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General Instructions
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
P2-3A
The following balance sheet items, listed in alphabetical order, are available from the records of Singer
Compnay at December 31, 2016:
Accounts payable 34,280$
Accounts receivable 26,700
Accumulated depreciation—buildings 40,000
Accumulated depreciation—equipment 12,500
Bonds payable, due December 31, 2022 250,000
Buildings 150,000
Required
1. Prepare a classified balance sheet as of December 31, 2016
Note: List assets and liabilities in the order of liquidity
SINGER COMPANY
BALANCE SHEET
DECEMBER 31, 2016
Office supplies 400
Total current assets 219,390$
Property, plant, and equipment:
Land 250,000$
Patents 45,000
Total assets 696,390$
Liabilities
Current liabilities:
Accounts payable 34,280$
Income taxes payable 7,500
Stockholders’ Equity
Contributed capital:
Capital stock, $1 par value, 200,000
shares issued and outstanding 200,000$
2. Compute Singer’s current ratio.
(Round answers to 2 decimal places)
Current Ratio 219,390$ =3.79
57,880$
3. On the basis of your answer to (2), does Singer appear to be liquid?
What other information do you need to fully answer that question?
General Instructions
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
P2-11A
2016 2015
Sales 1,700,000$ 1,500,000$
Cost of sales 612,000$ 450,000$
Required
1. Identify each income statement as either single-step or multiple-step format.
The income statements for both years are in single-step form.
2. Restate each item in the income statements as a percentage of sales.
Why did net income remain unchanged when sales increased in 2016?
2016 2015
Sales 100.0% 100.0%
Cost of sales 36.0% 30.0%
Sales salaries 25.1% 26.5%
The following income statements were provided by Chisholm Company, a wholesale food distributor:
Restating each item on the income statement as a percentage of sales allows the reader to better
understand how successful a business was in controlling costs. For example, Chisholm Company
General Instructions
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
P2-11
Sales 1,700,000$ Sales 1,500,000$
Cost of sales 520,000 Cost of sales 450,000$
Gross profit 1,180,000$ Sales salaries 398,000
Required
Sales 1,500,000$
GLEESON COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2015
The following income statements were provided by Gleeson Company, a retailer:
2016 Income Statement
2015 Income Statement
1. Identify each income statement as either single- or multiple-step format.
The income statement for 2015 is in single-step format, and the 2016 statement uses the multiple-step format.
2. Convert the 2015 income statement to the same format as the 2016 income statement.
General Instructions
1. The following worksheet may be used to complete the exercise/problem.
You may need to refer to your textbook for additional information.
P2-12
Quarterly dividends paid per share 0.50$
Increase in sales volume each month 5%
Cost of sales 40%
Inventory levels maintained at 75,000$
Monthly operating expenses paid 3,000$
*Note receivable represents a one-year, 5% interest-bearing note due November 1, 2015.
Interest rate on note receivable 5%
Balance Sheet
September 30, 2017
Franklin Co.
Franklin Co., a specialty retailer, has a history of paying quarterly dividends of $0.50 per
share. Management is trying to determine whether the company will have adequate cash
on December 31, 2017, to pay a dividend if one is declared by the board of directors.
The following additional information is available:
**Mortgage note is a 30-year, 7% note due in monthly installments of $1,200.
Interest rate on note payable 7%
Monthly installments toward note 1,200$
Required
Cash available to pay a dividend on December 31, 2017:
Cash balance, September 30, 2017 5,000$
Accounts receivable collections 39,406
Note receivable due on November 1 10,000
Interest due on November 1 500
Note: Because inventory levels are maintained at $75,000, purchases are equal to 40% of sales each month.
What can Franklin’s management do to increase the cash available?
Should management recommend that the board of directors declare a dividend? Explain.
• Reduce inventory levels.
• Speed up the collection of receivables.
• Lengthen the average amount of time taken to pay for purchases of inventory.
• Reduce operating expenses.
