Accounting problems

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timer Asked: Dec 14th, 2017

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Due 12/13/2017 Type your answer, insert Spreadsheet to show your calculation. Insert space as you need. 1. Linda’s Clothing is a retailer of contemporary women’s clothing. Selected financial information for Linda’s appears below: Net sales Net Income Total Assets at year-end Weighted Average number of shares Outstanding Total Liabilities at year-end Common Stockholders' Equity at year-end Interest Expense 2011 $978,560 $ 56,759 $381,500 2010 $786,500 $ 31,150 $246,250 2009 $520,650 $ 15,375 $145,490 2008 $245,820 $14,750 $71,268 84,215 205,967 $175,533 165 80,546 119,657 $126,593 195 77,965 60,522 $ 84,968 258 75,888 17,623 $53,645 368 Required: a. Compute the rate of return on assets for the years 2009-2011. Linda’s has an effective tax rate of 35%. b. Compute the rate of return on common shareholders’ equity for the years 2009-2011. c. If Linda wants to improve its ROA, propose two scenarios to improve the operation by breaking down the ROA. Provide your numeric analysis by inserting a spreadsheet of proposed change of one item at a time. (Answer to this part of question is used to assess Morgan student's mastery of Excel presentation and/or chart-making ability. Do your best presentation of an analysis to demonstrate your Excel ability. The presentation will not be evaluated as part of your semester grade; the content of the answer will). 2. a). Explain the difference between the Basic EPS and the Diluted EPS. b). Identify two capital structures that require the calculation of diluted EPS. c). Mathematically present the calculation of an anti-dilution scenario. 3.Below is selected data of Pronto Company: Balance Sheet Data Accounts receivable Allowance for doubtful accounts Net accounts receivable Inventories - LCM Income Statement Data Net credit sales Net cash sales Net sales Cost of goods sold Selling, general and adm. expenses Other Total operating expenses Net income As of December 31: 2012 2011 $671,000 $642,000 31,000 22,000 $640,000 $620,000 $542,500 $642,500 $3,150,000 800,000 $3,950,000 $2,390,000 475,000 150,000 $3,015,000 $ 935,000 $3,000,000 600,000 $3,600,000 $2,160,000 350,000 125,000 $2,635,000 $ 965,000 Required: a. What is the accounts receivable turnover for 2012? b. What is the inventory turnover for 2012? c. Comment on the change of quality of the account receivables from 2011 to 2012. Assuming the estimate of the Allowance account is about right, is it justifiable to accept the change of account receivable quality from 2011 to 2012? 4. On January 1, 2012, Porter Corporation signed a five-year non-cancelable lease for certain machinery. The terms of the lease called for: A) B) C) D) E) Porter to make annual payments of $60,000 at the end of each year (starting on Dec. 31, 2012) for five years. Porter must return the equipment to the lessor end of this period. The machinery has an estimated useful life of 6 years and no expected salvage value. Porter uses the straight-line method of depreciation for all of its fixed assets. Porter’s incremental borrowing rate is 8%. The fair value of the asset at January 1, 2012 is $275,000. Required: 1. Discuss whether Porter should account for the lease as an operating or capital lease and why. 2. Using the above information to show how the lease would affect Porter’s financial statements in 2013 in the following sections. Show your calculations. a). Assets: b). Liabilities: c). Expenses: d). Operating Cash flows: e). Investing Cash flows: 5.Six years ago Moline Industries acquired a new machine to use in its primary manufacturing operations. The machine cost $47 million and the company expected the machine to have a ten-year useful life with a zero salvage value. The company uses straight-line depreciation for the asset. However, because of changes within the industry, Moline reevaluated the machine at the end of Year 6 and estimated that the machine is capable of generating undiscounted future cash flows of $12 million. Based on the quoted market prices of similar assets, Moline estimates the fair value of the machine at $10.5 million. Required: 1. What is the machine’s book value at the end of Year 6? 2. Should Moline recognize an impairment of the asset? Why or why not? If yes, what amount? 3. At the end of Year 6, what amount should the machine be listed at on Moline’s balance sheet? Is the accounting treatment any different if reported under the IFRS? Rubric in evaluating Technology Proficiency (Excel Application) Rater: Course: Student: 7 Inadequate Obtains incorrect data 11 Satisfactory Obtains data from exercise with minor errors 15 Excellent Obtains the correct data Processes the data with many errors Processes the data with minor errors. Processes the data accurately. 3 Data Outputs: Analyze and calculate the ending balances of the accounts in the pension worksheet. Analyzes the data with significant errors. Analyzes the data with minor errors. Analyzes the data correctly. 4 Data Presentation: Record the journal entry of pension expense. Uses the outputs from data analysis incorrectly. Uses the outputs from data analysis with minor errors. Uses the outputs from data analysis correctly. 1 2 Tech Skill Data Inputs:Locate and input data pertaining to pension expense in the appropriate cells. Data Process: calculate components of pension expense as well as other pension related accounts in the appropriate cells. Total Score Score
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