CourseProject2_ACCT212_Benson

# CourseProject2_ACCT212_Benson - FINANCIAL ACCOUNTING Eighth...

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FINANCIAL ACCOUNTING - Eighth Edition Solutions Manual Chapter 13: Financial Statement Analysis Page 1 of 3 ACCT 212 : Course Project 2 Go to next tab to solve! McDonough Products, Inc. Income Statement Compared with Industry Average Year Ended December 31, 2010 McDonough Net sales ...............................................................................  \$700,000   100.00%  Cost of goods sold ..............................................................  490,000   57.30%  Gross profit ..........................................................................  210,000   42.70%  Operating expenses  ...........................................................  175,000   29.40%  Operating income ................................................................  35,000   13.30%  Other expenses ....................................................................  7,000   2.50%  Net income  ..........................................................................  \$28,000   10.80%  McDonough Products, Inc. Balance Sheet Compared with Industry Average December 31, 2010 McDonough Current assets ......................................................................  \$471,200  72.1%   Fixed assets, net  .................................................................  114,700  19.0% Intangible assets, net  ..........................................................  21,080  4.8% Other assets .........................................................................  13,020  4.1% Total  .....................................................................................  620,000  1.0% Current liabilities  .................................................................  240,560  47.2% Long-term liabilities  ............................................................  135,160  21.0% Stockholders’ equity ............................................................  244,280  31.8% Total  .....................................................................................  \$620,000  1.0% Industry Average Current Ratio 1.53 Industry Average Total Debt to Total Assets 0.68 Requirements 1. 2. 3. Learning Objectives : Preparing common-size statements; analyzing profitability; making comparisons with the industry Top managers of McDonough Products, Inc., have asked for your help in comparing the  company’s profit performance and financial position with the average for the industry. The  accountant has given you the company’s income statement and balance sheet and also the  following data for the industry: Industry Average Industry Average Prepare a common-size income statement and balance sheet for McDonough Products.  The first column of each statement should present McDonough Products’ common-size  statement, and the second column should show the industry averages.

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