ORIE 3150 Prelim 1 Solutions Summer 08

ORIE 3150 Prelim 1 Solutions Summer 08 - ORIE 3150 Prelim,...

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ORIE 3150 Name (please print) ___________________________________ Prelim, Fall 2008 Accounting Equation A = L + SE Earnings Per Share EPS = Net Income Average Number of Shares Outstanding Current Ratio s Liabilitie Current Assets Current Ratio Current = 1 2 3 4 5 6 7 8 9 10 T
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1. The Wombat Corporation had the following assets, liabilities and stockholder’s equity on the dates indicated. The corporation’s fiscal year ends on December 31 each year. Date Assets Liabilities Stockholder’s Equity December 31, 2002 $500,000 $350,000 $150,000 December 31, 2003 $560,000 $405,000 $155,000 December 31, 2004 $690,000 $500,000 $190,000 In 2003, the cash dividends were zero, but investors invested an additional $100,000 cash in the business. In 2004, cash dividends of $40,000 were declared and paid, there were no additional investments. Find the annual net income (or loss) for 2003 and 2004. 2003: $95,000 loss Check: 150,000 + 100,000 – 95,000 = 155,000 2004: $75,000 profit Check: 155,000 – 40,000 + 75,000 = 190,000
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2. Use the following data to construct a simple balance sheet for IBC Company as of December 31, 2004. Be sure to show a figure for Total Assets and a figure for Total Liabilities and Stockholder’s Equity. Accounts payable $ 3,000 Accounts receivable 4,000 Cash 2,000 Inventory 10,000 Notes payable 12,000 Contributed capital 20,000 Plant and equipment, net of depreciation 25,000 Retained Earnings, Dec. 31, 2004 6,000 Sales Revenue 32,000 IBC Company Balance Sheet Dec. 31, 2004 Assets Cash 2,000 Accounts Receivable 4,000 Inventory 10,000 Plant and equip, net 25,000 Total Assets 41,000 Liabilities Accounts Payable 3,000 Notes Payable 12,000 Total Liabilities 15,000 Stockholders Equity Contributed Capital 20,000 Ret. Earnings, 12/31/04 6,000 Total Stockholder’s Equity 26,000 Total Liabilities and Stockholder’s Equity 41,000
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3. The following accounts and balances are taken from the general ledger of Mount Cedar Corporation. Accounts payable $ 40,000 Accounts receivable 30,000 Cash 105,000 Current portion of long-term debt 60,000 Merchandise inventory 76,000 Long-term debt 80,000 Property, plant, and equipment 180,000 Contributed capital 128,000 Retained earnings 84,000 Compute the current ratio.
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ORIE 3150 Prelim 1 Solutions Summer 08 - ORIE 3150 Prelim,...

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