Reference no: EM132766922

ACC 200 Accounting principles - Emirates College of Technology

LO 1: Describe the tools of the financial statement analysis and Analyze Financial statements by using liquidity, profitability and solvency ratios.

LO 2: Define manufacturing cost and prepare an income statement and its supported schedules for an incorporated manufacturing operation with cost distributions

LO 3: Compare between the variable and fixed costs and employ Cost-Volume-profit analyses for planning using different methods.

Question 1:
Alhekma's financial analyst gathered the following information for its competitors so that it can assess and evaluate its own performance against that of the competitors.

Ratios	Alhekma	Competitors
Average collection period	33.5 days	27.9 days
Total assets turnover	2.3	3.7
Inventory turnover	1.8	2.8
Quick ratio	0.6	1.3

Required
Illustrate how Alhekmais doing relative to its competitors.

Question 2:

The following are the comparative financial statements for Eagle Company

Eagle Company Balance Sheet December 31
	2017	2016	2015
Cash	$ 30,000	$ 20,000	18,000
Accounts receivable (net)	50,000	45,000	48,000
Other current assets	90,000	95,000	64,000
Investments	55,000	70,000	45,000
Plant and equipment (net)	500,000	370,000	358,000
	$725,000	$600,000	$533,000
Current liabilities	$ 85,000	$ 80,000	$ 70,000
Long-term debt	145,000	85,000	50,000
Common stock, $10 par	320,000	310,000	300,000
Retained earnings	175,000	125,000	113,000
	$725,000	$600,000	$533,000

 

Eagle Company Income Statements For the Years Ended December 31
	2017	2016
Sales revenue	$740,000	$600,000
Less: Sales returns and allowances	40,000	30,000
Net sales	700,000	570,000
Cost of goods sold	425,000	350,000
Gross profit	275,000	220,000
Operating expenses (including income taxes)	180,000	150,000
Net income	$ 95,000	$ 70,000

Required
a. Determine the following financial ratios for 2016 and 2017.
1. Profit margin.
2. Asset turnover.
3. Earnings per share.
4. Price-earnings ratio.
5. Payout ratio.
6. Debt to assets ratio.

b. After determining the above financial ratios, explain briefly whether or notthe company experiences improvement in the financial position and operating for the period from 2016 to 2017

Question 3:

Ibrahim is studying for his accounting finalproject, summarize for Ibrahim the differences between financial accounting and managerial accounting. (Use narrative arguments).

Question 4:

The following information is available for Tomlin Company.

	January 1, 2020	2020	December 31, 2020
Raw materials inventory	$21,000		$30,000
Work in process inventory	13,500		17,200
Finished goods inventory	27,000		21,000
Materials purchased		$150,000
Direct labor		220,000
Manufacturing overhead		180,000
Sales revenue		910,000
Selling expenses		50,000
Administrative expenses		80,000

Required
a. Determine cost of goods manufactured.
b. Prepare an income statement
c. Describe the differences between merchandising and manufacturing companies with respect to income statement and balance sheet.

Question 5:

The controller of Rather Production has collected the following information

Sales (100,000 Units)	$1,600,000
Selling expenses	$250,000 (40% variable and 60% fixed).
Direct materials	$490,000
Direct labor	$290,000
Administrative expenses	$270,000 (20% variable and 80% fixed)
Manufacturing overhead	$380,000 (70% variable and 30% fixed).

Required
a. Determine (1) the contribution margin and (2) the fixed costs.
b. Determine the break-even point in (1) units and (2) dollars.
c. Determine the sales required in dollars to earn net income of $200,000.
d. Assume that Rather Production meets its target net income, what is the margin of safety ratio.

Attachment:- Accounting principles.rar