Bridgeport Electronics experienced the following events during Year 1, its first year of operation: 1. Started the business when it acquired $96,000 cash from the issue of common stock. 2. Paid $81,000 cash to purchase inventory. 3. Sold merchandise inventory costing $33,000 for $61,000 cash. Record this transaction as two separate events (3a & 3b). 4. Physically counted inventory showing $41,400 inventory was on hand at the end of the accounting period. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. The first transaction is shown as an example. Note: In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require an input - leave cells blank if there is no corresponding input needed.

Bridgeport Electronics experienced the following events during Year 1, its first year of operation: 1. Started the business when it acquired $96,000 cash from the issue of common stock. 2. Paid $81,000 cash to purchase inventory. 3. Sold merchandise inventory costing $33,000 for $61,000 cash. Record this transaction as two separate events (3a & 3b). 4. Physically counted inventory showing $41,400 inventory was on hand at the end of the accounting period. Required: Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. The first transaction is shown as an example. Note: In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require an input - leave cells blank if there is no corresponding input needed.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 56P: The following selected information is taken from the financial statements of Arnn Company for its...

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The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations: During the year, Arnn had net sales of 2.45 million. The cost of goods sold was 1.3 million. Required: Note: Round all answers to two decimal places. 1. Compute the current ratio. 2. Compute the quick or acid-test ratio. 3. Compute the accounts receivable turnover ratio. 4. Compute the accounts receivable turnover in days. 5. Compute the inventory turnover ratio. 6. Compute the inventory turnover in days.
Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of 250,000. During the year, it made 613,000 of net purchases. At the end of the year, a physical inventory showed it had ending inventory of 140,000. Calculate Reid Companys cost of goods sold for the year.
Plum Corporation began the month of May with $700,000 of current assets, a current ratio of 2.50:1, andan acid-test ratio of 1.10:1. During the month, it completed the following transactions (the company usesa perpetual inventory system).May 2 Purchased $50,000 of merchandise inventory on credit.8 Sold merchandise inventory that cost $55,000 for $110,000 cash.10 Collected $20,000 cash on an account receivable.15 Paid $22,000 cash to settle an account payable.17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account.22 Declared a $1 per share cash dividend on its 50,000 shares of outstanding common stock.26 Paid the dividend declared on May 22.27 Borrowed $100,000 cash by giving the bank a 30-day, 10% note.28 Borrowed $80,000 cash by signing a long-term secured note.29 Used the $180,000 cash proceeds from the notes to buy new machinery. RequiredPrepare a table, showing Plum’s (1) current ratio, (2) acid-test ratio, and (3) workingcapital after each transaction.…
Plum Corporation began the month of May with $700,000 of current assets, a current ratio of 2.50:1, and an acid-test ratio of 1.10:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $50,000 of merchandise inventory on credit. May 8 Sold merchandise inventory that cost $55,000 for $110,000 cash. May 10 Collected $20,000 cash on an account receivable. May 15 Paid $22,000 cash to settle an account payable. May 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. May 22 Declared a $1 per share cash dividend on its 50,000 shares of outstanding common stock. May 26 Paid the dividend declared on May 22. May 27 Borrowed $100,000 cash by giving the bank a 30-day, 10% note. May 28 Borrowed $80,000 cash by signing a long-term secured note. May 29 Used the $ 180,000 cash proceeds from the notes to buy new machinery. Required: Complete the table below showing Plum's (1) current ratio, (2)…
Plum Corporation began the month of May with $1,400,000 of current assets, a current ratio of 2.00:1, and an acid-test ratio of 1.70:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $65,000 of merchandise inventory on credit. May 8 Sold merchandise inventory that cost $55,000 for $140,000 cash. May 10 Collected $26,000 cash on an account receivable. May 15 Paid $29,500 cash to settle an account payable. May 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. May 22 Declared a $1 per share cash dividend on its 62,000 shares of outstanding common stock. May 26 Paid the dividend declared on May 22. May 27 Borrowed $100,000 cash by giving the bank a 30-day, 10 % note. May 28 Borrowed $120,000 cash by signing a long-term secured note. May 29 Used the $220,000 cash proceeds from the notes to buy new machinery. Required: Complete the table below showing Plum's (1) current ratio, (2)…
Plum Corporation began the month of May with $1,200,000 of current assets, a current ratio of 2.50:1, and an acid - test ratio of 1.40:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $70,000 of merchandise inventory on credit. May 8 Sold merchandise inventory that cost $45,000 for $130,000 cash. May 10 Collected $26,000 cash on an account receivable. May 15 Paid $30,000 cash to settle an account payable. May 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. May 22 Declared a $1 per share cash dividend on its 67,000 shares of outstanding common stock. May 26 Paid the dividend declared on May 22. May 27 Borrowed $115,000 cash by giving the bank a 30-day, 10% note. May 28 Borrowed $140,000 cash by signing a long-term secured note. May 29 Used the $255,000 cash proceeds from the notes to buy new machinery. Required: Complete the table below showing Plum's (1) current ratio, (2)…
Plum Corporation began the month of May with $1,300,000 of current assets, a current ratio of 1.80:1, and an acid-test ratio of 1.40:1. During the month, it completed the following transactions (the company uses a perpetual inventory system). May 2 Purchased $75,000 of merchandise inventory on credit. May 8 Sold merchandise inventory that cost $45,000 for $150,000 cash. May 10 Collected $23,000 cash on an account receivable. May 15 Paid $31,500 cash to settle an account payable. May 17 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account. May 22 Declared a $1 per share cash dividend on its 58,000 shares of outstanding common stock. May 26 Paid the dividend declared on May 22. May 27 Borrowed $115,000 cash by giving the bank a 30-day, 10% note. May 28 Borrowed $130,000 cash by signing a long-term secured note. May 29 Used the $245,000 cash proceeds from the notes to buy new machinery. Required: Complete the table below showing Plum's…
Koto Corporation began the month of June with $300,000 of current assets, a current ratio of 2.5:1, and anacid-test ratio of 1.4:1. During the month, it completed the following transactions (the company uses aperpetual inventory system).June 1 Sold merchandise inventory that cost $75,000 for $120,000 cash.3 Collected $88,000 cash on an account receivable.5 Purchased $150,000 of merchandise inventory on credit.7 Borrowed $100,000 cash by giving the bank a 60-day, 10% note.10 Borrowed $120,000 cash by signing a long-term secured note.12 Purchased machinery for $275,000 cash.15 Declared a $1 per share cash dividend on its 80,000 shares of outstanding common stock.19 Wrote off a $5,000 bad debt against the Allowance for Doubtful Accounts account.22 Paid $12,000 cash to settle an account payable.30 Paid the dividend declared on June 15.RequiredPrepare a table, showing the company’s (1) current ratio, (2) acid-test ratio, and(3) working capital after each transaction. Round ratios to two…
On Cherry Blossom Department Stores' most recent balance sheet, the balance of its inventory at the beginning of the year was $11,000. At the end of the year, the inventory balance was $17,500. During that year, its cost of goods sold was $59,000. All purchases of inventory throughout the year were on account. What was the total of Cherry Blossom's purchases during the year?
During the year just ended, the retailer James Corporation purchased $450,000 of inventory. The inventory balance at the beginning of the year was $201,000. If the cost of goods sold for the year was $474,000, then the inventory turnover for the year was:
Powell Company began the Year 3 accounting period with $44,000 cash, $90,000 inventory. $64,000 common stock, and $70,000 retained earnings. During Year 3, Powell experienced the following events: 1. Sold merchandise costing $60,000 for $103,500 on account to Prentise Furniture Store. 2. Delivered the goods to Prentise under terms FOB destination. Freight costs were $1,100 cash. 3. Received returned goods from Prentise. The goods cost Powell $4,400 and were sold to Prentise for $6,600. 4. Granted Prentise a $3,400 allowance for damaged goods that Prentise agreed to keep. 5. Collected partial payment of $84,500 cash from accounts receivable. Required: a. Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or…
Lewis Incorporated and Clark Enterprises report the following amounts for the year. Lewis Clark Inventory (beginning) $29,000 $55,000 Inventory (ending) 23,000 65,000 Purchases 339,000 177,000 Purchase returns 20,000 65,000 Required:1. Calculate cost of goods sold for each company.2. Calculate the inventory turnover ratio for each company.3. Calculate the average days in inventory for each company.4. Which company appears to be managing its inventory more efficiently?