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Part 3
SUCCESS SYSTEMS
Partial Work Sheet
March 31, 2014
Acct.
No. Account Title
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
101 Cash..................................77,845 77,845
106.1 Alex’s Engineering Co............ 0 0
106.2 Wildcat Services...................2,800 2,800
106.3 Easy Leasing.......................8,900 8,900
106.4 IMF Co...............................5,220 5,220
)
612 Depreciation expense–
Office equipment................ 0 (f) 400 400
613 Depreciation expense–
Computer equipment.......... 0 (e
)
1,25
0
1,250
Part 4
SUCCESS SYSTEMS
Income Statement
For Three Months Ended March 31, 2014
Revenues
Computer services revenue $25,160
Net sales* 18,693
Total revenues 43,853
Part 5
SUCCESS SYSTEMS
Statement of Owner’s Equity
For Three Months Ended March 31, 2014
A. Lopez, Capital, Dec. 31, 2013 $90,148
Plus: Investments by owner 25,000
Part 6
SUCCESS SYSTEMS
Balance Sheet
31-Mar-14
Assets
Current assets
Cash $77,845
Accounts receivable* 22,720
Merchandise inventory 704
Computer supplies 2,005
Liabilities
Equity
A. Lopez, Capital 129,034
Total liabilities and equity $129,909
Title: Reporting in Action 1
QA_Ori:
Compute cost of sales for 2011 as follows ($ thousands)
December 31, 2010 inventory $235,927
Title: Reporting in Action 2
QA_Ori:
2011 2010
($ thousands)
Current
Ratio
Acid-Test
Ratio
Current
Ratio
Acid-Test
Ratio
Current assets
Cash and equivalents................ $325,336 $325,336 $393,927 $393,927
Trade receivables, net................ 115,302 115,302 89,294 89,294
Ratio........................................ 1.43
1.20
1.38
1.23
Interpretation: The current ratio increased from 1.38 in 2010 to 1.43 in 2011.
The acid-test ratio decreased from 1.23 in 2010 to 1.20 in 2011. The
year-to-year comparison shows that Polaris’ liquidity position has slightly
Title: Reporting in Action 3
QA_Ori:
Solution depends on the financial statement data obtained.
Title: Comparative Analysis 1
QA_Ori:
Polaris Arctic Cat
($ thousands) Current Prior Current Prior
Net sales.................. $2,656,949 $1,991,139 $464,651 $450,728
Title: Comparative Analysis 2
QA_Ori:
In both years, Polaris’ gross margin ratio was higher than that for Arctic Cat.
Title: Comparative Analysis 3
QA_Ori:
Arctic Cat’s gross margin ratio improved from 18.5% to 21.8% and Polaris’
gross margin ratio improved from 26.6% to 27.9%.
Title: Ethics Challenge 1
QA_Ori:
A few students sometimes feel that Amy has devised a clever way to beat the
system. She appears to be succeeding in getting something for free.
However, most students fortunately feel that Amy is abusing the system and
Title: Ethics Challenge 2
QA_Ori:
The merchandising company accounts for sales returns using a contra
Also, if the item is returned to inventory (and it had cost $160), the following
entry is made:
Title: Communicating in Practice
QA_Ori:
Note: While responses will vary, the essence of its content follows:
TO: Mr. V. Velakturi
FROM:
DATE:
SUBJECT: Reply to inventory shrinkage question
You are correct in noting that Music Plus has lost inventory as a result of
We maintain a perpetual inventory system, which continuously updates inventory
account balances as goods are purchased, sold, and returned. At the end of
I hope this addresses your concern and that you are now confident that net
Title: Taking It to the Net
QA_Ori:
Fiscal Year ($ thousands) 2010 2011 2012
Net sales............................................$1,578,042 $1,722,227 $1,854,988
Analysis: J. Crew’s gross margin ratio declined from 44.1% in 2010 to 43.4% in
2011 to 40.0% in 2012. Its net sales increased in both 2011 and 2012, albeit with
a lower gross margin for both periods.
Title: Teamwork in Action 1
QA_Ori:
1.
a. Net sales computation
b. Total cost of merchandise purchases computation
Invoice cost of merchandise purchases.......................... $360,000
c. Cost of goods sold computation
Merchandise inventory, Beginning
$98,00
0
Total cost of merchandise purchased (from b) 362,000
Title: Teamwork in Action 2
QA_Ori:
Net income is $141,000.
Title: Teamwork in Action 3
QA_Ori:
The inventory account balance is $84,000. If actual (physical) inventory is
$76,000, an $8,000 loss from inventory shrinkage occurred. This would
Title: Entrepreneurial Decision 1
QA_Ori:
Faithful Fish
Forecasted Income Statement
For Year Ended January 31, 2013
Net sales ($1,000,000 x 1.09) $1,090,000
Title: Entrepreneurial Decision 2
QA_Ori:
The proposal yields a forecasted net income of $213,100. This compares
favorably to the prior year’s net income of $190,000. Accordingly, based on
these facts alone, the company should implement the proposal.
Title: Entrepreneurial Decision 3
QA_Ori:
There are many issues that should be considered. Among them are:
First, there is the issue of the prediction itself. That is, are estimates
Second, and related to the first, there is a need to consider “ranges” of
In addition to issues of confidence in prediction, one should also consider
that there may be speeding up of cash collections. Customers currently have 15
Currently, the company sends a signal to customers through terms of n/60
In sum, we must consider alternative possibilities, both good and bad, with
QA_Ori:
There is no formal solution for this field activity. As the discussion facilitator, the
Title: Global Decision 1
QA_Ori:
(in thousands) KTM Polaris Arctic Cat
Net sales............................................€526,801 $2,656,949 $464,651
Gross Margin % Rank
KTM.......................................... 29.4% 1
Title: Global Decision 1
QA_Ori:
KTM, Polaris, and Arctic Cat each use the multiple-step format for their
