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

978-0078025754 Chapter 13 Solution Manual Part 3

March 26, 2020
Problem 13-2B (60 minutes)
Part 1
Current ratio: December 31, 2015: $54,860 / $22,370 = 2.5 to 1
Part 2
BLUEGRASS CORPORATION
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 ................................
54.77
51.91
Problem 13-2B (Concluded)
Part 3
BLUEGRASS CORPORATION
Balance Sheet Data in Trend Percents
December 31, 2015, 2014, and 2013
2015
2014
2013
Assets
Current assets ............................................
151.13%
89.97%
100.00%
Long-term investments .............................
0.00
16.04
100.00
Part 4
Significant relations revealed
Bluegrass's cost of goods sold took a larger percent of sales each year.
Selling and administrative expenses and income taxes took a somewhat
Problem 13-3B (60 minutes)
Trans-
action
Current
Assets
Quick
Assets
Current
Liabilities
Current
Ratio
Acid-Test
Ratio
Working
Capital
Beginning*
$300,000
$168,000
$120,000
2.50
1.40
$180,000
June 1
+120,000
+120,000
- 75,000
_______
________
____
____
_______
Bal.
345,000
288,000
120,000
2.88
2.40
225,000
June 3
+ 88,000
+ 88,000
- 88,000
- 88,000
________
____
____
_______
Bal.
345,000
288,000
120,000
2.88
2.40
225,000
June 5
+150,000
________
+150,000
____
____
_______
Bal.
495,000
288,000
270,000
1.83
1.07
225,000
Problem 13-4B (50 minutes)
1. Current ratio
2. Acid-test ratio
3. Days' sales uncollected
4. Inventory turnover
5. Days’ sales in inventory
6. Debt-to-equity ratio
7. Times interest earned
8. Profit margin ratio
Problem 13-4B (Concluded)
9. Total asset turnover
10. Return on total assets
11. Return on common stockholders' equity
Problem 13-5B (60 minutes)
Part 1
Fargo Company
Ball Company
c. Accounts (and notes) receivable turnover
d. Inventory turnover
e. Days’ sales in inventory
f. Days' sales uncollected
Problem 13-5B (Concluded)
Part 2
Fargo Company
Ball 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: Ball’s profit margin, total asset turnover, return on total
Problem 13-6BA (60 minutes)
Part 1 Effect of income taxes (debits or losses in parentheses)
Pretax
25% Tax
Effect
After-Tax
e. Loss on hurricane damage ......................................................
(64,000)
(16,000)
(48,000)
Part 2 Income from continuing operations (and its components)
c.
Net sales ................................................................
$2,640,000
b.
Interest revenue .............................................................
20,000
j.
Gain from settling lawsuit .............................................
68,000
Total revenues and gains .............................................
2,728,000
Problem 13-6BA (Concluded)
Part 3 Income from discontinued segment
Part 4 Income before extraordinary items
Part 5 Net income

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