CHAPTER 13
SOLUTIONS TO EXERCISES—SET B
EXERCISE 13-1B
PLANO COMPANY
Partial Income Statement
For the Year Ended December 31, 2014
Income from continuing operations …………………………………. $400,000
Discontinued operations
EXERCISE 13-2B
ORTIZ CORPORATION
Partial Income Statement
For the Year Ended December 31, 2014
Income from continuing operations …………………………………. $250,000
Discontinued operations
Loss from operation of division,
EXERCISE 13-3B
VATTEN INC.
Condensed Balance Sheet
December 31
2014
2013
Amount
Percentage
Assets
Total assets
$440,000
(22.3%)
Current assets
$128,000
$ 80,000
($48,000
(60.0%)
Liabilities
Current liabilities
Long-term liabilities
Total liabilities
$ 91,000
144,000
$235,000
$ 65,000
90,000
$155,000
($26,000
54,000
$80,000
(40.0%)
(60.0%)
(51.6%)
Stockholders’ Equity
Total liabilities and
equity
$440,000
(22.3%)
Common stock, $1 par
138,000
115,000
23,000
(20.0%)
EXERCISE 13-4B
POISSON CORPORATION
Condensed Income Statement
For the Years Ended December 31
2014
2013
Amount
Percent
Amount
Percent
Net income
Sales revenue
Cost of goods sold
$800,000
532,000
100.0%
66.5%
$600,000
408,000
100.0%
68.0%
EXERCISE 13-5B
(a) NIKE INC.
Condensed Balance Sheet
May 31
($ in millions)
2014
2013
Increase
(Decrease)
Percentage
Change
from 2013
Assets
Current assets
Property, plant, and
$ 8,839
$ 8,076
$ 763
9.4%
EXERCISE 13-5B (Continued)
(b) NIKE INC.
Condensed Balance Sheet
May 31, 2014
$ (in millions)
Percent
Assets
Current assets
Property, plant, and equipment (net)
Other assets
$ 8,839
1,891
1,713
71.0%
15.2%
13.8%
EXERCISE 13-6B
(a) RICO CORPORATION
Condensed Income Statement
For the Years Ended December 31
Increase or (Decrease)
During 2014
2014
2013
Amount
Percentage
Operating expenses
Net income
Net sales
$572,000
$520,000
$52,000
10.0%
EXERCISE 13-6B (Continued)
(b) RICO CORPORATION
Condensed Income Statements
For the Years Ended December 31
2014
2013
$
Percent
$
Percent
Net income
Net sales
$572,000
100.0%
$520,000
100.0%
EXERCISE 13-7B
Current ratio = 2.39:1 ($5,054 ÷ $2,114)
Current cash debt coverage = .83 ($1,542 ÷ $1,857.5a)
EXERCISE 13-8B
Current ratio as of February 1, 2014 = 2.00:1 ($80,000 ÷ $40,000).
Feb. 3 2.00 No change in total current assets or liabilities.
7 1.43 ($57,000 ÷ $40,000).
14 1.61 ($45,000 ÷ $28,000).
EXERCISE 13-9B
(a) Current ratio =
$155,000
$50,000
= 3.1:1
(e) Days in inventory = 365 days ÷ 2.6 = 140.4 days
EXERCISE 13-10B
(a) Profit margin
$135.8
$5,410.8
= 2.5%
(c) Return on assets
$135.8
= 4.2%
(d)
Return on common
$135.8
= 12.1%
EXERCISE 13-11B
(a) Earnings per share
$92,000 – $5,000
=
$87,000
= $2.29
$2.29
EXERCISE 13-12B
(a) Inventory turnover = 4.0 =
Cost of goods sold
$200, 000 + $180, 000
(b) Accounts receivable turnover = 11.2 =
Net sales (credit)
$126, 000 + $72, 500
(c) Return on common stockholders’ equity = 20% =
Net income
$400, 000 + $113, 500 + $400, 000 + $101, 000
(d) Return on assets = 16% =
Net income
Average assets
=
$101,450 [see (c) above]
Average assets