Problem 13-2A (Concluded)
Part 3
KORBIN COMPANY
Balance Sheet Data in Trend Percents
December 31, 2016, 2015, and 2014
2016
2015
2014
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 2015 than 2014. However, cost of goods sold and
administrative expenses consumed a larger portion in 2015. 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 8
+110,000
+110,000
_______
_______
____
____
_______
Bal.
805,000
418,000
330,000
2.44
1.27
475,000
May 10
+ 20,000
+ 20,000
_______
____
____
_______
Bal.
805,000
418,000
330,000
2.44
1.27
475,000
May 15
____
____
_______
May 17
+0
+0
_______
____
____
_______
Bal.
783,000
396,000
308,000
2.54
1.29
475,000
May 22
_______
+ 50,000
____
____
_______
Bal.
2.19
1.11
May 26
____
____
_______
Bal.
2.38
1.12
Bal.
2.04
1.09
May 28
+ 80,000
+ 80,000
____
____
_______
Bal.
2.24
1.29
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
Problem 13-4A (Concluded)
9. Total asset turnover
10. Return on total assets
Problem 13-5A (60 minutes)
Part 1
Fender Company
Gibson 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 13–5A (Concluded)
Part 2
Fender Company
Gibson 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: Gibson’s profit margin ratio, total asset turnover, return
$880,200
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)
(16,000)
(4,800)
Part 2 Income from continuing operations (and its components)
k.
Net sales …………………………………………………………
$ 998,000
Depreciation expense—Equipment ………………….
c.
Total expenses ………………………………………………..
Problem 13–6AA (Concluded)
Part 3 Income from discontinued segment
i.
Loss from operating a discontinued
Part 4 Net income
PROBLEM SET B
Problem 13-1B (120 minutes)
Part 1
TRIPOLY COMPANY
Income Statement Trends
For Years Ended December 31, 2016-2010
2016
2015
2014
2013
2012
2011
2010
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
Gross profit ……………………..
59.2
66.7
70.0
76.3
83.3
87.5
100.0
Operating expenses …………
56.0
69.3
74.7
84.0
93.3
96.0
100.0
TRIPOLY COMPANY
Balance Sheet Trends
December 31, 2016-2010
2016
2015
2014
2013
2012
2011
2010
Cash ………………………………
64.7%
67.6%
76.5%
79.4%
88.2%
91.2%
100.0%
Accounts recble., net ……….
Merchandise inventory ……..
Other current assets …………
Plant assets, net ………………
Total assets ……………………..
Current liabilities ……………..
Common stock …………………
Other paid-in capital …………
Retained earnings…………….
Problem 13-1B (Concluded)
Part 2
Analysis and Interpretation
• The statements and the trend percent data show that sales declined
Problem 13-2B (60 minutes)
Part 1
Part 2
BLUEGRASS CORPORATION
Common-Size Comparative Income Statements
For Years Ended December 31, 2016, 2015, and 2014
2016
2015
2014
Sales ……………………………………………………
100.00%
100.00%
100.00%
Cost of goods sold …………………………..
54.77
51.91
46.04
45.23
48.09
53.96
19.84
20.72
23.44
3.04
3.56
3.69
Problem 13-2B (Concluded)
Part 3
BLUEGRASS CORPORATION
Balance Sheet Data in Trend Percents
December 31, 2016, 2015, and 2014
2016
2015
2014
Assets
Current assets ……………………………………..
151.13%
89.97%
100.00%
Part 4
Notable 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
____
____
_______
June 3
____
____
_______
June 5
+150,000
____
____
_______
June 7
+100,000
+100,000
____
____
_______
June 10
+120,000
+120,000
_______
____
____
_______
June 12
– 275,000
– 275,000
____
____
_______
June 15
____
____
_______
Bal.
0.98
0.52
June 19
____
____
_______
Bal.
June 22
____
____
_______
Bal.
0.98
0.50
June 30
____
____
_______
Bal.
$348,000
$141,000
$358,000
0.97
0.39
Problem 13-4B (50 minutes)
1. Current ratio
4. Inventory turnover
5. Days’ sales in inventory
6. Debt–to-equity ratio
$6,100 + $6,900 + $12,100 + $3,000 + $13,500 + $2,000