Question 1
Translate a trial balance and prepare a consolidation worksheet with excess of cost over book value traceable to equipment. Due to increasing pressures to expand globally, Pueblo Corporation acquired a 100% interest in Sorenson Company, a foreign company, on January 1, 2016. Pueblo paid 12,000,000 FC, and Sorenson?s equity consisted of the following: Common Stock????????????????..? 3,000,000 FC Paid-in Capital in excess of par????????? 2,000,000 Retained earnings???????????????? 4,200,000 Total???????????????????????? 9,200,000 FC On the date of acquisition equipment with a 10-year life was undervalued by 500,000 FC. Any remaining excess of cost over book value is attributable to additional equipment with a 20-year life. The trial balances for Pueblo and Sorenson as of December 31, 2018 are as follows: Pueblo Corporation Sorenson Company Cash???????????????????. 4,050,000 2,840,000 FC Accounts receivable?????????? 5,270,000 3,990,000 Inventory???????????????? 5,540,000 5,800,000 Investment in Sorenson???????.. 20,969,000 Fixed Assets??????????????. 21,000,000 15,000,000 Accumulated Depreciation?????? (12,560,000) (6,800,000) Accounts Payable???????????.. (3,450,000) (1,580,000) Long-term Debt????????????.. (10,000,000) (5,000,000) Common Stock?????????????. (4,000,000) (3,000,000) Paid-in Capital in Excess of Par????.. (6,500,000) (2,000,000) Retained Earnings, Jan. 1, 2018????.. (12,180,000) (7,950,000) Sales???????????????????? (26,000,000) (10,000,000) Cost of Goods Sold???????????? 16,380,000 7,500,000 Operating expenses??????????.. 3,210,000 1,200,000 Subsidiary Income???????????.. (1,729,000) Totals?????????????????. 0 0 FC The investment in Sorenson consists of the following: Initial investment (12,000,000 FC x $1.20)?????????????.. $14,400,000 2016 Income (1,750,000 FC x $1.28)?????????????????. 2,240,000 2017 Income (2,000,000 FC x $1.30)?????????????????. 2,600,000 2018 Income??????????????????????????? 1,729,000 Totals????????????????????????????? $20,969,000 Relevant exchange rates are as follows: 1FC = January 1, 2016????????????.. $1.20 2016 Average?????????????. 1.28 January 1, 2017????????????.. 1.25 2017 Average?????????????. 1.30 December 31, 2018??????????. 1.31 2018 Average?????????????. 1.33 Assuming the FC is Sorenson?s function currency, prepare a consolidated worksheet.
Question 4
Ratio Analysis 1. The current ratio for a company with current assets of $70,000, quick assets of $30,000, total assets of $150,000 current liabilities of $50,000 and net sales of $80,000 would be: A. 0.20. B. 1.40. C. 3.00. D. 1.00. 2. Rick?s has a cash balance of $80,000; short-term investments of $20,000; net receivables of $60,000; and inventory of $450,000. Current liabilities total $200,000. Ricks? acid test (quick ratio) is within: A. 3.05 to 1. B. 2.25 to 1. C. 0.80 to 1. D. 0.54 to 1. 3. Isaiah Company has net income of $720,000, beginning total assets of $2,100,000, and ending total assets of $2,300,000. Isaiah?s return on total assets is: A. 32.7%. B. 11.2%. C. 3.1%. D 31.3%. 4.Tammy Company has a beginning accounts receivable balance of $65,000 and an ending accounts receivable balance of $60,000. Net credit sales are $250,000. Tammy?s accounts receivable turnover rate is: A. 3.846. B. 4.167. C. 4.000. D. 2.000. 5. With a beginning accounts receivable balance of $80,000; an ending accounts receivable balance of $120,000; and net credit sales of $900,000, the accounts receivable turnover is: A. 9.00. B. 4.50. C. 7.50. D. 11.25. 6. Topiary?s Unlimited has a cost of goods sold of $1,600,000. The beginning merchandise inventory was $195,000 and the ending merchandise inventory is $205,000. Topiary?s merchandise inventory turnover ratio is: A. 8.21 times. B. 7.80 times. C. 8.00 times. D. 9.00 times. 7. Amanda?s has a cost of goods sold of $1,900,000. The beginning and ending merchandise inventories are $133,000 and $125,000, respectively. Amanda?s merchandise inventory turnover ratio is: A. 65.5 times. B. 33.8 times. C. 14.7 times. D. 29.4 times. 8. Walker Clothing Store had a balance in the Accounts Receivable account of $390,000 at the beginning of the year and a balance of $410,000 at the end of the year. Net credit sales during the year amounted to $2,000,000. The average collection period of the receivables in terms of days was a. 30 days. b. 365 days. c. 146 days. d. 73 days 9. Parr Hardware Store had net credit sales of $6,500,000 and cost of goods sold of $5,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The receivables turnover was a. 7.7 times. b. 10.8 times. c. 9.3 times. d. 10 times. 10. Waters Department Store had net credit sales of $16,000,000 and cost of goods sold of $12,000,000 for the year. The average inventory for the year amounted to $2,000,000. Inventory turnover for the year is a. 8 times. b. 14 times. c. 6 times. d. 4 times. 11. Waters Department Store had net credit sales of $16,000,000 and cost of goods sold of $12,000,000 for the year. The average inventory for the year amounted to $2,000,000. The average number of days in inventory during the year was a. 91 days. b. 61 days. c. 46 days. d. 26 days. 12.The current assets of Kile Company are $150,000. The current liabilities are $100,000. The current ratio expressed as a proportion is a. 150%. b. 1.5 : 1 c. .67 : 1 d. $150,000 ? $100,000 13. A company has a receivables turnover of 10 times. The average net receivables during the period are $400,000. What is the amount of net credit sales for the period? a. $40,000 b. $4,000,000 c. $480,000 d. Cannot be determined from the information given 14. Gold Clothing Store had a balance in the Accounts Receivable account of $820,000 at the beginning of the year and a balance of $880,000 at the end of the year. Net credit sales during the year amounted to $7,650,000. The receivables turnover ratio was a. 9.0 times. b. 4.5 times. c. 8.7 times. d. 9.3 times. 15. Gold Clothing Store had a balance in the Accounts Receivable account of $810,000 at the beginning of the year and a balance of $850,000 at the end of the year. Net credit sales during the year amounted to $6,640,000. The average collection period of the receivables in terms of days was a. 91.3 days. b. 45.6 days. c. 30 days. d. 46.7 days. 16. The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 45,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets $300,000 Liabilities and Stockholders? Equity Current liabilities $ 50,000 Long-term liabilities 90,000 Stockholders? equity?common 160,000 Total Liabilities and Stockholders? Equity $300,000 Income Statement Sales $ 120,000 Cost of goods sold 66,000 Gross margin 54,000 Operating expenses 30,000 Net income $ 24,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share .50 What is the current ratio for Soho? a. 1.80 b. 1.30 c. 1.40 d. .64 17. The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 45,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets $300,000 Liabilities and Stockholders? Equity Current liabilities $ 50,000 Long-term liabilities 90,000 Stockholders? equity?common 160,000 Total Liabilities and Stockholders? Equity $300,000 Income Statement Sales $ 120,000 Cost of goods sold 66,000 Gross margin 54,000 Operating expenses 30,000 Net income $ 24,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share .50 What is the receivables turnover for Soho? a. 2.1 times b. 2 times c. 4.8 times d. 9.6 times 18. The following financial statement information is available for Houser Corporation: 2011 2010 Inventory $ 44,000 $ 43,000 Current assets 81,000 106,000 Total assets 432,000 358,000 Current liabilities 30,000 36,000 Total liabilities 102,000 88,000 The current ratio for 2011 is a. .37:1. b. 2.7:1. c. .79:1. d. 4.24:1. Relevant Cost 1. Alvarez Company is considering the following alternatives: Alternative A Alternative B Revenues $50,000 $60,000 Variable costs 30,000 30,000 Fixed costs 10,000 16,000 What is the incremental profit? a. $10,000 b. $0 c. $6,000 d. $4,000 2. Seville Company manufactures a product with a unit variable cost of $42 and a unit sales price of $75. Fixed manufacturing costs were $80,000 when 10,000 units were produced and sold, equating to $8 per unit. The company has a one-time opportunity to sell an additional 2,000 units at $55 each in an international market which would not affect its present sales. The company has sufficient capacity to produce the additional units. How much is the relevant income effect of accepting the special order? a. $84,000 b. $10,000 c. $40,000 d. $26,000 3. It costs Lannon Fields $14 of variable costs and $6 of allocated fixed costs to produce an industrial trash can that sells for $30. A buyer in Mexico offers to purchase 3,000 units at $18 each. Lannon Fields has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income? a. Decrease $6,000 b. Increase $6,000 c. Increase $54,000 d. Increase $12,000 4. It costs Fortune Company $10 of variable and $4 of fixed costs to produce one bathroom scale, which normally sells for $28. A foreign wholesaler offers to purchase 1,000 scales at $12 each. Fortune would incur special shipping costs of $1 per scale if the order were accepted. Fortune has sufficient unused capacity to produce the 1,000 scales. If the special order is accepted, what will be the effect on net income? a. $1,000 increase b. $1,000 decrease c. $2,000 decrease d. $12,000 increase 5. A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: Direct materials $ 4 Direct labor 10 Variable overhead 8 Fixed overhead 6 A foreign company wants to purchase 1,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $2,000 in order to stamp the foreign company?s name on the product. The incremental income (loss) from accepting the order is a. $3,000. b. $1,000. c. $(3,000). d. $(1,000). 6. Chapman Company manufactures widgets. Embree Company has approached Chapman with a proposal to sell the company widgets at a price of $80,000 for 100,000 units. Chapman is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced: Direct materials $ 31,000 Direct labor 29,000 Manufacturing overhead 40,000 Total $100,000 The manufacturing overhead consists of $16,000 of costs that will be eliminated if the components are no longer produced by Chapman. From Chapman?s point of view, how much is the incremental cost or savings if the widgets are bought instead of made? a. $20,000 incremental savings b. $4,000 incremental cost c. $4,000 incremental savings d. $20,000 incremental cost 7. Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $36 each. If Truckel makes the wickets, variable costs are $22 per unit. Fixed costs are $16 per unit; however, $10 per unit is unavoidable. Should Truckel make or buy the wickets? a. Buy; savings = $50,000 b. Buy; savings = $20,000 c. Make; savings = $40,000 d. Make; savings = $20,000 Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $500,000 $200,000 $ 65,000 $765,000 Variable expenses 325,000 140,000 58,000 523,000 Contribution margin 175,000 60,000 7,000 242,000 Fixed expenses 75,000 35,000 22,000 132,000 Net income (loss) $100,000 $ 25,000 $(15,000) $110,000 8. Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped? a. $125,000 b. $103,000 c. $105,000 d. $140,000 9. Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if that line is dropped? a. $125,000 b. $103,000 c. $105,000 d. $140,000 10. If the total net income after dropping the hard rubber line is $105,000, hard rubber?s avoidable fixed expenses were a. $20,000. b. $2,000. c. $7,000. d. $5,000.,Thank's for help! :-) Maria,Are You believe that tomorroe Oct. 17, in the morning before 7am, is able to finish? I would appreciate your help and your reply, MARIA
