Name Date Class
17-M MASTERY PROBLEM (LO1, 2, 3, 4, 5, 6, 7, 8), p. 542
Analyzing financial statements
1.
Current Year Prior Year
Amount Percent Amount Percent
Net Sales 838 9 4 1 16 774 8 2 7 66
Cost of Merchandise Sold 391 4 9 1 71 366 6 0 8 74
Gross Profit 447 4 4 9 45 408 2 1 8 92
Operating Expenses:
Depreciation Expense 24 6 0 0 00 22 5 6 0 00
Office Expense 10 4 9 1 18 9 7 4 2 49
Aqua Products, Inc.
Comparative Income Statement
For Years Ended December 31, 20— and 20–
100.0 100.0
46.7 47.3
53.3 52.7
2.9 2.9
1.3 1.3
17-M MASTERY PROBLEM (continued)
Current Year Prior Year
Amount Percent Amount Percent
ASSETS
Current Assets:
Cash 23 9 0 5 98 8 0 2 9 57
Accounts Receivable (net) 18 1 4 2 15 17 9 1 5 63
Merchandise Inventory 98 1 4 2 36 82 1 9 4 38
Other Current Assets 9 1 4 8 25 8 1 4 3 37
Total Current Assets 149 3 3 8 74 116 2 8 2 95
Plant Assets:
LIABILITIES
Current Liabilities:
Accounts Payable 14 1 8 9 10 26 4 9 1 11
Dividends Payable 2 0 0 0 00 1 8 0 0 00
Aqua Products, Inc.
Comparative Balance Sheet
December 31, 20— and 20–
11.0 4.1
8.3 9.2
45.1 42.1
4.2 4.2
68.7 59.5
6.5 13.6
0.9 0.9
Chapter 17 Financial Statement Analysis • 521
Name Date Class
17-M MASTERY PROBLEM (continued)
2.
Current
Year
Prior
Year
Increase (Decrease)
Amount Percent
Net Sales 838 9 4 1 16 774 8 2 7 66
Cost of Merchandise Sold 391 4 9 1 71 366 6 0 8 74
Gross Profit 447 4 4 9 45 408 2 1 8 92
Operating Expenses:
Depreciation Expense 24 6 0 0 00 22 5 6 0 00
Office Expense 10 4 9 1 18 9 7 4 2 49
Aqua Products, Inc.
Comparative Income Statement
For Years Ended December 31, 20– and 20–
64 1 1 3 50 8.3
24 8 8 2 97 6.8
39 2 3 0 53 9.6
2 0 4 0 00 9.0
7 4 8 69 7.7
522 • Working Papers
17-M MASTERY PROBLEM (continued)
Current
Year
Prior
Year
Increase (Decrease)
Amount Percent
ASSETS
Current Assets:
Cash 23 9 0 5 98 8 0 2 9 57
Accounts Receivable (net) 18 1 4 2 15 17 9 1 5 63
Merchandise Inventory 98 1 4 2 36 82 1 9 4 38
Other Current Assets 9 1 4 8 25 8 1 4 3 37
Total Current Assets 149 3 3 8 74 116 2 8 2 95
LIABILITIES
Current Liabilities:
Accounts Payable 14 1 8 9 10 26 4 9 1 11
Dividends Payable 2 0 0 0 00 1 8 0 0 00
Other Current Liabilities 9 4 8 1 76 10 9 4 7 61
Total Liabilities 25 6 7 0 86 39 2 3 8 72
STOCKHOLDERS’ EQUITY
Aqua Products, Inc.
Comparative Balance Sheet
December 31, 20— and 20–
TE
15 8 7 6 41 197.7
2 2 6 52 1.3
15 9 4 7 98 19.4
1 0 0 4 88 12.3
33 0 5 5 79 28.4
(12 3 0 2 01) (46.4)
2 0 0 00 11.1
(1 4 6 5 85) (13.4)
(13 5 6 7 86) (34.6)
Chapter 17 Financial Statement Analysis • 523
Name Date Class
17-M MASTERY PROBLEM (concluded)
3.
4.
Current
Year
Prior
Year
Increase over
Prior Year
(Yes or No)
Evaluation
Earnings per share $1.23
Target Range
Actual Ratio Favorable
Result
Low High
Working capital $125,000.00 $145,000.00
Current ratio 4.50 5.00
Ratio Target Range Actual Ratio Favorable
Trend
Favorable
Result
Low High Current Year Prior Year
Gross margin 53.0% 54.0%
Total operating expenses 46.0% 48.0%
Operating margin 5.0% 8.0%
5.
53.3% 52.7% Yes Yes
48.7% 51.0% Yes No
4.6% 1.7% Yes No
$3.37 Yes EPS increased by 174.0% over the
prior year, a favorable trend.
$123,667.88 No
5.82 No
524 • Working Papers
17-C CHALLENGE PROBLEM (LO1, 3, 8), p. 542
Analyzing industry standards
A.
TE
Hardware stores
Reinforcement Activity 2, Part B • 525
Name Date Class
REINFORCEMENT ACTIVITY 2, Part B, p. 545
An Accounting Cycle for a Corporation: End-of-Fiscal-Period Work
11.
GENERAL JOURNAL PAGE 13
DATE ACCOUNT TITLE DOC.
NO.
POST.
REF. DEBIT CREDIT
1 1
2 2
7 7
12.
20–
Dec. 31 Notes Receivable NR7 1170 1 5 0 0 00
Accounts Receivable/Western Theaters 1130/160 1 5 0 0 00
Gulf Uniform Supply, Inc.
Schedule of Accounts Receivable
December 31, 20—
Batesville Manufacturing 7 0 9 9 83
Chandler City Schools 5 5 8 0 00
Hubbard Medical Clinic 2 9 6 4 80
526 • Working Papers
REINFORCEMENT ACTIVITY 2, Part B (continued)
13.
Gulf Uniform Supply, Inc.
Unadjusted Trial Balance
December 31, 20–
ACCOUNT TITLE DEBIT CREDIT
Cash
Petty Cash
Accounts Receivable
Allowance for Uncollectible Accounts
Interest Receivable
Office Equipment
Accumulated Depreciation—Office Equipment
Store Equipment
Accumulated Depreciation—Store Equipment
Accounts Payable
Sales Tax Payable
Employee Income Tax Payable
Social Security Tax Payable
Medicare Tax Payable
(Note: Unadjusted trial balance is continued on next page.)
TE
49 7 4 3 48
2 5 0 00
22 8 2 7 83
1 9 7 4 91
23 2 4 5 97
3 2 1 0 00
36 4 8 9 20
6 1 8 2 00
18 5 4 7 00
2 5 2 7 07
4 6 6 00
8 8 6 36
2 0 7 30
Name Date Class
REINFORCEMENT ACTIVITY 2, Part B (continued)
Gulf Uniform Supply, Inc.
Unadjusted Trial Balance
December 31, 20–
ACCOUNT TITLE DEBIT CREDIT
Dividends
Income Summary
Sales
Advertising Expense
Cash Short and Over
Credit Card Fee Expense
Depreciation Expense—Office Equipment
Depreciation Expense—Store Equipment
Insurance Expense
Miscellaneous Expense
Payroll Taxes Expense
Rent Expense
Salary Expense
3 0 0 0 00
426 8 8 3 60
15 2 6 5 90
7 15
4 9 6 0 10
5 2 5 9 30
7 0 0 9 87
19 2 0 0 00
84 7 6 4 00
528 • Working Papers
REINFORCEMENT ACTIVITY 2, Part B (continued)
14.
Age Group Amount Percent Uncollectible
Current $13,232.18 2.0%
1–30 811.50 4.5%
31–60 1,470.75 10.0%
61–90 5,824.25 30.0%
Over 90 1,489.15 60.0%
14., 15., 16., 19.
GENERAL JOURNAL PAGE 14
DATE ACCOUNT TITLE DOC.
NO.
POST.
REF. DEBIT CREDIT
1 1
2 2
3 3
10 10
11 11
12 12
13 13
14 14
15 15
TE
$ 264.64
36.52
147.08
1,747.28
893.49
Adjusting Entries
20–
Dec. 31 Uncollectible Accounts Expense 6165 1 1 1 4 10
31 Insurance Expense 6130 12 0 0 0 00
Prepaid Insurance 1160 12 0 0 0 00
31 Interest Receivable 1175 3 4 00
Interest Income 7110 3 4 00
31 Depreciation Expense—Office Equipment 6120 5 4 6 0 00
Accumulated Depreciation—Office Equipment 1210 5 4 6 0 00
Name Date Class
REINFORCEMENT ACTIVITY 2, Part B (continued)
17., 20.
Reinforcement Activity 2, Part B • 529
Gulf Uniform Supply, Inc.
Adjusted Trial Balance
December 31, 20–
ACCOUNT TITLE DEBIT CREDIT
Cash
Petty Cash
Accounts Receivable
Office Equipment
Accumulated Depreciation—Office Equipment
Store Equipment
Accumulated Depreciation—Store Equipment
Accounts Payable
Sales Tax Payable
Employee Income Tax Payable
Social Security Tax Payable
(Note: Adjusted trial balance is continued on next page.)
49 7 4 3 48
2 5 0 00
22 8 2 7 83
23 2 4 5 97
8 6 7 0 00
36 4 8 9 20
13 1 6 2 00
18 5 4 7 00
2 5 2 7 07
4 6 6 00
8 8 6 36