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MET AD632: Financial Concepts - Difference Between Current Assets and Current Liabilities - Finance Assessment Answer
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Subject Code: MET AD632
Internal Code: 1AIJGG
It is estimated that all but 20 percent of the accounts receivable can be collected, and that the merchandise inventory can be disposed of in a liquidation sale for 80 percent of its cost. Buildings and equipment can be sold at $40,000 above book value (the difference between original cost and accumulated depreciation shown on the balance sheet), and the land can be sold at its current appraisal value of $64,000. In addition to the liabilities included in the balance sheet, $2,195 is owed to employees for their work since the last pay period, and interest of $5,230 has accrued on notes payable and longterm debt.
Required:
a. Calculate the amount of cash that will be available to the stockholders if the accounts receivable are collected, the other assets are sold as described, and all liabilities and other claims are paid in full. Subject Code: MET AD632
Gary’s TV had the following accounts and amounts in its financial statements on December 31, 2016. Assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year then ended.
Interest expense $ 35,000
Paidin capital 88,000
Accumulated depreciation 29,000
Notes payable (longterm) 288,000
Rent expense 66,000
Merchandise inventory 840,000
Accounts receivable 183,000
Depreciation expense 12,000
Land 123,000
Retained earnings 421,240
Cash 144,000
Cost of goods sold 1,755,000
Equipment 71,000
Income tax expense 265,240
Accounts payable 102,000
Sales revenue 2,566,000
Required:
a. Calculate the difference between current assets and current liabilities for Gary’s TV at December 31, 2016.
b. Calculate the total assets on December 31, 2016.
c. Calculate the earnings from operations (operating income) for the year ended December 31, 2016.
d. Calculate the net income (or loss) for the year ended December 31, 2016.
e. What was the average income tax rate for Gary’s TV for 2016?
f. If $426,760 of dividends had been declared and paid during the year, what was January 1, 2016, balance of retained earnings?
The following information was obtained from the records of Shae, Inc.: Subject Code: MET AD632
Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year ended December 31, 2016. There were no changes in paidin capital during the year. Subject Code: MET AD632
Required:
a. Prepare an income statement and statement of changes in stockholders’ equity for the year ended December 31, 2016, and a balance sheet at December 31, 2016, for Shae, Inc. Based on the financial statements that you have prepared for part a, answer the questions in parts b–e.
b. What is the company's average income tax rate?
c. What interest rate is charged on longterm debt?
d. What is the par value per share of common stock?
e. What is the company's dividend policy (i.e., what proportion of the company's earnings is used for dividends)?
A partially completed balance sheet for Blue Co., Inc., as of October 31, 2016, follows. Where amounts are shown for various items, the amounts are correct.
Required:
Using the following data, complete the balance sheet.
a. Blue Co.'s records show that current and former customers owe the firm a total of $4,500; $650 of this amount has been due for more than a year from two customers who are now bankrupt.
b. The automobile, which is still being used in the business, cost $16,800 new; a used car dealer's Blue Book shows that it is now worth $10,000. Management estimates that the car has been used for onethird of its total potential use. (The car is being depreciated using the straightline method.) Subject Code: MET AD632
c. The land cost Blue Co. $11,000; it was recently assessed for real estate tax purposes at a value of $ 15,000.
d. Blue Co.'s president isn't sure of the amount of the note payable, but he does know that he signed a note.
e. Since Blue Co. was formed, net income has totaled $33,000, and dividends to stockholders have totaled $22,250.
The following selected data are adapted from November 30, 2014, and November 24, 2013, consolidated balance sheets and income statements for the years then ended for Levi Strauss & Co. and Subsidiaries. All amounts are reported in thousands.
Finance Assessment Answer
TASK: Kimber Co. is in the process of liquidating and going out of business. The firm’s accountant has provided the following balance sheet and additional information: Subject Code: MET AD632
It is estimated that all but 20 percent of the accounts receivable can be collected, and that the merchandise inventory can be disposed of in a liquidation sale for 80 percent of its cost. Buildings and equipment can be sold at $40,000 above book value (the difference between original cost and accumulated depreciation shown on the balance sheet), and the land can be sold at its current appraisal value of $64,000. In addition to the liabilities included in the balance sheet, $2,195 is owed to employees for their work since the last pay period, and interest of $5,230 has accrued on notes payable and longterm debt.
Required:
a. Calculate the amount of cash that will be available to the stockholders if the accounts receivable are collected, the other assets are sold as described, and all liabilities and other claims are paid in full. Subject Code: MET AD632
Gary’s TV had the following accounts and amounts in its financial statements on December 31, 2016. Assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year then ended.
Interest expense $ 35,000
Paidin capital 88,000
Accumulated depreciation 29,000
Notes payable (longterm) 288,000
Rent expense 66,000
Merchandise inventory 840,000
Accounts receivable 183,000
Depreciation expense 12,000
Land 123,000
Retained earnings 421,240
Cash 144,000
Cost of goods sold 1,755,000
Equipment 71,000
Income tax expense 265,240
Accounts payable 102,000
Sales revenue 2,566,000
Required:
a. Calculate the difference between current assets and current liabilities for Gary’s TV at December 31, 2016.
b. Calculate the total assets on December 31, 2016.
c. Calculate the earnings from operations (operating income) for the year ended December 31, 2016.
d. Calculate the net income (or loss) for the year ended December 31, 2016.
e. What was the average income tax rate for Gary’s TV for 2016?
f. If $426,760 of dividends had been declared and paid during the year, what was January 1, 2016, balance of retained earnings?
The following information was obtained from the records of Shae, Inc.: Subject Code: MET AD632
Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year ended December 31, 2016. There were no changes in paidin capital during the year. Subject Code: MET AD632
Required:
a. Prepare an income statement and statement of changes in stockholders’ equity for the year ended December 31, 2016, and a balance sheet at December 31, 2016, for Shae, Inc. Based on the financial statements that you have prepared for part a, answer the questions in parts b–e.
b. What is the company's average income tax rate?
c. What interest rate is charged on longterm debt?
d. What is the par value per share of common stock?
e. What is the company's dividend policy (i.e., what proportion of the company's earnings is used for dividends)?
A partially completed balance sheet for Blue Co., Inc., as of October 31, 2016, follows. Where amounts are shown for various items, the amounts are correct.
Required:
Using the following data, complete the balance sheet.
a. Blue Co.'s records show that current and former customers owe the firm a total of $4,500; $650 of this amount has been due for more than a year from two customers who are now bankrupt.
b. The automobile, which is still being used in the business, cost $16,800 new; a used car dealer's Blue Book shows that it is now worth $10,000. Management estimates that the car has been used for onethird of its total potential use. (The car is being depreciated using the straightline method.) Subject Code: MET AD632
c. The land cost Blue Co. $11,000; it was recently assessed for real estate tax purposes at a value of $ 15,000.
d. Blue Co.'s president isn't sure of the amount of the note payable, but he does know that he signed a note.
e. Since Blue Co. was formed, net income has totaled $33,000, and dividends to stockholders have totaled $22,250.
The following selected data are adapted from November 30, 2014, and November 24, 2013, consolidated balance sheets and income statements for the years then ended for Levi Strauss & Co. and Subsidiaries. All amounts are reported in thousands.
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