Reference no: EM132768140
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.
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Ratios
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Alhekma
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Competitors
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Average collection period
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33.5 days
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27.9 days
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Total assets turnover
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2.3
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3.7
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Inventory turnover
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1.8
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2.8
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Quick ratio
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0.6
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1.3
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Required
Illustrate how Alhekmais doing relative to its competitors.
Question 2:
The following are the comparative financial statements for Eagle Company
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Eagle Company
Balance Sheet
December 31
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|
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2017
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2016
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2015
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Cash
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$ 30,000
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$ 20,000
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18,000
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Accounts receivable (net)
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50,000
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45,000
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48,000
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Other current assets
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90,000
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95,000
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64,000
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Investments
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55,000
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70,000
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45,000
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Plant and equipment (net)
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500,000
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370,000
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358,000
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$725,000
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$600,000
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$533,000
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Current liabilities
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$ 85,000
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$ 80,000
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$ 70,000
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Long-term debt
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145,000
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85,000
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50,000
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Common stock, $10 par
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320,000
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310,000
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300,000
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Retained earnings
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175,000
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125,000
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113,000
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$725,000
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$600,000
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$533,000
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Eagle Company
Income Statements
For the Years Ended December 31
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2017
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2016
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Sales revenue
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$740,000
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$600,000
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Less: Sales returns and allowances
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40,000
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30,000
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Net sales
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700,000
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570,000
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Cost of goods sold
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425,000
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350,000
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Gross profit
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275,000
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220,000
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Operating expenses (including income taxes)
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180,000
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150,000
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Net income
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$ 95,000
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$ 70,000
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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.
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January 1, 2020
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2020
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December 31, 2020
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Raw materials inventory
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$21,000
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$30,000
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Work in process inventory
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13,500
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17,200
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Finished goods inventory
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27,000
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21,000
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Materials purchased
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$150,000
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Direct labor
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220,000
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|
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Manufacturing overhead
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180,000
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|
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Sales revenue
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910,000
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Selling expenses
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50,000
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Administrative expenses
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80,000
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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
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Sales (100,000 Units)
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$1,600,000
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Selling expenses
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$250,000 (40% variable and 60% fixed).
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Direct materials
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$490,000
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Direct labor
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$290,000
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Administrative expenses
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$270,000 (20% variable and 80% fixed)
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Manufacturing overhead
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$380,000 (70% variable and 30% fixed).
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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