Reference no: EM132577847
ACC1175 Financial Accounting II - Lethbridge College
The following are condensed financial statements of South Dakota Corporation for the three years ended December 31, 2017, 2018, 2019.
South Dakota Corporation
Comparative Balance Sheets (in the thousands)
December 31
| Current Assets |
2019 |
2018 |
2017 |
| Cash |
|
$ 24 |
|
$ 9 |
|
$ 20 |
| Accounts Receivable |
$ 46 |
|
$ 38 |
|
$ 24 |
|
| Less: Allowance for Doubtful Accounts |
1 |
45 |
2 |
36 |
0 |
24 |
| Inventory |
|
72 |
|
48 |
|
36 |
| Prepaid Expenses |
|
3 |
|
3 |
|
4 |
| Total Current Assets |
|
$ 144 |
|
$ 96 |
|
$ 84 |
| Capital Assets |
405 |
|
234 |
|
118 |
|
| Less: Accumulated Depreciation |
93 |
312 |
54 |
180 |
27 |
91 |
| Total Assets |
|
$ 456 |
|
$ 276 |
|
$ 175 |
| Current Liabilities |
|
|
|
|
|
|
| Accounts Payable |
|
90 |
|
72 |
|
40 |
| Accrued Liabilities |
|
30 |
|
24 |
|
20 |
| Total Current Liabilities |
|
$ 120 |
|
$ 96 |
|
$ 60 |
| Bonds Payable |
|
60 |
|
60 |
|
0 |
| Total Liabilities |
|
$ 180 |
|
$ 156 |
|
$ 60 |
| Shareholder's Equity |
|
|
|
|
|
|
| Common Shares |
|
240 |
|
96 |
|
96 |
| Retained Earnings |
|
36 |
|
24 |
|
19 |
| Total Shareholders' Equity |
|
$ 276 |
|
$ 120 |
|
$ 115 |
| Total Liabilities and Shareholders' Equity |
|
$ 456 |
|
$ 276 |
|
$ 175 |
South Dakota Corporation
Comparative Income Statements (in the thousands)
For the Year Ended December 31
The following are condensed financial statements of South Dakota Corporation for the three years ended December 31, 2017, 2018, 2019.
|
2019 |
2018 |
2017 |
| Sales |
|
$ 252 |
|
$ 144 |
|
$ 120 |
| Cost of Goods Sold |
|
|
|
|
|
|
| Beginning Inventory |
$ 48 |
|
$ 36 |
|
$ 24 |
|
| Add: Purchases |
213 |
|
108 |
|
78 |
|
|
$ 261 |
|
$ 144 |
|
$ 102 |
|
| Less: Ending Inventory |
72 |
|
48 |
|
36 |
|
| Cost of Goods Sold |
|
189 |
|
96 |
|
66 |
| Gross Profit |
|
$ 63 |
|
$ 48 |
|
$ 54 |
| Less: Selling and Administrative Expenses |
|
37 |
|
34 |
0 |
30 |
| Net Income from Operations |
|
$ 26 |
|
$ 14 |
|
$ 24 |
| Interest Expense |
|
6 |
|
6 |
|
0 |
| Income Before Income Tax |
|
$ 20 |
|
$ 8 |
|
$ 24 |
| Income Tax |
|
8 |
|
3 |
|
9 |
| Net income |
|
$ 12 |
|
$ 5 |
|
$ 15 |
South Dakota Corporation
Comparative Statements of Retained Earnings (in the thousands)
For the Year Ended December 31
|
2019 |
2018 |
2017 |
| Balance, January 1 |
|
$ 24 |
|
$ 19 |
|
$ 12 |
| Add: Net income |
|
12 |
|
5 |
|
15 |
|
|
$ 36 |
|
$ 24 |
|
$ 27 |
| Less: Dividend |
|
0 |
|
0 |
|
8 |
| Balance, December 31 |
|
$ 36 |
|
$ 24 |
|
$ 19 |
|
|
|
|
|
|
|
Required: #1 Based on the information provided, calculate the following for each year. Round all answers to two (2) decimal places. Be careful with your rounding. There will be deductions for incorrect rounding.
The following are condensed financial statements of South Dakota Corporation for the three years ended December 31, 2017, 2018, and 2019.
Required:
1. Complete the required calculations. There is sufficient information to complete all required calculations. Be sure to include the industry averages that are provided in the textbook as sample averages. Fill in the formula for each of the calculations. Every blank is worth marks.
"2. In a Word document, analyze the ratio calculations for each of the four financial areas.
Your report should have a brief introduction followed by four headings (liquidity, solvency, profitability and market.
What conclusions can be drawn from each of the four financial ratio areas you calculated above? What do the numbers tell you about this company. Compare 2019 to 2018 and 2017 to identify trends. Also compare to the industry averages, page 1122 Exhibit 17.11."
3. Was South Dakaota Corporation wise to expand operations? Yes or no and a brief explanation. Tell me why, yes or no is not enough! Make a case, supported by your analysis.
"Questions #2 and #3 together should be a minimum of one page of comments using 11 point font (double-spaced) and a maximum of two pages. DO NOT hand write your report!
Attachment:- Final_Case.rar