Week 5 Case Studies 21-1 and 21-2
26
Comtempor Comparat December 2011 Amount Percent Assets Current Asstes Cash $1,844 1,0 Accounts Receivable 11,807 6.5 Inventory 9,628 5.3 Total Current Assets 23,279 12.8 Plant and Equipment Equipment 158,700 87.2 Total Plant and Equipment 158,700 87.2 Total Assets $181,979 100 Liabilities Current Liabilities Accounts Payable $13,446 7.3 Wages Payable 650 0.4 Property and Taxes Payable 4,124 0.2 Total current liabilities $18,220 10 Long Term Liabilities Total Term Liabilities 92,800 51 Total Liabilities $111,020 61 Owner's Equity C.Royston, capital 70,959 39 Total Liabilities and owner' equity $181,979 100
-
Upload
gabriella-goodfield -
Category
Documents
-
view
7 -
download
2
description
work
Transcript of Week 5 Case Studies 21-1 and 21-2
Case 21-1 VerticalComtemporary Wood FurnitureComparative Balance SheetDecember 31, 2010 and 201120112010AmountPercentAmountPercent20112010AssetsCash1844/181979=0.0101330373Cash3278/172149=0.0190416442Current Asstes0.010133037(100)=1.0133037(0.01904)(100)=1.904Cash$1,8441,0$3,2781.9Round off 1.0Round Off1.9Accounts Receivable11,8076.56,95440.4Accounts Receivable11807/181979=0.0648811127Account Receivable6954/172149=0.040395239Inventory9,6285.317,41710.1(0.064881113)(100)=6.48811139(0.404)(100)=40.4Total Current Assets23,27912.827,64916.1Round off 6.5Round off40.4Inventory9628/181979=0.0529072036Inventoy17417/172149=0.101173983Plant and Equipment(0.052907204)(100)=5.2907204(0.10117)(100)=10.117Equipment158,70087.2144,50083.9Round Off5.3Round off10.1Total Plant and Equipment158,70087.2144,50083.9Total Current Asset23279/181979=0.1279213536Total Current Asset27649/172149=0.1606108662Total Assets$181,979100$172,149100(0.127921354)(100)=12.7921354(0.16061)(100)=16.061Round off12.8Round off16.1LiabilitiesPlant and Equipment158700/181979=0.8720786464Plant and Equipment144500/172149=0.8393891338Current Liabilities(0.872078646)(100)=87.2078646(0.83939)(100)=83.939Accounts Payable $13,4467.3$9,2505.4Round off87.2Round off83.9Wages Payable6500.41,1100.6Total Asset181979/181979=1Total Asset172149/172149=1Property and Taxes Payable4,1240.2$3,6502.1(1)(100)=100(1)(100)=100Total current liabilities$18,22010$14,0108.1Accounts Payable13446/181979=0.0738876464Accounts Payable9250/172149=0.0537325224(0.07338746)(100)=7.338746(0.05373)(100)=5.373Long Term LiabilitiesRound off7.3Round Off5.4Total Term Liabilities92,8005175,80044Wages Payable650/181979=0.0035718407Wages Payable1110/172149=0.0064479027Total Liabilities$111,0206189,81052.1(0.0035571841)(100)=0.355718141(0.00645)(100)=0.645Round off0.4Round off0.6Owner's EquityProperty and Taxes Payable4124/181979=0.0226619555Property and Taxes Payable3650/172149=0.0212025629C.Royston, capital 70,9593982,33947.8(0.0022661956)(100)=0.22661956(0.0212)(100)=2.12Total Liabilities and owner' equity$181,979100$172,149100Round off0.2Round Off2.1Total Current Liabilities18220/181979=0.1001214426Total Current Liabilities14010/172149=0.081382988(0.100121443)(100)=10.0121443(0.08138)(100)=8.138Round off10Round off8.1Total Long Term Liabilities92800/181979=0.5099489502Long Term Liabilities75800/172149=0.4403162377(0.50994895)(100)=50.994895(0.44032)(100)44.032Round off51Round off44Total Liabilities111020/181979=0.6100703927Total Liabilities89810/172149=0.5216992257(0.610070393)(100)=61.0070393(0.5217)(172149)=52.17Round off61Round off 52.1Owner's Equity70959/181979=0.3899296073Owner's Equity82339/172149=0.4783007743(0.38992961)(100)=38.99261(0.4783)(100)=47.83Round off39Round off47.8Total Liabilities and Owner's Equity181979/181979=1Total Liabilities and Owner's Equity172149/172149=1(1)(100)100(1)(100)=100Round off100Round off100
Case 21-1 HorizontalContemporary Wood Furniture Comparative Balance SheetDecember 31, 2010 and 211Increase(Decrease)*20112010AmountPercentAssetsSolution for amount Increase (Decrease) Solution for increase or decrease Cash$1,844$3,278($1,434)(43.75)Amount = 1844 - 3278Percentage = (1434)/3278 * 100% Accounts Receivable11,8076954$4,85369.80Amount = 11807 - 6954Percentage = 4853/6964 * 100% Inventory9,62817,417($7,789)(44.72)Amount = 9628 - 17417Percentage = (7789)/17417 * 100%Equipment 158,700144,500$14,2009.8Amount = 158700 - 144500Percentage = 14200/144500 * 100%Total Assets$181,979$172,149$9,8305.7Amount = 181979 - 172149Percentage = 9830/172149 * 100%
LiabilitiesAccounts Payable13,4469,250$4,19645.4Amount = 13446 - 9250Percentage = 4196/9250 * 100%Wages Payable6501,110($460)(41.40)Amount = 650 - 1110Percentage = (460)/1110 * 100%Property and Taxes Payable4,1243,650$47413Amount = 4124 - 3650Percentage = 474/3650 * 100%Long Term Debts92,80075,800$17,00022.4Amount = 92800 - 75800Percentage = 17000/75800 * 100%Total Liabilities111,02089,810$21,21023.6Amount = 111020 - 89810Percentage = 21210/89810 * 100%
Owner's EquityC. Royston, capital70,95982,339($11,380)(13.80)Amount = 70959 - 82339Percentage = (11380)/82339 * 100%Total Liabilities and Owner's Equity181,979172,149$9,8305.7Amount = 181979 - 172149Percentage = 9830/172149 * 100%
Case 21-1 RatiosCurrent Ratio and Total Debit to Total RatioCurrent Ratio 2010Current Ratio 2011Current AssetsCurrent AssetsCurrent LiabilitiesCurrent Liabilities
Current Assets27649Current Assets23279Current Liabilities14010Current Liabilities18220
Answer1.9735189151Answer1.27766Answer Round off 2Answer Round off1.2Current Ratio2 to 1Current Ratio 1.2 to 1
Total Debit to Total Ratio 2010Total Debit to Total Ratio 2011Total LiabilitiesTotal LiabilitiesTotal AssetsTotal Assets
Total Liabilities 172149Total Liabilities111020Total Asset14010Total Asset181979
Answer12.2875802998Answer0.6100703927Answer Round off12.3Answe Round Off0.61Total Ratio12.3 to 1Total Ratio0.61 to 1
Case 21-1 Question 33. Overall, what does your analysis mean? Is Charles correct to be concerned about these numbers? Explain The Current ratio for 2010 is good because the assets are greater than the liabilities. In 2011 the current ratio went down from 2 in 2010 to 1.2 in 2011. This is means that the assets are still greater than the liabilities but it shows there are some losses. Thetotal debt to total ratio in 2010 is 12.3 means that the debts are extremely high. In 2011 the same ratio went to the industry averagemeans the debts are ok. The vertical balance shows that the total assets in dollars were stronger than the liabilities. If we take a look at 2010 the asset in dollars are stonge as well. The main concern is the percentage of both years. The percentage of current assets in 2010 is higher than 2011. In 2011 the total liabilities were higher than 2010 total liabilities. This usually means that Charles liabilitiesare not under control or he is not having much cash comming into to the business. In the horizontal balance sheet confirms that Charles is losing mony and inventory. Charles is correct to be concerned. He has to find a solution to increase cash and assets. He needs to lower The liabilities.
Case 21-2 Balance SheetCarltonShow Your Work and calculationsBalance SheetFor year ending December 31, 2011Amount Percent Cash4,000/40,000=0.1Assets(0.1)(100)=10Current AssetsAccounts Receivable6,000/40,000=0.15Cash$4,00010(0.15)(100)=15Accounts Receivable6,00015Merchandise Inventory15,000/40,000=0.375Merechandise Inventory15,00037.5(0.375)(100)=37.5Total Current Assets$25,00062.5Total Assets25,000/40,000=0.625(0.625)(100)=62.5Plant and EquipmentPlant and Equipment15,000/40,000=0.375Equipment 15,00037.5(0.375)(100)=37.5Total Assets $40,000100Total Assets40,000/40,000=1(1)(100)=100LiabiitiesAccounts Payable3,500/40,000=0.0875Current Liabilities(0.0875)(100)=8.75Accounts Payable3,5008.75Insurnce Payable5001.25Insurance Payable500/40,000=0.0125Wages Payables1,5003.75(0.0125)(100)=1.25Total Liabilities5,50013.75Wages Payable1,500/40,000=0.0375Owner's equity(0.0375)(100)=3.75Carlton,capital34,50086.3Total Liabilities and Equity40,000100Total Liabilities5,500/40,000=0.1375(0.1375)(100)=13.75
Carlton, Capital34,500/40,000=0.8625(0.8625)(100)=86.25
Total Liabilities and Owner's Equity40,000/40,000=1(1)(100)=100
Case 21-2 IncomeCarltonShow Your work and your CalucaltionsIncome StatementDepreciation2,000For the year ending December 31, 2011Rent expense15,000Percent Wages 8,000Amount of Net SalesUtilities6,500Net Sales$120,000100Miscellanous Expenses1,500Cost of Goods85,0007.8Total Operating Expenses33,000Gross Profits$35,0002.9Opreating Expenses33,00027.5Net Sales120000/120000=1Net Income$2,0001.7(1)(100)=100Cost of Goods85,000/120,000=0.7083333333(0.708333)(100)=70.833Round Off70.8Gross Profit35000/120000=0.0291666667(0.029167)(100)=2.9167Round Off2.9Operating Expenses33000/120000=0.275(0.275)(100)=27.5Net Income2000/120000=0.0166666667(0.016667)/(100)=1.6667Round off1.7
Case 21-2 RatiosCurrent RatiosAcid Test RatioHope's CalculationsCurrent AssetsAcid Test RatioCash4000Acid Test Ratio =Quick Current AssetsCash$4,000Accounts Receivable6000Current LiabilitesAccounts Receivable 6,000Merechandise Inventory15000Total$10,000Total Current Assets25000Quick Current Assets$4,000 + $6,000 Current Liabilities$5,500Wages Payable1,500Current LiabilitiesAccounts Payable3,500Accounts Payable3500Quick Current Assets10,000Insurance Payable 500Insurance Payable500Current Liabilities$5,500Total Liabilities5,500Wages Payable1500Total Liabilites5500Answer1.81818181Round to1.82Current Ratio=Current AssetsAcid Test Ratio 1.82 to 1Current Liabilities
Current Asset25000Current Liabilities5500
Current Ratio4.5454545455Current Ratio Round off4.5Current Ratio 4.5 to 1
Foglio5
