AC301-Unit6ExcelTemplate

AC301-Unit6ExcelTemplate - The controller of the Halpern...

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Unformatted text preview: The controller of the Halpern Company prepared the following income statement and balance sheet at the end of the first year of the company's existence: Income Statement Sales revenue $40,000 Cost of sales (20,000) Operating expenses (8,000) Net income $12,000 Balance Sheet Cash $33,000 Accounts payable $5,000 Inventory 24,000 Notes payable 40,000 R&D costs 30,000 Common stock 50,000 Property, plant, and equipment (net) 20,000 Retained earnings 12,000 $107,000 $107,000 Investigation shows that R&D costs include, among others, half the year's operating costs because "the company is not yet operating at capacity." In addition, R&D costs include $5,000 of material that were wasted during early production because "our employees made some unnecessary mistakes." Required 1. Prepare the financial statements according to GAAP. 2. Compute the company's return on assets (net income divided by average total assets, as we discussed in Chapter 6) under both the original and revised financial statements. P12-9 R&D Costs Name: An asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s). If you are still getting a red asterisk, and think the answer is correct, but used a formula in the cell try manually typing in the answer according to the rounding instructions. Required 1. Prepare the financial statements according to GAAP. Income Statement Sales revenue $40,000 Cost of sales (25,000) Gross profit $15,000 Operating expenses (16,000) Research and development expenses (17,000) Net Loss $(18,000) Balance Sheet Cash $33,000 Inventory 24,000 Total current assets $57,000 Property, plant, and equipment (net) 20,000 Total Assets $77,000 Accounts payable $5,000 Notes payable 40,000 Total Liabilities $45,000 Common stock $50,000 Retained earnings--deficit (18,000) Total Stockholders' equity 32,000 Total Liabilities and Stockholders' Equity $77,000 2. Compute the company's return on assets (net income divided by average total assets, as we discussed in Chapter 6) under both the original and revised financial statements. Original Financial Statements: Rate of return = Net income / Total Assets = $12,000 $107,000 = 11.2% Revised Financial Statements: Rate of return = Net loss / Total Assets = $(18,000) $77,000 =-23.4% P12-9 R&D Costs Name: Solutions An asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s). If you are still getting a red asterisk, and think the answer is correct, but used a formula in the cell try manually typing in the answer according to the rounding instructions. Required 1. Prepare the financial statements according to GAAP. Income Statement Sales revenue $40,000 Cost of sales (25,000) Gross profit $15,000 Operating expenses (16,000) Research and development expenses (17,000) Net Loss $(18,000) Balance Sheet Cash $33,000 Inventory 24,000 Total current assets $57,000 Property, plant, and equipment (net) 20,000 Total Assets $77,000 Accounts payable $5,000 Notes payable 40,000 Total Liabilities $45,000 Common stock...
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AC301-Unit6ExcelTemplate - The controller of the Halpern...

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