Question 6 Presented below is the ledger for Heerey Co. Cash No. 101 10/1 5,000

Question

Question 6 Presented below is the ledger for Heerey Co. Cash No. 101 10/1 5,000 10/4 400 10/10 650 10/12 1,500 10/10 4,000 10/15 250 10/20 500 10/30 300 10/25 2,000 10/31 500 Accounts Receivable No. 112 10/6 800 10/20 500 10/20 940 Supplies No. 126 10/4 400 Furniture No. 149 10/3 2,000 Notes Payable No. 200 10/10 4,000 Accounts Payable No. 201 10/12 1,500 10/3 2,000 Heerey, Capital No. 301 10/1 5,000 10/25 2,000 Service Revenue No. 407 10/6 800 10/10 650 10/20 940 Heerey, Drawing No. 306 10/30 300 Store Wages Expense No. 628 10/31 500 Rent Expense No. 729 10/15 250 Instructions (a) Reproduce the journal entries for the transactions that occurred on Oct 1, 10, and 20. Date Account/Description Debit Credit Oct. 1 (Owner's investment of cash in business.) 10 (Received Cash for services provided.) 10 (Obtained loan from bank.) 20 (Received cash in payment of account.) 20 (Billed clients for services provided.) (b) Determine the October 31 balance for each of the accounts above, and complete the trial balance at October 31, 2010. (If answer is zero, please enter 0. Do not leave any fields blank.) HEEREY CO. Trial Balance October 31, 2010 Debit Credit Cash $ $ Accounts Receivable Supplies Furniture Notes Payable Accounts Payable Heerey, Capital Heerey, Drawing Service Revenue Store Wages Expense Rent Expense $ $

Explanation / Answer

Ryan Company is the first set of numbers.............Priest Company is the second set of numbers ______________________________________… Data from the current year-end balance sheets Assets Cash $18,500 $34,000 Accounts receivable, net 37,400 55,400 Current notes receivable (trade) 9,800 7,200 Merchandise inventory 84,940 132,500 Prepaid expenses 5,300 7,800 Plant assets, net 340,000 308,400 _____________________________________… Total assets $ 495,940 $ 545,300 _____________________________________… Liabilities and Equity Current liabilities $68,340 $93,300 Long-term notes payable 81,800 113,000 Common stock, $5 par value 200,000 226,000 Retained earnings 145,800 113,000 _____________________________________… Total liabilities and equity $495,940 $545,300 _____________________________________… Data from the current year’s income statement Sales $790,000 $909,200 Cost of goods sold 588,100 652,500 Interest expense 8,100 12,000 Income tax expense 15,185 25,100 Net income 178,615 219,600 Basic earnings per share 4.47 4.86 Beginning-of-year balance sheet data Accounts receivable, net $31,800 $56,200 Current notes receivable (trade) 0 0 Merchandise inventory 63,600 113,400 Total assets 448,000 362,500 Common stock, $5 par value 200,000 230,000 Retained earnings 105,300 91,600 MY ANSWERS: FIRST ONE: Ryan Company SECOND ONE: Priest Company A. Current ratio 2.3 to 1 ...................... 2.5 to 1 B. Acid-test ratio 1.0 to 1 ......................1.0 to 1 C. Accounts receivable turnover 22.8 times ......................16.3 times D. Inventory turnover 7.9 times .............................5.3 times E. Days' sales in inventory 52.7 days ..................74.1 days F. Days' sales uncollected 17.3 days ....................22.2 days A. Profit margin ratio 22.6% .....................24.2% B. Total asset turnover 1.7 times .....................2.0 times C. Return on total assets 37.8% ....................48.4% D. Return on common stockholders' ezuity 89.3% ..............74.6% E. Price-earnings ratio 1.1..................1.0 F. Dividend yield 0% ..................0%

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