Need accounting help with Internal Control and Cash

Nov 23rd, 2015
Anonymous
Category:
Accounting
Price: $20 USD

Question description

P13-2A

The comparative statements of Osborne Company are presented here.

Compute ratios from balance sheets and income statements.




 
  
 
 
  
  
  
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
  
 
 
  
  
  
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 





  

OSBORNE COMPANY


  

Income Statements


  

For the Years Ended December 31


  

  
  

  

 2014 


  

  

 2013 


  

 

Net
  sales


 

 

$1,890,540


 

 

$1,750,500


 

 

Cost
  of goods sold


 

 

 1,058,540


 

 

 1,006,000


 

 

Gross
  profit


 

 

832,000


 

 

744,500


 

 

Selling
  and administrative expenses


 

 

 500,000


 

 

 479,000


 

 

Income
  from operations


 

 

332,000


 

 

265,500


 

 

Other
  expenses and losses


 

 
 

 
 

 

 Interest
  expense


 

 

 22,000


 

 

 20,000


 

 

Income
  before income taxes


 

 

310,000


 

 

245,500


 

 

Income
  tax expense


 

 

 92,000


 

 

 73,000


 

 

Net
  income


 

 

$ 218,000
 


 

 

$ 172,500
 


 

  

OSBORNE COMPANY


  

Balance Sheets


  

December 31


  

  

Assets


  

  

 2014 


  

  

 2013 


  

 

Current
  assets


 

 
 

 
 

 

 Cash


 

 

$ 60,100


 

 

$ 64,200


 

 

 Debt
  investments (short-term)


 

 

74,000


 

 

50,000


 

 

 Accounts
  receivable


 

 

117,800


 

 

102,800


 

 

 Inventory


 

 

 126,000


 

 

 115,500


 

 

 Total
  current assets


 

 

377,900


 

 

332,500


 

 

Plant
  assets (net)


 

 

 649,000


 

 

 520,300


 

 

Total
  assets


 

 

$1,026,900
 


 

 

$852,800
 


 




 
  
  
  
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


 
 
 


  

Liabilities and Stockholders’ Equity


  

  
  

  
  

 

Current
  liabilities


 

 
 

 
 

 

 Accounts
  payable


 

 

$ 160,000


 

 

$145,400


 

 

 Income
  taxes payable


 

 

 43,500


 

 

 42,000


 

 

 Total
  current liabilities


 

 

 203,500


 

 

 187,400


 

 

Bonds
  payable


 

 

 220,000


 

 

 200,000


 

 

 Total
  liabilities


 

 

 423,500


 

 

 387,400


 

 

Stockholders’
  equity


 

 
 

 
 

 

 Common
  stock ($5 par)


 

 

 290,000


 

 

 300,000


 

 

 Retained
  earnings


 

 

 313,400


 

 

 165,400


 

 

 Total
  stockholders’ equity


 

 

 603,400


 

 

 465,400


 

 

Total
  liabilities and stockholders’ equity


 

 

$1,026,900
 


 

 

$852,800
 


 


All sales were on account. Net cash provided by operating activities for 2014 was $220,000. Capital expenditures were
$136,000, and cash dividends were $70,000.


Instructions

 

Compute the following ratios for 2014.

(a) Earnings per share.

(b) Return on common stockholders’ equity.

(c) Return on assets.

(d) Current ratio.

(e) Accounts receivable turnover.

(f) Average collection period.

(g) Inventory turnover.

(h) Days in inventory.

(i) Times interest earned.

(j) Asset turnover.

(k) Debt to assets.

(l) Current cash debt coverage.

(m) Cash debt coverage.

(n) Free cash flow

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