Reference no: EM131881610

Exercise 1 - The comparative condensed balance sheets of Garcia Corporation are presented below.

GARCIA CORPORATION Comparative Condensed Balance Sheets December 31
	2014	2013
Assets
Current assets	$ 76,000	$ 80,000
Property, plant, and equipment (net)	100,000	90,000
Intangibles	24,000	40,000
Total assets	$200,000	$210,000
Liabilities and stockholders' equity
Current liabilities	$ 40,000	$ 48,000
Long-term liabilities	140,000	150,000
Stockholders' equity	20,000	12,000
Total liabilities and stockholders' equity	$200,000	$210,000

(a) Prepare a horizontal analysis of the balance sheet data for Garcia Corporation using 2013 as a base.

(b) Prepare a vertical analysis of the balance sheet data for Garcia Corporation in columnar form for 2014.

Exercise 2 - The comparative condensed income statements of Hendi Corporation are shown below.

HENDI CORPORATION Comparative Condensed Income Statements For the Years Ended December 31
	2014	2013
Net sales	$600,000	$500,000
Cost of goods sold	468,000	400,000
Gross profit	132,000	100,000
Operating expenses	60,000	54,000
Net income	$ 72,000	$ 46,000

(a) Prepare a horizontal analysis of the income statement data for Hendi Corporation using 2013 as a base. (Show the amounts of increase or decrease.)

(b) Prepare a vertical analysis of the income statement data for Hendi Corporation in columnar form for both years.

Exercise 3 - Maulder Corporation has income from continuing operations of $290,000 for the year ended December 31, 2014. It also has the following items (before considering income taxes).

1. An extraordinary loss of $70,000.

2. A gain of $35,000 on the discontinuance of a division.

3. A correction of an error in last year's financial statements that resulted in a $25,000 understatement of 2013 net income.

Assume all items are subject to income taxes at a 30% tax rate.

Prepare an income statement, beginning with income from continuing operations.

Exercise 4 - The comparative statements of Beulah Company are presented below.

BEULAH COMPANY Income Statement For the Years Ended December 31
	2014	2013
Net sales (all on account)	$500,000	$420,000
Expenses
Cost of goods sold	315,000	254,000
Selling and administrative	120,800	114,800
Interest expense	7,500	6,500
Income tax expense	20,000	15,000
Total expenses	463,300	390,300
Net income	$ 36,700	$ 29,700

 

BEULAH COMPANY Balance Sheets December 31
Assets	2014	2013
Current assets
Cash	$ 21,000	$ 18,000
Short-term investments	18,000	15,000
Accounts receivable (net)	85,000	75,000
Inventory	80,000	60,000
Total current assets	204,000	168,000
Plant assets (net)	423,000	383,000
Total assets	$627,000	$551,000
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$122,000	$110,000
Income taxes payable	12,000	11,000
Total current liabilities	134,000	121,000
Long-term liabilities
Bonds payable	120,000	80,000
Total liabilities	254,000	201,000
Stockholders' equity
Common stock ($5 par)	150,000	150,000
Retained earnings	223,000	200,000
Total stockholders' equity	373,000	350,000
Total liabilities and stockholders' equity	$627,000	$551,000

Additional data: The common stock recently sold at $19.50 per share.

Compute the following ratios for 2014.

(a) Current ratio

(b) Acid-test ratio

(c) Accounts receivable turnover

(d) Inventory turnover

(e) Profit margin

(f) Asset turnover

(g) Return on assets

(h) Return on common stockholders' equity

(i) Earnings per share

(j) Price-earnings ratio

(k) Payout ratio

(l) Debt to total assets

(m) Times interest earned