Chapter+13+Solutions

Chapter+13+Solutions - Problem 13-1A(60 minutes Part 1...

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Problem 13-1A (60 minutes) Part 1 Current ratio: December 31, 2010: $48,242 / $20,534 = 2.3 to 1 December 31, 2009: $38,514 / $20,349 = 1.9 to 1 December 31, 2008: $51,484 / $19,801 = 2.6 to 1 Part 2 ASTALON COMPANY 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 63.40 64.00 Gross profit .......................................... 39.80 36.60 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 14.00 14.50 Income taxes ........................................ 3.09 2.87 2.94 Net income ........................................... 13.51 % 11.13 % 11.56 % Problem 13-1A (Concluded) Part 3 ASTALON COMPANY Balance Sheet Data in Trend Percents December 31, 2010, 2009, and 2008 2010 2009 2008 Assets Current assets .................................. 93.70% 74.81% 100.00%
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Long-term investments ................... 0.00 22.10 100.00 Plant assets ...................................... 159.19 167.55 100.00 Total assets ...................................... 124.30 120.70 100.00 Liabilities and Equity Current liabilities .............................. 103.70% 102.77% 100.00% Common stock ................................. 135.29 135.29 100.00 Other contributed capital ................ 152.20 152.20 100.00 Retained earnings ............................ 115.82 105.22 100.00 Total liabilities and equity ............... 124.30 120.70 100.00 Part 4 Significant relations revealed Astalon’s cost of goods sold and income taxes consumed smaller portions of each sales dollar in 2009 than 2008. However, selling expenses and administrative expenses consumed a larger portion in 2009. Therefore, income
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