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Ch.+13+Problem+Solutions

Ch.+13+Problem+Solutions - Problem 13-1B(60 minutes Part 1...

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Problem 13-1B (60 minutes) Part 1 Current ratio: December 31, 2010: $53,776 / $22,432 = 2.4 to 1 December 31, 2009: $42,494 / $22,230 = 1.9 to 1 December 31, 2008: $55,118 / $21,632 = 2.5 to 1 Part 2 DANNO CORPORATION Common-Size Comparative Income Statements For Years Ended December 31, 2010, 2009, and 2008 2010 2009 2008 Sales ...................................................... 100.00% 100.00% 100.00% Cost of goods sold .............................. 60.20 63.30 64.00 Gross profit .......................................... 39.80 36.70 36.00 Selling expenses .................................. 14.20 13.80 13.20 Administrative expenses .................... 9.00 8.80 8.30 Total expenses ..................................... 23.20 22.60 21.50 Income before taxes ............................ 16.60 14.10 14.50 Income taxes ........................................ 3.09 2.89 2.94 Net income ........................................... 13.51 % 11.21 % 11.56 % Problem 13-1B (Concluded)
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Part 3 DANNO CORPORATION Balance Sheet Data in Trend Percents December 31, 2010, 2009, and 2008 2010 2009 2008 Assets Current assets ...................................... 97.57% 77.10% 100.00% Long-term investments ....................... 0.00 9.73 100.00 Plant assets .......................................... 155.12 165.11 100.00 Total assets .......................................... 124.30 120.70 100.00 Liabilities and Equity Current liabilities .................................. 103.70% 102.76% 100.00% Common stock ..................................... 134.62 134.62 100.00 Other paid in capital ............................ 151.44 151.44 100.00 Retained earnings ................................ 118.70 109.09 100.00 Total liabilities and equity ................... 124.30 120.70 100.00 Part 4 Significant relations revealed Danno's cost of goods sold took a smaller percent of sales each year. Selling and administrative expenses and income taxes took a larger portion
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