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Problem 17-2A (Concluded)
Part 3
KORBIN COMPANY
Balance Sheet Data in Trend Percents
December 31, 2017, 2016, and 2015
2017
2016
2015
Assets
Current assets ..................................
101.24%
73.29%
100.00%
Part 4
Significant relations revealed
Korbin’s selling expenses and income taxes consumed smaller portions of
each sales dollar in 2016 than 2015. However, cost of goods sold and
administrative expenses consumed a larger portion in 2016. Therefore, income
Problem 17-3A (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.
783,000
396,000
308,000
2.54
1.29
475,000
May 22
_______
_______
+ 50,000
____
____
_______
Bal.
783,000
396,000
358,000
2.19
1.11
425,000
May 26
- 50,000
- 50,000
- 50,000
____
____
_______
Bal.
733,000
346,000
308,000
2.38
1.12
425,000
1019
Problem 17-4A (50 minutes)
1. Current ratio
2. Acid-test ratio
3. Days' sales uncollected
5. Days’ sales in inventory
7. Times interest earned
1020
Problem 17-4A (Concluded)
9. Total asset turnover
10. Return on total assets
11. Return on common stockholders' equity
1021
Problem 17-5A (60 minutes)
Part 1
Barco Company
Kyan Company
a. Current ratio
b. Acid-test ratio
c. Accounts receivable turnover
d. Inventory turnover
e. Days’ sales in inventory
f. Days' sales uncollected
Problem 17-5A (Concluded)
Part 2
Barco Company
Kyan Company
a. Profit margin ratio
b. Total asset turnover
d. Return on common stockholders' equity
1023
Problem 17-6AA (60 minutes)
Part 1
Effect of income taxes (debits or losses in parentheses)
Pretax
30% Tax
Effect
After-Tax
Part 2 Income from continuing operations (and its components)
k.
Net sales ..................................................................
$ 998,000
1024
Problem 17-6AA (Concluded)
Part 3 Income from discontinued segment
i.
Loss from operating a discontinued
Part 4 Net income
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 17
1025
PROBLEM SET B
Problem 17-1B (120 minutes)
Part 1
TRIPOLY COMPANY
Income Statement Trends
For Years Ended December 31, 2017-2011
2017
2016
2015
2014
2013
2012
2011
Sales .....................................
65.1%
70.9%
73.3%
79.1%
86.0%
89.5%
100.0%
TRIPOLY COMPANY
Balance Sheet Trends
December 31, 2017-2011
2017
2016
2015
2014
2013
2012
2011
Cash ....................................
64.7%
67.6%
76.5%
79.4%
88.2%
91.2%
100.0%
Problem 17-1B (Concluded)
Part 2
Analysis and Interpretation
• The statements and the trend percent data show that sales declined
1027
Problem 17-2B (60 minutes)
Part 1
Current ratio: December 31, 2017: $54,860 / $22,370 = 2.5 to 1
Part 2
BLUEGRASS CORPORATION
Common-Size Comparative Income Statements
For Years Ended December 31, 2017, 2016, and 2015
2017
2016
2015
Sales ............................................................
100.00%
100.00%
100.00%
1028
Problem 17-2B (Concluded)
Part 3
BLUEGRASS CORPORATION
Balance Sheet Data in Trend Percents
December 31, 2017, 2016, and 2015
2017
2016
2015
Assets
Current assets ............................................
151.13%
89.97%
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 17-3B (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
June 15
________
________
+ 80,000
____
____
_______
Bal.
440,000
233,000
450,000
0.98
0.52
(10,000)
1030
Problem 17-4B (50 minutes)
1. Current ratio
2. Acid-test ratio
3. Days' sales uncollected
5. Days’ sales in inventory
6. Debt-to-equity ratio
7. Times interest earned
8. Profit margin ratio
