ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS 625 CUMULATIVE REVIEW PROBLE

Question

ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS 625 CUMULATIVE REVIEW PROBLEM: CHAPTER 15 The purpose of this problem is to provide an opportunity to revienw both new concepts in the current chapter and major concepts in previous chapters. This curaulatice revienc should assist you in integrating accounting concepts and preparing for exams. REQUIRED: Use the following information for the eight questions which follow. Heather Company has the following account balances after adjusting entries at December 31, 2011: 137,000 Bonds Payable (due 2050) Accounts Payable Dividends Treasury Stock, Common (22,000 shares) Preferred Stock ($10 par 100,000 C 22,000 g 20,000 98,000 C -220,000 Paid-in Capital in Exoess of Par Value, Preferred Accounts Receivable Common Stock ($1 par) 400,000 940,000 C v0.000?? 0720,000 Cost of Goods Sold Unearned Revenue Allowance for Doubtful Accounts Operating Expenses 18,000 15,000 5,000 40,000 C 40,000 ?? 27,000 Paid-in Capital in Excess of Par Value, Common Retained Earnings (1/1/2011) 1. The adjusted trial balance on December 31, 2011, would balance at: 2. The net income for the year is: 3·The total owners' equity on the December 31, 2011 balance sheet is: 4. The total assets on the December 31, 2011 balance sheet is: 5. The total current assets on the December 31, 2011l balance sheet is 6. The current ratio on December 31, 2011 is: 7. The total debt percentage on December 31, 2011 is: 8. The gross margin percent for 2011 is:

Explanation / Answer

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Adjusted Trial Balance Dr Cr Cash $137,000 Accounts Receivable $90,000 Allowance for Doubtful Debts 15000 Mercandise Inventory $70,000 Equipment 240000 Accumulated dep-equipmnet 40000 Land 220000 Accounts Payable $22,000 Uneraned Revenue 18000 Bonds payable $100,000 Preferred Stock 80000 Common stock 400000 Paod in capital in excess of par-Preferred 8000 Paid in capital in excess of par-Common 40000 Retained Earnings 27000 Dividends 20000 Treasury stock 98000 Sales 940000 Cost of good sold 720000 Operating expenses 95000 Total $1,690,000 $1,690,000 ans 1 Total of Adjusted Trial Balance $1,690,000 ans 2 Net Income Sales 940000 Cost of good sold 720000 Operating expenses 95000 815000 Net Income 125000 ans 3 Owners equity Preferred Stock 80000 Common stock 400000 Paod in capital in excess of par-Preferred 8000 Paid in capital in excess of par-Common 40000 Retained Earnings (27000+125000-20000) 132000 Less: Treasury stock -98000 Owners equity 562000 ans 4 Total assets Cash $137,000 Accounts Receivable $90,000 Allowance for Doubtful Debts ($15,000) Mercandise Inventory $70,000 Equipment 240000 Accumulated dep-equipmnet ($40,000) Land 220000 Total assets $702,000 ans 5 Total current assets Cash $137,000 Accounts Receivable $90,000 Allowance for Doubtful Debts ($15,000) Mercandise Inventory $70,000 Total current assets $282,000 ans 6 Current ratio 7.05 282000/(22000+18000) ans 7 Total debt % (100000+22000+18000)/702000 19.94 % ans 8 Gross profit margin 76.6 % 720000/940000*100

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