2024 – Complete the following problem sets of Financial Accounting P2 6A P13 2A P2 6A Condensed balance sheet and
Accounting Problem – 2024
Complete the following problem sets of Financial Accounting: (P2-6A) & (P13-2A)
P2-6A
Condensed balance sheet and income statement data for Sadecki Corporation are presented here and on the next page.
Compute and interpret liquidity, solvency, and profitability ratios.
(LO 2, 4, 5), AP
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SADECKI CORPORATION Balance Sheets December 31 |
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Assets |
2014 |
2013 |
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Cash |
$ 28,000 |
$ 20,000 |
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Receivables (net) |
70,000 |
62,000 |
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Other current assets |
90,000 |
73,000 |
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Long-term investments |
62,000 |
60,000 |
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Property, plant, and equipment (net) |
510,000 |
470,000 |
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Total assets |
$760,000 |
$685,000 |
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Liabilities and Stockholders’ Equity |
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|
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Current liabilities |
$ 75,000 |
$ 70,000 |
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Long-term liabilities |
80,000 |
90,000 |
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Common stock |
330,000 |
300,000 |
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Retained earnings |
275,000 |
225,000 |
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Total liabilities and stockholders’ equity |
$760,000 |
$685,000 |
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SADECKI CORPORATION Income Statements For the Years Ended December 31 |
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2014 |
2013 |
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Sales revenue |
$750,000 |
$680,000 |
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Cost of goods sold |
440,000 |
400,000 |
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Operating expenses (including income taxes) |
240,000 |
220,000 |
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Net income |
$ 70,000 |
$ 60,000 |
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Additional information:
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Net cash provided by operating activities |
$82,000 |
$56,000 |
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Cash used for capital expenditures |
$45,000 |
$38,000 |
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Dividends paid |
$20,000 |
$15,000 |
|
Average number of shares outstanding |
33,000 |
30,000 |
Instructions
Compute these values and ratios for 2013 and 2014.
· (a) Earnings per share.
· (b) Working capital.
· (c) Current ratio.
· (d) Debt to assets ratio.
· (e) Free cash flow.
· (f) Based on the ratios calculated, discuss briefly the improvement or lack thereof in financial position and operating results from 2013 to 2014 of Sadecki Corporation.
P13-2A
The comparative statements of Osborne Company are presented here.
Compute ratios from balance sheets and income statements.
(LO 6), AP
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OSBORNE COMPANY Income Statements For the Years Ended December 31 |
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|
2014 |
2013 |
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Net sales |
$1,890,540 |
$1,750,500 |
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Cost of goods sold |
1,058,540 |
1,006,000 |
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Gross profit |
832,000 |
744,500 |
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Selling and administrative expenses |
500,000 |
479,000 |
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Income from operations |
332,000 |
265,500 |
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Other expenses and losses |
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|
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Interest expense |
22,000 |
20,000 |
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Income before income taxes |
310,000 |
245,500 |
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Income tax expense |
92,000 |
73,000 |
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Net income |
$ 218,000 |
$ 172,500 |
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OSBORNE COMPANY Balance Sheets December 31 |
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Assets |
2014 |
2013 |
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Current assets |
|
|
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Cash |
$ 60,100 |
$ 64,200 |
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Debt investments (short-term) |
74,000 |
50,000 |
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Accounts receivable |
117,800 |
102,800 |
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Inventory |
126,000 |
115,500 |
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Total current assets |
377,900 |
332,500 |
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Plant assets (net) |
649,000 |
520,300 |
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Total assets |
$1,026,900 |
$852,800 |
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Liabilities and Stockholders’ Equity |
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|
|
Current liabilities |
|
|
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Accounts payable |
$ 160,000 |
$145,400 |
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Income taxes payable |
43,500 |
42,000 |
|
Total current liabilities |
203,500 |
187,400 |
|
Bonds payable |
220,000 |
200,000 |
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Total liabilities |
423,500 |
387,400 |
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Stockholders’ equity |
|
|
|
Common stock ($5 par) |
290,000 |
300,000 |
|
Retained earnings |
313,400 |
165,400 |
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Total stockholders’ equity |
603,400 |
465,400 |
|
Total liabilities and stockholders’ equity |
$1,026,900 |
$852,800 |
All sales were on account. Net cash provided by operating activities for 2014 was $220,000. Capital expenditures were $136,000, and cash dividends were $70,000.
Instructions
Compute the following ratios for 2014.
· (a) Earnings per share.
· (b) Return on common stockholders’ equity.
· (c) Return on assets.
· (d) Current ratio.
· (e) Accounts receivable turnover.
· (f) Average collection period.
· (g) Inventory turnover.
· (h) Days in inventory.
· (i) Times interest earned.
· (j) Asset turnover.
· (k) Debt to assets.
· (l) Current cash debt coverage.
· (m) Cash debt coverage.
· (n) Free cash flow.
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