1 the following are loziers 2010 and 2011 balance sheets

Assignment Help Financial Accounting

Reference no: EM13376785

1. The following are Lozier's 2010 and 2011 balance sheets and income statements for the years ended December 31, 2010 and December 31, 2011, respectively.

	2010	2011
Cash	$ 200,000	$ 325,000
Accounts Receivable	400,000	450,000
Inventory	400,000	325,000
Intangible Assets	60,000	54,000
Total Assets	$1,060,000	$1,154,000

Accounts Payable	$ 396,000	$ 420,000
Short-term Notes Payable	100,000	100,000
Common Stock	3,000	3,000
Retained Earnings	564,000	636,000
Total Liabilities and Owner's Equity	$1,063,000	$1,159,000

	2010	2011
Sales Revenue	$ 945,000	$1,190,000
Cost of Goods Sold	(400,000)	(500,000)
Advertising Expense	(20,000)	(25,000)
Office Supplies Expense	(10,000)	(13,000)
Interest Expense	(5,000)	(5,000)
Net Income	$ 510,000	$ 647,000

Required:

Using an Excel spreadsheet, calculate the following ratios for 2010 and 2011:

1. Quick ratio

2. Accounts receivable turnover ratio

3. Average age of receivables. Assume a 360-day calendar year.

4. Inventory turnover ratio.

5. Calculate the average age of Lozier's inventory for 2010 and 2011. Assume a 360-day calendar year.

6. Given your calculations in parts 1-5, what conclusions might you draw about Lozier's business operations?

3. On January 1, 2010, LoCoco Corporation purchased a new assembly line for $100,000 cash and a $200,000, 10%, 5-year note payable. The assembly line has an estimated salvage value of $20,000 and an estimated useful life of 14 years.

Required:

1. Prepare a journal entry to record the acquisition of the assembly line.

2. Assume that LoCoco depreciates its assets using the straight-line method.

a. Compute depreciation expense for 2010 and 2011. Prepare a journal entry to record 2011 depreciation expense.

b. Compute accumulated depreciation at the end of 2010 and 2011.

c. Compute the assembly line's book value at the end of 2010 and 2011.

Pullam's weekly 5-day payroll includes the following:

Gross Pay $28,000

Less: Payroll Deductions

FICA Taxes $2,200

Federal Income Tax Withholdings 2,000

State Income Tax Withholdings 1,800

Health Insurance Premiums 1,000 (7,000)

Net Payroll $21,000

Prepare the necessary journal entries for the payroll paid on Friday, December 27, 2011.

Ratio Analysis

The following are Brenham Corporation's 2010 and 2011 balance sheets and income statements.

	2010	2011
Cash	$120,000	$140,000
Accounts Receivable	190,000	215,000
Inventory	240,000	260,000
Buildings and Equipment	275,000	250,000
Intangible Assets	75,000	67,500
Total Assets	$900,000	$932,500

Accounts Payable	$400,000	$420,000
Bonds Payable (Long-Term)	200,000	125,000
Common Stock	30,000	30,000
Additional Paid-In Capital	175,000	175,000
Retained Earnings	95,000	182,500
Total Liabilities and Stockholders' Equity	$900,000	$932,500

	2010	2011
Sales	$1,000,000	$1,200,000
Cost of Goods Sold	(600,000)	(784,000)
Gross Profit	$400,000	$416,000
Advertising Expense	(25,000)	(65,000)
Depreciation Expense	(40,000)	(51,040)
Office Supplies Expense	(20,000)	(22,500)
Interest Expense	(40,000)	(30,000)
Provision for Income Tax Expense	(189,000)	(159,960)
Net Income	$86,000	$87,500

(a) Calculate Brenham's current ratio at Dec 31, 2010 and Dec 31, 2011.

(b) Calculate Brenham's working capital at Dec 31, 2010 and Dec 31, 2011.

Reference no: EM13376785

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