Student Name:
Instructor
Class:
McGraw-Hill/Irwin
Coached Problem 13-1
Requirement 1:
GOLDEN CORPORATION
Comparative Financial Statements
December 31, 2010
Increase (Decrease)
2006 over 2005
2010
2009
Amount
Percentage
Income Statement
Sales revenue
$180,000
$165,000
$15,000
9.09%
<-- Correct!
Cost of goods sold
110,000
100,000
10,000
10.00%
<-- Correct!
Gross profit
70,000
65,000
5,000
7.69%
<-- Correct!
Operating expenses
53,300
50,400
2,900
5.75%
<-- Correct!
Interest expense
2,700
2,600
100
3.85%
<-- Correct!
Income before taxes
14,000
12,000
2,000
16.67%
<-- Correct!
Income tax expense
4,000
3,000
1,000
33.33%
<-- Correct!
Net income
$10,000
$9,000
$1,000
11.11%
<-- Correct!
Balance Sheet
Cash
$4,000
$8,000
($4,000)
-50.00%
<-- Correct!
Accounts receivable (net)
19,000
23,000
(4,000)
-17.39%
<-- Correct!
Inventory
40,000
35,000
5,000
14.29%
<-- Correct!
Property and equipment (net)
45,000
38,000
7,000
18.42%
<-- Correct!
$108,000
$104,000
$4,000
3.85%
<-- Correct!
Current liabilities
$16,000
$19,000
($3,000)
-15.79%
<-- Correct!
Long-term liabilities
45,000
45,000
0
0.00%
<-- Correct!
Common stock (par $5)
30,000
30,000
0
0.00%
<-- Correct!
Additional paid-in capital
5,000
5,000
0
0.00%
<-- Correct!
Retained earnings
12,000
5,000
7,000
140.00%
<-- Correct!
$108,000
$104,000
$4,000
3.85%
<-- Correct!
Requirement 2:
The percentage change in Cash (50%) is big but it results from the small prior year balance.
The
percentage change in Retained Earnings (140%) also is big, but it too is the consequence of a small
prior year balance and it can be explained by the net income and dividends in the current year.
One
really unusual change is that although sales increased by 9.09%, accounts receivable decreased by
17.4%.
Typically, an increase in sales would be accompanied by an increase in accounts receivable.
One potential explanation of this odd pattern is that the company might have factored some of its
accounts receivable during 2010, but this is just speculation at this point.
Another oddity is that
inventory increased 14.3% but current liabilities decreased by 15.8%.
One would expect an increase
in inventory to be accompanied by an increase in accounts payable.
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Given Data CP13-1:
GOLDEN CORPORATION
Comparative Financial Statements
December 31, 2010
2010
2009
Income Statement
Sales revenue
$180,000
$165,000
Cost of goods sold
110,000
100,000
Gross profit
70,000
65,000
Operating expenses
53,300
50,400
Interest expense
2,700
2,600
Income before income taxes
14,000
12,000
Income tax expense
4,000
3,000
Net income
$10,000
$9,000
Balance Sheet
Cash
4,000
8,000
Accounts receivable (net)
19,000
23,000
Inventory
40,000
35,000
Property and equipment (net)
45,000
38,000
$108,000
$104,000
Current liabilities (no interest)
16,000
19,000
Long-term liabilities (6% interest)
45,000
45,000
Common stock (par $5)
30,000
30,000
Additional paid-in capital
5,000
5,000
Retained earnings
12,000
5,000
$108,000
$104,000

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- Spring '12
- SOBEISKI
- Financial Accounting, Balance Sheet, Income Statement, Revenue, Net Income, Generally Accepted Accounting Principles
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