Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Chapter 13 Solution Manual Part 2

March 26, 2020
Exercise 13-14 (15 minutes)
RANDA MERCHANDISING, INC.
Income Statement
For Year Ended December 31, 2015
Net sales ..........................................................................
$2,900,000
Expenses
Cost of goods sold ......................................................
$1,480,000
Salaries expense .........................................................
640,000
Depreciation expense .................................................
232,500
Exercise 13-15 (15 minutes)
1. Current ratio = (in ¥s) ¥ 1,192,250 / ¥ 194,475 = 6.13
(in $s) $12,683,516 / $2,068,887 = 6.13
PROBLEM SET A
Problem 13-1A (120 minutes)
Part 1
2015
2014
2013
2012
2011
2010
2009
Sales .....................................
182.5%
161.2%
147.6%
136.2%
127.8%
119.6%
100.0%
2015
2014
2013
2012
2011
2010
2009
Cash ......................................
65.2%
87.6%
92.1%
94.4%
98.9%
96.6%
100.0%
Accounts recble., net ..........
226.9
238.0
215.7
166.7
147.2
139.8
100.0
Problem 13-1A (concluded)
Part 2
Analysis and Interpretation
The statements and the trend percent data indicate that the company
significantly expanded its plant assets in 2013. Prior to that time, the
Problem 13-2A (60 minutes)
Part 1
Part 2
KORBIN COMPANY
Common-Size Comparative Income Statements
For Years Ended December 31, 2015, 2014, and 2013
2015
2014
2013
Sales ............................................................
100.00%
100.00%
100.00%
Cost of goods sold ................................
51.08
62.50
55.36
Problem 13-2A (Concluded)
Part 3
KORBIN COMPANY
Balance Sheet Data in Trend Percents
December 31, 2015, 2014, and 2013
2015
2014
2013
Assets
Current assets ..................................
101.24%
73.29%
100.00%
Long-term investments ...................
0.00
12.66
100.00
Part 4
Significant relations revealed
Korbin’s selling expenses and income taxes consumed smaller portions of
each sales dollar in 2014 than 2013. However, cost of goods sold and
administrative expenses consumed a larger portion in 2014. Therefore, income
Problem 13-3A (60 minutes)
Trans-
action
Current
Assets
Quick
Assets
Current
Liabilities
Current
Ratio
Acid-Test
Ratio
Working
Capital
Beginning*
$700,000
$308,000
$280,000
2.50
1.10
$420,000
May 2
+ 50,000
_______
+ 50,000
____
____
_______
Bal.
750,000
308,000
330,000
2.27
0.93
420,000
May 8
+110,000
+110,000
- 55,000
_______
_______
____
____
_______
Problem 13-4A (50 minutes)
1. Current ratio
2. Acid-test ratio
4. Inventory turnover
5. Days’ sales in inventory
6. Debt-to-equity ratio
7. Times interest earned
8. Profit margin ratio
Problem 13-4A (Concluded)
9. Total asset turnover
10. Return on total assets
11. Return on common stockholders' equity
Problem 13-5A (60 minutes)
Part 1
Barco Company
Kyan Company
c. Accounts receivable turnover
d. Inventory turnover
e. Days’ sales in inventory
f. Days' sales uncollected
Short-term credit risk analysis: Barco and Kyan have essentially equal
Problem 13-5A (Concluded)
Part 2
Barco Company
Kyan Company
a. Profit margin ratio
b. Total asset turnover
c. Return on total assets
d. Return on common stockholders' equity
e. Price-earnings ratio
f. Dividend yield
Investment analysis: Kyan's profit margin ratio, total asset turnover, return on
Problem 13-6AA (60 minutes)
Part 1
Effect of income taxes (debits or losses in parentheses)
Pretax
30% Tax
Effect
After-Tax
i. Loss from operating a discontinued segment ..............
(18,250)
(5,475)
(12,775)
Part 2 Income from continuing operations (and its components)
k.
Net sales ..................................................................
$ 998,500
a.
Interest revenue ......................................................
14,000
g.
Gain from settling lawsuit ......................................
44,000
Total revenues and gains ......................................
1,056,500
Problem 13-6AA (Concluded)
Part 3 Income from discontinued segment
i.
Loss from operating a discontinued
segment (after-tax) ................................................................
$ (12,775)
Part 4 Income before extraordinary items
Part 5 Net income
Income before extraordinary items ............................................................
$243,425
j.
Extraordinary item
PROBLEM SET B
Problem 13-1B (120 minutes)
Part 1
TRIPOLY COMPANY
Income Statement Trends
For Years Ended December 31, 2015-2009
2015
2014
2013
2012
2011
2010
2009
Sales .....................................
65.1%
70.9%
73.3%
79.1%
86.0%
89.5%
100.0%
Cost of goods sold ..............
72.6
76.3
77.4
82.6
89.5
92.1
100.0
TRIPOLY COMPANY
Balance Sheet Trends
December 31, 2015-2009
2015
2014
2013
2012
2011
2010
2009
Cash ....................................
64.7%
67.6%
76.5%
79.4%
88.2%
91.2%
100.0%
Accounts recble., net ..........
81.3
85.0
87.5
90.0
93.8
96.3
100.0
Problem 13-1B (Concluded)
Part 2
Analysis and Interpretation
The statements and the trend percent data show that sales declined
every year. However, cost of goods sold did not fall as rapidly as sales.

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