock |
100,000 |
|
Accumulated Depreciation |
180,000 |
|
Dividend Revenue |
8,000 |
|
Inventory, January 1, 2018 |
170,000 |
|
Inventory, December 31, 2018 |
182,000 |
|
Unearned Service Fees |
4,400 |
|
Loss on restructuring of finance division |
50,000 |
|
Gain on sale of equipment |
19,000 |
|
Accrued Interest Payable |
1,000 |
|
Land |
370,000 |
|
Patents |
100,000 |
|
Gain on Sale of Investments |
23,000 |
|
General and Administrative expenses |
150,000 |
|
Depreciation Expense |
50,000 |
|
Retained Earnings, January 2018 |
270,000 |
|
Interest Expense |
7,000 |
|
Allowance for doubtful accounts |
5,000 |
|
Dividends Declared |
51,000 |
|
Allowance for doubtful accounts |
5,000 |
|
Notes Payable |
200,000 |
|
Machinery and Equipment |
450,000 |
|
Materials and supplies Inventory |
40,000 |
|
Accounts Payable |
60,000 |
Excluded from the above numbers are the operations of the Art Department which the company decided to discontinue on November 1st. The information on the 2018 operations of the Art Department are presented below:
|
2018 Operations |
|
|
Sales |
170,000 |
|
Cost of Goods Sold |
79,000 |
|
Selling Expenses |
34,000 |
|
General and Administrative Expenses |
20,000 |
|
Loss on asset Sales after measurement date |
10,000 |
The net realizable value of the remaining Art Department assets is $15,000 less than their net book value.
A 30% tax rate applies to all items.
Prepare a multiple step income statement
In: Accounting
| recent financial statements for Smolira Golf Corp. follow. |
| SMOLIRA GOLF CORP. 2017 and 2018 Balance Sheets |
||||||||||||||||
| Assets | Liabilities and Owners’ Equity | |||||||||||||||
| 2017 | 2018 | 2017 | 2018 | |||||||||||||
| Current assets | Current liabilities | |||||||||||||||
| Cash | $ | 24,236 | $ | 26,000 | Accounts payable | $ | 25,084 | $ | 29,000 | |||||||
| Accounts receivable | 14,348 | 17,100 | Notes payable | 19,000 | 12,700 | |||||||||||
| Inventory | 27,892 | 29,000 | Other | 13,471 | 18,300 | |||||||||||
| Total | $ | 66,476 | $ | 72,100 | Total | $ | 57,555 | $ | 60,000 | |||||||
| Long-term debt | $ | 88,000 | $ | 87,698 | ||||||||||||
| Owners’ equity | ||||||||||||||||
| Common stock and paid-in surplus | $ | 45,000 | $ | 45,000 | ||||||||||||
| Accumulated retained earnings | 219,616 | 244,302 | ||||||||||||||
| Fixed assets | ||||||||||||||||
| Net plant and equipment | $ | 343,695 | $ | 364,900 | Total | $ | 264,616 | $ | 289,302 | |||||||
| Total assets | $ | 410,171 | $ | 437,000 | Total liabilities and owners’ equity | $ | 410,171 | $ | 437,000 | |||||||
| SMOLIRA GOLF CORP. 2018 Income Statement |
|||||||
| Sales | $ | 392,640 | |||||
| Cost of goods sold | 257,000 | ||||||
| Depreciation | 48,800 | ||||||
| Earnings before interest and taxes | $ | 86,840 | |||||
| Interest paid | 16,200 | ||||||
| Taxable income | $ | 70,640 | |||||
| Taxes (24%) | 16,954 | ||||||
| Net income | $ | 53,686 | |||||
| Dividends | $ | 29,000 | |||||
| Retained earnings | 24,686 | ||||||
|
Find the following financial ratios for Smolira Golf Corp. (use year-end figures rather than average values where appropriate): (Enter your profitability ratio answers as a percent rounded to 2 decimal places, e.g., 32.16. Round the remaining answers to 2 decimal places, e.g., 32.16.) |
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In: Finance
Income statements and balance sheets data for Virtual Gaming Systems are provided below.
| VIRTUAL GAMING SYSTEMS Income Statements For the year ended December 31 |
||
| 2019 | 2018 | |
| Net sales | $3,555,000 | $3,081,000 |
| Cost of goods sold | 2,489,000 | 1,959,000 |
| Gross profit | 1,066,000 | 1,122,000 |
| Expenses: | ||
| Operating expenses | 964,000 | 867,000 |
| Depreciation expense | 39,000 | 31,500 |
| Loss on sale of land | 0 | 8,900 |
| Interest expense | 22,500 | 19,500 |
| Income tax expense | 8,900 | 52,500 |
| Total expenses | 1,034,400 | 979,400 |
| Net income | $ 31,600 | $ 142,600 |
| VIRTUAL GAMING SYSTEMS Balance Sheets December 31 |
|||
| 2019 | 2018 | 2017 | |
| Assets | |||
| Current assets: | |||
| Cash | $ 214,500 | $195,000 | $153,000 |
| Accounts receivable | 88,500 | 90,000 | 69,000 |
| Inventory | 138,500 | 114,000 | 144,000 |
| Prepaid rent | 14,900 | 12,900 | 7,080 |
| Long-term assets: | |||
| Investment in bonds | 114,000 | 114,000 | 0 |
| Land | 309,000 | 219,000 | 249,000 |
| Equipment | 309,000 | 279,000 | 219,000 |
| Less: Accumulated depreciation | (121,500) | (82,500) | (51,000) |
| Total assets | $1,066,900 | $941,400 | $790,080 |
| Liabilities and Stockholders' Equity | |||
| Current liabilities: | |||
| Accounts payable | $ 118,200 | $ 75,000 | $134,780 |
| Interest payable | 11,700 | 7,800 | 3,900 |
| Income tax payable | 12,900 | 19,500 | 14,900 |
| Long-term liabilities: | |||
| Notes payable | 490,000 | 294,000 | 234,000 |
| Stockholders' equity: | |||
| Common stock | 309,000 | 309,000 | 309,000 |
| Retained earnings | 125,100 | 236,100 | 93,500 |
| Total liabilities and stockholders’ equity | $1,066,900 | $941,400 | $790,080 |
Required:
1. Calculate the following risk ratios for 2018 and 2019: (Round your answers to 1 decimal place.)
2. Calculate the following profitability ratios for 2018 and 2019: (Round your answers to 1 decimal place.)
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In: Accounting
ackpot Mining Company
operates a copper mine in central Montana. The company paid
$1,550,000 in 2018 for the mining site and spent an additional
$710,000 to prepare the mine for extraction of the copper. After
the copper is extracted in approximately four years, the company is
required to restore the land to its original condition, including
repaving of roads and replacing a greenbelt. The company has
provided the following three cash flow possibilities for the
restoration costs (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD
of $1 and PVAD of $1) (Use appropriate factor(s) from the
tables provided.):
| Cash Outflow | Probability | |||
| 1 | $ | 410,000 | 25% | |
| 2 | 510,000 | 40% | ||
| 3 | 710,000 | 35% | ||
To aid extraction, Jackpot purchased some new equipment on July 1,
2018, for $249,000. After the copper is removed from this mine, the
equipment will be sold for an estimated residual amount of $27,000.
There will be no residual value for the copper mine. The
credit-adjusted risk-free rate of interest is 10%.
The company expects to extract 11.1 million pounds of copper from
the mine. Actual production was 2.7 million pounds in 2018 and 4.1
million pounds in 2019.
Required:
1. Compute depletion and depreciation on the mine
and mining equipment for 2018 and 2019. The units-of-production
method is used to calculate depreciation. (The expected
format for rounding is presented in the appropriate rows of the
table. Round your final answers to nearest whole
dollar.)
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In: Accounting
Based on the status quo population parameter value (Opportunity Amount USD 91637.26) and information (or lack thereof) regarding the population standard deviation, you will conduct a one tailed hypothesis test based on a level of significance of alpha=0.05. You will choose between a lower and upper tailed test based on your calculated sample mean: -If your sample mean is lower than the status quo population mean, you will be testing that it has decreased from the norm. -If your sample mean is higher than the status quo population mean, you will be testing that it has increased from the norm. Be sure to state the Null and Alternative Hypotheses, the Test Statistic, the Critical Value, and the Test Conclusion. Explain in words how the conclusion of the test could impact the business.
| Opportunity.Number | Supplies.Subgroup | Supplies.Group | Region | Elapsed.Days.In.Sales.Stage | Opportunity.Result | Sales.Stage.Change.Count | Total.Days.Identified.Through.Closing | Opportunity.Amount.USD | Client.Size.By.Revenue |
Deal.Size.Category |
| 6003579 | Replacement Parts | Car Accessories | Pacific | 36 | Won | 4 | 6 | 3000 | 4 | 1 |
| 6193895 | Motorcycle Parts | Performance & Non-auto | Pacific | 85 | Loss | 2 | 32 | 77507 | 1 | 4 |
| 6302462 | Shelters & RV | Performance & Non-auto | Pacific | 87 | Loss | 2 | 25 | 86808 | 2 | 4 |
| 6813830 | Batteries & Accessories | Car Accessories | Pacific | 65 | Loss | 4 | 26 | 355000 | 1 | 6 |
| 6824867 | Motorcycle Parts | Performance & Non-auto | Midwest | 43 | Won | 4 | 9 | 1600 | 4 | 1 |
| 6837544 | Batteries & Accessories | Car Accessories | Pacific | 35 | Loss | 5 | 55 | 117191 | 1 | 5 |
| 6892231 | Replacement Parts | Car Accessories | Northwest | 73 | Loss | 4 | 15 | 39156 | 1 | 3 |
| 6978782 | Shelters & RV | Performance & Non-auto | Midwest | 39 | Loss | 5 | 45 | 493000 | 2 | 6 |
| 7042696 | Replacement Parts | Car Accessories | Northwest | 61 | Loss | 3 | 22 | 52631 | 4 | 4 |
| 7101959 | Interior Accessories | Car Accessories | Northwest | 74 | Loss | 3 | 6 | 60240 | 1 | 4 |
| 7106427 | Batteries & Accessories | Car Accessories | Northwest | 16 | Loss | 2 | 64 | 174418 | 1 | 5 |
| 7220419 | Exterior Accessories | Car Accessories | Midwest | 67 | Loss | 3 | 7 | 350000 | 4 | 6 |
| 7227288 | Exterior Accessories | Car Accessories | Midwest | 74 | Loss | 2 | 1 | 25000 | 1 | 3 |
| 7227293 | Replacement Parts | Car Accessories | Northwest | 40 | Loss | 3 | 35 | 99000 | 1 | 4 |
| 7254613 | Shelters & RV | Performance & Non-auto | Pacific | 35 | Loss | 2 | 39 | 120000 | 3 | 5 |
| 7305209 | Exterior Accessories | Car Accessories | Pacific | 47 | Loss | 2 | 26 | 38753 | 1 | 3 |
| 7583892 | Replacement Parts | Car Accessories | Pacific | 54 | Won | 5 | 8 | 6165 | 1 | 1 |
| 7591583 | Batteries & Accessories | Car Accessories | Northwest | 16 | Loss | 2 | 45 | 5813 | 1 | 1 |
| 7657636 | Garage & Car Care | Car Accessories | Midwest | 52 | Won | 3 | 7 | 46203 | 1 | 3 |
| 7872502 | Interior Accessories | Car Accessories | Pacific | 45 | Loss | 2 | 5 | 3000 | 1 | 1 |
| 7892585 | Motorcycle Parts | Performance & Non-auto | Midwest | 16 | Loss | 3 | 33 | 50000 | 1 | 4 |
| 7897420 | Motorcycle Parts | Performance & Non-auto | Midwest | 8 | Won | 3 | 41 | 235000 | 1 | 5 |
| 7968158 | Shelters & RV | Performance & Non-auto | Pacific | 38 | Loss | 2 | 10 | 279026 | 1 | 6 |
| 8127740 | Towing & Hitches | Car Accessories | Northwest | 38 | Loss | 2 | 5 | 7228 | 1 | 1 |
| 8149161 | Motorcycle Parts | Performance & Non-auto | Midwest | 21 | Loss | 2 | 20 | 23312 | 1 | 2 |
| 8158105 | Motorcycle Parts | Performance & Non-auto | Midwest | 28 | Won | 4 | 13 | 160000 | 1 | 5 |
| 8327470 | Interior Accessories | Car Accessories | Midwest | 3 | Loss | 3 | 32 | 52000 | 1 | 4 |
| 8488548 | Replacement Parts | Car Accessories | Midwest | 7 | Loss | 4 | 22 | 50000 | 1 | 4 |
| 8536833 | Batteries & Accessories | Car Accessories | Midwest | 27 | Won | 1 | 0 | 10000 | 1 | 2 |
| 9560637 | Motorcycle Parts | Performance & Non-auto | Pacific | 8 | Won | 3 | 10 | 109 | 1 | 1 |
| 5661353 | Motorcycle Parts | Performance & Non-auto | Southeast | 85 | Loss | 4 | 54 | 179000 | 4 | 5 |
| 5977241 | Garage & Car Care | Car Accessories | Mid-Atlantic | 75 | Loss | 3 | 49 | 175000 | 3 | 5 |
| 6295684 | Garage & Car Care | Car Accessories | Mid-Atlantic | 82 | Loss | 3 | 30 | 150000 | 1 | 5 |
| 6910718 | Exterior Accessories | Car Accessories | Northeast | 79 | Loss | 2 | 9 | 50000 | 1 | 4 |
| 7154102 | Exterior Accessories | Car Accessories | Northeast | 58 | Loss | 5 | 20 | 200000 | 4 | 5 |
| 7349990 | Batteries & Accessories | Car Accessories | Northeast | 34 | Loss | 7 | 37 | 105000 | 1 | 5 |
| 7421525 | Motorcycle Parts | Performance & Non-auto | Mid-Atlantic | 58 | Loss | 3 | 2 | 50000 | 1 | 4 |
| 7902934 | Tires & Wheels | Tires & Wheels | Mid-Atlantic | 41 | Loss | 2 | 8 | 110000 | 1 | 5 |
| 7941247 | Replacement Parts | Car Accessories | Northeast | 45 | Won | 4 | 3 | 23000 | 1 | 2 |
| 7952814 | Exterior Accessories | Car Accessories | Northeast | 28 | Loss | 3 | 20 | 52000 | 1 | 4 |
| 8008934 | Garage & Car Care | Car Accessories | Southwest | 46 | Loss | 1 | 0 | 473900 | 1 | 6 |
| 8026399 | Batteries & Accessories | Car Accessories | Southeast | 27 | Loss | 2 | 18 | 340000 | 1 | 6 |
| 8101150 | Exterior Accessories | Car Accessories | Southeast | 16 | Loss | 4 | 27 | 30000 | 1 | 3 |
| 8149004 | Motorcycle Parts | Performance & Non-auto | Mid-Atlantic | 18 | Loss | 2 | 24 | 15000 | 1 | 2 |
| 8245200 | Exterior Accessories | Car Accessories | Northeast | 37 | Won | 3 | 2 | 209000 | 1 | 5 |
| 8249983 | Exterior Accessories | Car Accessories | Southeast | 10 | Loss | 7 | 24 | 50000 | 1 | 4 |
| 8550964 | Exterior Accessories | Car Accessories | Southeast | 5 | Loss | 5 | 22 | 150000 | 1 | 5 |
| 9600318 | Performance Parts | Performance & Non-auto | Mid-Atlantic | 5 | Loss | 5 | 12 | 120000 | 1 | 5 |
| 9643667 | Motorcycle Parts | Performance & Non-auto | Northeast | 16 | Won | 1 | 0 | 253 | 1 | 1 |
| 9794114 | Replacement Parts | Car Accessories | Southwest | 9 | Won | 2 | 2 | 420000 | 1 | 6 |
In: Statistics and Probability
Company A wishes to invest in 4 projects X, W, Y & Z whose net benefits are given in the table below.
|
Project |
Years |
||||
|
|
0 |
1 |
2 |
3 |
4 |
|
W |
(1000) |
1200 |
0 |
0 |
0 |
|
X |
(1361.1) |
500 |
500 |
500 |
500 |
|
Y |
(1000) |
1200 |
1500 |
0 |
0 |
|
Z |
(2000) |
1000 |
0 |
0 |
0 |
Using a discount rate of 10% appraise the 4 projects using the NPV criteria.
In: Economics
Assume that you construct a price weighted index of 30 stocks. The sum of the prices of these stocks is $2000. The divisor for this index is 30, and the value of this index is 100. Now assume that one of the 30 stocks, with an average price of $100, has a three-for-one stock split while the value of other stocks remains unchanged.
a) If you make no adjustments to the index, what will be the new value of the index?
b) What does the new divisor have to be to keep the value of the index unchanged at 100?
In: Finance
Assume that you construct a price weighted index of 30 stocks. The sum of the prices of these stocks is $2000. The divisor for this index is 30, and the value of this index is 100. Now assume that one of the 30 stocks, with an average price of $100, has a three-for-one stock split while the value of other stocks remains unchanged.
a) If you make no adjustments to the index, what will be the new value of the index?
b) What does the new divisor have to be to keep the value of the index unchanged at 100
In: Finance
All Clean is the only company selling all-in-one washer–dryer machines. The price of a machine is P, while Q is the quantity of machines sold per quarter. The following equations describe the market for All Clean's machines: Demand: P = 600 – 5Q ♦ Marginal Revenue: MR = 600 – 10Q Total Cost: TC = 2000 + 60Q + 2.5Q2 ♦ Marginal Cost: MC = 60 + 5Q _____________________________________________________ What is All Clean's profit at the profit-maximizing quantity?
In: Economics
Suppose that the closed economy of an island H is described by the following equations: GDP (Y) = 10000, government expenditures (G) = 600, Taxes (T) = 2000, Consumption (C) = 400 + 3/4 (Y-T), and investment (I) = 200 – 1400 r
a. Write and explain the equation of the GDP
b. Compute
1. Private saving
2. Public saving
3. National saving
4. Equilibrium interest rate
c. What can you conclude about the economy of Island H?
In: Economics