1. The
Verifine Department Stores Inc., chief executive officer
(CEO) has asked you to
compare the company’s profit performance and financial
position with the
average for the industry. The CEO has
given you the company’s income statement and balance sheet as
well as the
industries average data for retailers.
Provided
information
Income
Statement
Verifine
Department Stores, Inc.
Income
Statement Compared with Industry Average
Year
Ended December 31, 2010
Industry
Verifine
Average
Net
sales
$778,000
100.0
%
Cost
of goods sold
524,372
65.8
Gross
profit
253,628
34.2
Operating
expenses
159,490
19.7
Operating
income
94,138
14.5
Other
expenses
5,446
0.4
Net
income
$88,692
14.1
%
Verifine
Department Stores, Inc.
Balance
Sheet Compared with Industry Average
December
31, 2010
Industry
Verifine
Average
Current
assets
$285,180
70.9
%
Fixed
assets, net
109,200
23.6
Intangible
assets, net
3,360
0.8
Other
assets
22,260
4.7
Total
assets
$420,000
100.0
%
Current
liabilities
$192,360
48.1
%
Long?term
liabilities
94,080
16.6
Stockholders’
equity
133,560
35.3
Total
liabilities and stockholders’ equity
$420,000
100.0
%
Requirements
1.
Prepare a common-size income
statement and balance sheet for Verifine.
The first column of each statement should present Verifine’s
common-size
statement, and the second column, the industry averages.
2.
For the profitability analysis,
compute Verifine’s (a) ratio of gross profit to net sales,
(b) ratio of
operating income to net sales, and (c) ratio of net income to
net sales.
Compare these figures with the industry averages. Is
Verifine’s profit
performance better or worse than the industry average?
3.
For the analysis of financial
position, compute Verifine’s (a) ratio of current assets to
total assets and
(b) ratio of stockholders’ equity to total assets. Compare
these ratios with the industry
averages. Is Verifine’s financial
position better or worse than the industry averages?
2.) Financial Statement Data of
Modern Traveler Magazine include the following items (dollars
in thousands)
Cash
$22,000
Accounts
receivable, net
$80,000
Inventories
$185,000
Total
assets
$636,000
Short?term
notes payable
$50,000
Accounts
payable
$102,000
Accrued
liabilities
$39,000
Long?term
liabilities
$222,000
Net
income
$72,000
Common
shares outstanding
50,000
Requirements
1.
Compute Modern Travelers
current ratio, debt ratio and earnings per share. Round all
ratios to 2 decimal
places.
2.
Compute the 3 ratios after
evaluating the effect of each transaction as follows.
Consider each transaction
separately.
a.
Purchased inventory of $48,000
on account.
b.
Borrowed $123,000 on a
long-term note payable.
c.
Issued 5,000 shares of common
stock, receiving cash of $102,000.
d.
Received cash on account
$2,000.
3.) Tree Time provide
tree-spraying services in the company’s home county. George
Smith, the owner, incurred the
following operating costs for the month of
May 2012.
Tree Time earned $26,000 in revenues for
the month of May by spraying trees totaling 20,000 feet in
height.
Provide
information
Salaries
and wages
$10,000
Chemicals
4,900
Depreciation
on truck
300
Depreciation
on building and equipment
800
Supplies
expense
600
Gasoline
and utilities
1,080
Requirements
1.
Prepare an income statement for
the month of May. Compute the ratio of
total operating expense to total revenue and operating income
to total revenue.
2.
Compute the unit operating cost
of spraying one foot of tree height.
3.
The manager of Tree Time must
keep unit operating cost below $0.70 per foot in order to get
his bonus. Did he meet the goal?
4.
What kind of system could Tree
Time use to integrate all it’s data?
4.) In 2011 Cam
Gonzales opened Cam’s Pets, a small retail shop selling pet
supplies. On December 31, 2011, Cams accounting records
showed the following:
Inventory
on December 31, 2011
$10,600
Inventory
on January 1, 2011
15,200
Sales
revenue
56,000
Utilities
for shop
3,100
Rent
for shop
4,400
Sales
commissions
2,150
Purchases
of merchandise
29,000
Requirements
1.
Prepare an income statement for
Cam’s Pet’s, a merchandiser, for the year ended December 31st
2011.
5.) Charlie’s Pet’s
succeeded so well that Charlie decided to manufacture it’s
own brand of chewing
bone – Denim Bone. At the end of 2011
his accounting records showed the following:
Inventories:
Beginning
Ending
Materials
$13,800
$7,500
Work
in process
0
3,500
Finished
goods
0
6,000
Other
information:
Direct
material purchases
$37,000
Utilities
for plant
$1,300
Plant
janitorial services
300
Rent
on plant
16,000
Sales
salaries expense
5,100
Customer
service hotline expense
1,700
Delivery
expense
1,600
Direct
labor
21,000
Sales
revenue
105,000
Requirements
1.
Prepare a schedule of cost’s of
goods manufactured for Denim Bones for the year ended
December 31, 2011.
2.
Prepare an income statement for
Denim Bones for the year ended December 31, 2011.
3.
How does the format for the
income statement of Denim Bones differ from the income
statement of a
merchandiser?
4.
Denim Bones manufactured 17,300
units of it’s product in 2011. Compute
the company’s unit product cost for the year.
1. The
Verifine Department Stores Inc., chief executive officer
(CEO) has asked you to
compare the company’s profit performance and financial
position with the
average for the industry. The CEO has
given you the company’s income statement and balance sheet as
well as the
industries average data for retailers.
Provided
information
Income
Statement
Verifine
Department Stores, Inc.
Income
Statement Compared with Industry Average
Year
Ended December 31, 2010
Industry
Verifine
Average
Net
sales
$778,000
100.0
%
Cost
of goods sold
524,372
65.8
Gross
profit
253,628
34.2
Operating
expenses
159,490
19.7
Operating
income
94,138
14.5
Other
expenses
5,446
0.4
Net
income
$88,692
14.1
%
Verifine
Department Stores, Inc.
Balance
Sheet Compared with Industry Average
December
31, 2010
Industry
Verifine
Average
Current
assets
$285,180
70.9
%
Fixed
assets, net
109,200
23.6
Intangible
assets, net
3,360
0.8
Other
assets
22,260
4.7
Total
assets
$420,000
100.0
%
Current
liabilities
$192,360
48.1
%
Long?term
liabilities
94,080
16.6
Stockholders’
equity
133,560
35.3
Total
liabilities and stockholders’ equity
$420,000
100.0
%
Requirements
1.
Prepare a common-size income
statement and balance sheet for Verifine.
The first column of each statement should present Verifine’s
common-size
statement, and the second column, the industry averages.
2.
For the profitability analysis,
compute Verifine’s (a) ratio of gross profit to net sales,
(b) ratio of
operating income to net sales, and (c) ratio of net income to
net sales.
Compare these figures with the industry averages. Is
Verifine’s profit
performance better or worse than the industry average?
3.
For the analysis of financial
position, compute Verifine’s (a) ratio of current assets to
total assets and
(b) ratio of stockholders’ equity to total assets. Compare
these ratios with the industry
averages. Is Verifine’s financial
position better or worse than the industry averages?
2.) Financial Statement Data of
Modern Traveler Magazine include the following items (dollars
in thousands)
Cash
$22,000
Accounts
receivable, net
$80,000
Inventories
$185,000
Total
assets
$636,000
Short?term
notes payable
$50,000
Accounts
payable
$102,000
Accrued
liabilities
$39,000
Long?term
liabilities
$222,000
Net
income
$72,000
Common
shares outstanding
50,000
Requirements
1.
Compute Modern Travelers
current ratio, debt ratio and earnings per share. Round all
ratios to 2 decimal
places.
2.
Compute the 3 ratios after
evaluating the effect of each transaction as follows.
Consider each transaction
separately.
a.
Purchased inventory of $48,000
on account.
b.
Borrowed $123,000 on a
long-term note payable.
c.
Issued 5,000 shares of common
stock, receiving cash of $102,000.
d.
Received cash on account
$2,000.
3.) Tree Time provide
tree-spraying services in the company’s home county. George
Smith, the owner, incurred the
following operating costs for the month of
May 2012.
Tree Time earned $26,000 in revenues for
the month of May by spraying trees totaling 20,000 feet in
height.
Provide
information
Salaries
and wages
$10,000
Chemicals
4,900
Depreciation
on truck
300
Depreciation
on building and equipment
800
Supplies
expense
600
Gasoline
and utilities
1,080
Requirements
1.
Prepare an income statement for
the month of May. Compute the ratio of
total operating expense to total revenue and operating income
to total revenue.
2.
Compute the unit operating cost
of spraying one foot of tree height.
3.
The manager of Tree Time must
keep unit operating cost below $0.70 per foot in order to get
his bonus. Did he meet the goal?
4.
What kind of system could Tree
Time use to integrate all it’s data?
4.) In 2011 Cam
Gonzales opened Cam’s Pets, a small retail shop selling pet
supplies. On December 31, 2011, Cams accounting records
showed the following:
Inventory
on December 31, 2011
$10,600
Inventory
on January 1, 2011
15,200
Sales
revenue
56,000
Utilities
for shop
3,100
Rent
for shop
4,400
Sales
commissions
2,150
Purchases
of merchandise
29,000
Requirements
1.
Prepare an income statement for
Cam’s Pet’s, a merchandiser, for the year ended December 31st
2011.
5.) Charlie’s Pet’s
succeeded so well that Charlie decided to manufacture it’s
own brand of chewing
bone – Denim Bone. At the end of 2011
his accounting records showed the following:
Inventories:
Beginning
Ending
Materials
$13,800
$7,500
Work
in process
0
3,500
Finished
goods
0
6,000
Other
information:
Direct
material purchases
$37,000
Utilities
for plant
$1,300
Plant
janitorial services
300
Rent
on plant
16,000
Sales
salaries expense
5,100
Customer
service hotline expense
1,700
Delivery
expense
1,600
Direct
labor
21,000
Sales
revenue
105,000
Requirements
1.
Prepare a schedule of cost’s of
goods manufactured for Denim Bones for the year ended
December 31, 2011.
2.
Prepare an income statement for
Denim Bones for the year ended December 31, 2011.
3.
How does the format for the
income statement of Denim Bones differ from the income
statement of a
merchandiser?
4.
Denim Bones manufactured 17,300
units of it’s product in 2011. Compute
the company’s unit product cost for the year.
1. The
Verifine Department Stores Inc., chief executive officer
(CEO) has asked you to
compare the company’s profit performance and financial
position with the
average for the industry. The CEO has
given you the company’s income statement and balance sheet as
well as the
industries average data for retailers.
Provided
information
Income
Statement
Verifine
Department Stores, Inc.
Income
Statement Compared with Industry Average
Year
Ended December 31, 2010
Industry
Verifine
Average
Net
sales
$778,000
100.0
%
Cost
of goods sold
524,372
65.8
Gross
profit
253,628
34.2
Operating
expenses
159,490
19.7
Operating
income
94,138
14.5
Other
expenses
5,446
0.4
Net
income
$88,692
14.1
%
Verifine
Department Stores, Inc.
Balance
Sheet Compared with Industry Average
December
31, 2010
Industry
Verifine
Average
Current
assets
$285,180
70.9
%
Fixed
assets, net
109,200
23.6
Intangible
assets, net
3,360
0.8
Other
assets
22,260
4.7
Total
assets
$420,000
100.0
%
Current
liabilities
$192,360
48.1
%
Long?term
liabilities
94,080
16.6
Stockholders’
equity
133,560
35.3
Total
liabilities and stockholders’ equity
$420,000
100.0
%
Requirements
1.
Prepare a common-size income
statement and balance sheet for Verifine.
The first column of each statement should present Verifine’s
common-size
statement, and the second column, the industry averages.
2.
For the profitability analysis,
compute Verifine’s (a) ratio of gross profit to net sales,
(b) ratio of
operating income to net sales, and (c) ratio of net income to
net sales.
Compare these figures with the industry averages. Is
Verifine’s profit
performance better or worse than the industry average?
3.
For the analysis of financial
position, compute Verifine’s (a) ratio of current assets to
total assets and
(b) ratio of stockholders’ equity to total assets. Compare
these ratios with the industry
averages. Is Verifine’s financial
position better or worse than the industry averages?
2.) Financial Statement Data of
Modern Traveler Magazine include the following items (dollars
in thousands)
Cash
$22,000
Accounts
receivable, net
$80,000
Inventories
$185,000
Total
assets
$636,000
Short?term
notes payable
$50,000
Accounts
payable
$102,000
Accrued
liabilities
$39,000
Long?term
liabilities
$222,000
Net
income
$72,000
Common
shares outstanding
50,000
Requirements
1.
Compute Modern Travelers
current ratio, debt ratio and earnings per share. Round all
ratios to 2 decimal
places.
2.
Compute the 3 ratios after
evaluating the effect of each transaction as follows.
Consider each transaction
separately.
a.
Purchased inventory of $48,000
on account.
b.
Borrowed $123,000 on a
long-term note payable.
c.
Issued 5,000 shares of common
stock, receiving cash of $102,000.
d.
Received cash on account
$2,000.
3.) Tree Time provide
tree-spraying services in the company’s home county. George
Smith, the owner, incurred the
following operating costs for the month of
May 2012.
Tree Time earned $26,000 in revenues for
the month of May by spraying trees totaling 20,000 feet in
height.
Provide
information
Salaries
and wages
$10,000
Chemicals
4,900
Depreciation
on truck
300
Depreciation
on building and equipment
800
Supplies
expense
600
Gasoline
and utilities
1,080
Requirements
1.
Prepare an income statement for
the month of May. Compute the ratio of
total operating expense to total revenue and operating income
to total revenue.
2.
Compute the unit operating cost
of spraying one foot of tree height.
3.
The manager of Tree Time must
keep unit operating cost below $0.70 per foot in order to get
his bonus. Did he meet the goal?
4.
What kind of system could Tree
Time use to integrate all it’s data?
4.) In 2011 Cam
Gonzales opened Cam’s Pets, a small retail shop selling pet
supplies. On December 31, 2011, Cams accounting records
showed the following:
Inventory
on December 31, 2011
$10,600
Inventory
on January 1, 2011
15,200
Sales
revenue
56,000
Utilities
for shop
3,100
Rent
for shop
4,400
Sales
commissions
2,150
Purchases
of merchandise
29,000
Requirements
1.
Prepare an income statement for
Cam’s Pet’s, a merchandiser, for the year ended December 31st
2011.
5.) Charlie’s Pet’s
succeeded so well that Charlie decided to manufacture it’s
own brand of chewing
bone – Denim Bone. At the end of 2011
his accounting records showed the following:
Inventories:
Beginning
Ending
Materials
$13,800
$7,500
Work
in process
0
3,500
Finished
goods
0
6,000
Other
information:
Direct
material purchases
$37,000
Utilities
for plant
$1,300
Plant
janitorial services
300
Rent
on plant
16,000
Sales
salaries expense
5,100
Customer
service hotline expense
1,700
Delivery
expense
1,600
Direct
labor
21,000
Sales
revenue
105,000
Requirements
1.
Prepare a schedule of cost’s of
goods manufactured for Denim Bones for the year ended
December 31, 2011.
2.
Prepare an income statement for
Denim Bones for the year ended December 31, 2011.
3.
How does the format for the
income statement of Denim Bones differ from the income
statement of a
merchandiser?
4.
Denim Bones manufactured 17,300
units of it’s product in 2011. Compute
the company’s unit product cost for the year.
1. The
Verifine Department Stores Inc., chief executive officer
(CEO) has asked you to
compare the company’s profit performance and financial
position with the
average for the industry. The CEO has
given you the company’s income statement and balance sheet as
well as the
industries average data for retailers.
Provided
information
Income
Statement
Verifine
Department Stores, Inc.
Income
Statement Compared with Industry Average
Year
Ended December 31, 2010
Industry
Verifine
Average
Net
sales
$778,000
100.0
%
Cost
of goods sold
524,372
65.8
Gross
profit
253,628
34.2
Operating
expenses
159,490
19.7
Operating
income
94,138
14.5
Other
expenses
5,446
0.4
Net
income
$88,692
14.1
%
Verifine
Department Stores, Inc.
Balance
Sheet Compared with Industry Average
December
31, 2010
Industry
Verifine
Average
Current
assets
$285,180
70.9
%
Fixed
assets, net
109,200
23.6
Intangible
assets, net
3,360
0.8
Other
assets
22,260
4.7
Total
assets
$420,000
100.0
%
Current
liabilities
$192,360
48.1
%
Long?term
liabilities
94,080
16.6
Stockholders’
equity
133,560
35.3
Total
liabilities and stockholders’ equity
$420,000
100.0
%
Requirements
1.
Prepare a common-size income
statement and balance sheet for Verifine.
The first column of each statement should present Verifine’s
common-size
statement, and the second column, the industry averages.
2.
For the profitability analysis,
compute Verifine’s (a) ratio of gross profit to net sales,
(b) ratio of
operating income to net sales, and (c) ratio of net income to
net sales.
Compare these figures with the industry averages. Is
Verifine’s profit
performance better or worse than the industry average?
3.
For the analysis of financial
position, compute Verifine’s (a) ratio of current assets to
total assets and
(b) ratio of stockholders’ equity to total assets. Compare
these ratios with the industry
averages. Is Verifine’s financial
position better or worse than the industry averages?
2.) Financial Statement Data of
Modern Traveler Magazine include the following items (dollars
in thousands)
Cash
$22,000
Accounts
receivable, net
$80,000
Inventories
$185,000
Total
assets
$636,000
Short?term
notes payable
$50,000
Accounts
payable
$102,000
Accrued
liabilities
$39,000
Long?term
liabilities
$222,000
Net
income
$72,000
Common
shares outstanding
50,000
Requirements
1.
Compute Modern Travelers
current ratio, debt ratio and earnings per share. Round all
ratios to 2 decimal
places.
2.
Compute the 3 ratios after
evaluating the effect of each transaction as follows.
Consider each transaction
separately.
a.
Purchased inventory of $48,000
on account.
b.
Borrowed $123,000 on a
long-term note payable.
c.
Issued 5,000 shares of common
stock, receiving cash of $102,000.
d.
Received cash on account
$2,000.
3.) Tree Time provide
tree-spraying services in the company’s home county. George
Smith, the owner, incurred the
following operating costs for the month of
May 2012.
Tree Time earned $26,000 in revenues for
the month of May by spraying trees totaling 20,000 feet in
height.
Provide
information
Salaries
and wages
$10,000
Chemicals
4,900
Depreciation
on truck
300
Depreciation
on building and equipment
800
Supplies
expense
600
Gasoline
and utilities
1,080
Requirements
1.
Prepare an income statement for
the month of May. Compute the ratio of
total operating expense to total revenue and operating income
to total revenue.
2.
Compute the unit operating cost
of spraying one foot of tree height.
3.
The manager of Tree Time must
keep unit operating cost below $0.70 per foot in order to get
his bonus. Did he meet the goal?
4.
What kind of system could Tree
Time use to integrate all it’s data?
4.) In 2011 Cam
Gonzales opened Cam’s Pets, a small retail shop selling pet
supplies. On December 31, 2011, Cams accounting records
showed the following:
Inventory
on December 31, 2011
$10,600
Inventory
on January 1, 2011
15,200
Sales
revenue
56,000
Utilities
for shop
3,100
Rent
for shop
4,400
Sales
commissions
2,150
Purchases
of merchandise
29,000
Requirements
1.
Prepare an income statement for
Cam’s Pet’s, a merchandiser, for the year ended December 31st
2011.
5.) Charlie’s Pet’s
succeeded so well that Charlie decided to manufacture it’s
own brand of chewing
bone – Denim Bone. At the end of 2011
his accounting records showed the following:
Inventories:
Beginning
Ending
Materials
$13,800
$7,500
Work
in process
0
3,500
Finished
goods
0
6,000
Other
information:
Direct
material purchases
$37,000
Utilities
for plant
$1,300
Plant
janitorial services
300
Rent
on plant
16,000
Sales
salaries expense
5,100
Customer
service hotline expense
1,700
Delivery
expense
1,600
Direct
labor
21,000
Sales
revenue
105,000
Requirements
1.
Prepare a schedule of cost’s of
goods manufactured for Denim Bones for the year ended
December 31, 2011.
2.
Prepare an income statement for
Denim Bones for the year ended December 31, 2011.
3.
How does the format for the
income statement of Denim Bones differ from the income
statement of a
merchandiser?
4.
Denim Bones manufactured 17,300
units of it’s product in 2011. Compute
the company’s unit product cost for the year.
