Reference no: EM132807308
Problem 1: Describe the specific elements of the balance sheet (assets, liabilities, and owners' equity), and make a balance sheet with assets and liabilities properly classified into current and noncurrent categories.
Problem 2: Analyze a company's performance and financial position through the computation of financial ratios.
Denton Equipment Inc. furnishes you with the following list of accounts.
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66,000
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,000
Advances to Salespersons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Advertising Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000
Allowance for Bad Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000
Certificates of Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Common Stock (par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Deferred Income Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,500
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000
Investment in Rowe Oil Co. Stock
(40% of outstanding stock owned for control purposes) . . . . . . . . . 76,500
Investment in Siebert Co. Stock (trading securities) . . . . . . . . . . . . 21,000
Paid-In Capital in Excess of Par . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,500
Premium on Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Rent Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,000
Rent Revenue Received in Advance (4 months) . . . . . . . . . . . . . . . 12,000
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,500
Taxes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,000
Instructions:
Problem 3: From the preceding list of accounts, determine working capital, total assets, total liabilities, and owners? equity per share of stock (75,000 shares outstanding).
Problem 4: Assume net income of $20,000. Compute current ratio, debt ratio, and return on equity