# Practice Problems_newest - Practice Problems(Ch 16 Problem...

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Practice Problems (Ch 16) Problem 1: Financial Statement Analysis The balance sheet and income statements for Waverly Inc. are presented below. Waverly Inc. Balance Sheet December 31, 20X4 and 20X3 Dec. 31, 20X4 Dec. 31, 20X3 Cash \$ 11,000 \$ 8,400 Trading securities 5,000 4,800 Accounts receivable (net) 119,200 104,000 Inventory 150,000 126,000 Prepaid expenses 1,800 1,200 Property, plant, and equipment 97,600 83,200 Total assets \$384,600 \$327,600 Notes payable \$ 7,000 \$ 6,000 Accounts payable 50,200 48,200 Accrued liabilities 60,000 54,600 Bonds payable 60,000 40,000 10% Preferred stock, \$100 par 16,000 16,000 Common stock, \$5 par 30,000 30,000 Paid-in capital in excess of par-common 21,000 21,000 Retained earnings 140,400 111,800 Total liabilities and stockholders' equity \$384,600 \$327,600 Waverly Inc. Income Statement Years Ended December 31, 20X4 and 20X3 Dec. 31, 20X4 Dec. 31, 20x3 Net sales \$830,000 \$640,000 Cost of goods sold 580,000 460,000 Gross profit 250,000 180,000 Operating expenses 178,280 119,800 Income from operations 71,720 60,200 Interest expense 6,000 4,800 Income before income tax 65,720 55,400 Income tax expense 28,200 24,600 Net income \$ 37,520 \$ 30,800

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Required: 1. Compute trend percentages for Net Sales for 20X0-20X4. Assume Net Sales for 20X0-20X2 are \$404,000, \$430,000, and \$486,000, respectively. 2. Prepare a comparative common-size income statement for 20X4 and 20X3. 3. Compute the following for 20X4 and 20X3: ( Remember that the only ratios that have to be memorized are the ones in the notes that have the formula. The other ratios you must be familiar with, you may have to calculate, but you will be given the formula) a. Working capital b. Current ratio c. Quick ratio d. Inventory turnover (assume beginning inventory in 20X3 is \$109,200) e. Days’ sales in receivables (assume beginning net receivables in 20X3 is \$96,000) f. Debt ratio g Times-interest-earned h. Rate of return on total assets (assume beginning total assets in 20X3 is \$292,200) i. Rate of return on common stockholders’ equity (assume beginning total common stockholders' equity in 20X3 is \$138,360) j. Earnings per share of common stock k. Price/earnings ratio (assume market price in 20X4 and 20X3 is \$55.50 and \$53.75, respectively). l. Dividend yield (assume dividends per share for common is \$1.22 and \$.92, respectively) Practice Problems (Ch 2) COGM and COGS The following information pertains to the Spray-Write Paint Company for the current year. Work in process inventory, December 31, 20x0 \$200,000 Sales 550,000 Finished goods inventory, December 31, 20x0 150,000 Direct materials inventory, January 1, 20x0 20,000 Direct materials inventory, December 31, 20x0 30,000 Work in process inventory, January 1, 20x0 210,000 Finished goods inventory, January 1, 20x0 130,000 Gross margin 200,000 Materials used 150,000 Direct labor (8,000 hrs. @ \$10/hr) 80,000 Calculate : 1. Direct Material Purchases 3. Total manufacturing costs 2. Manufacturing Overhead 4. Cost of Goods Manufactured 5. Cost of Goods Sold
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Practice Problems_newest - Practice Problems(Ch 16 Problem...

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