Day: April 27, 2018

Resource:Virtual Organizations

Click the Virtual Organization link on the student website to access the Virtual Organizations.

Select one of the Virtual Organizations as the basis for the assignment.

Obtain faculty approval of your selected organization before beginning the assignment.

Access the information contained in your selected organization’s balance sheet and income statement to calculate the following:

 

• Liquidity ratios

 

• Current ratio
• Acid-test,or quick, ratio
• Receivables turnover
• Inventory turnover

 

• Profitability ratios

 

• Asset turnover
• Profit margin
• Return on assets
• Return on common stockholders’ equity

 

• Solvency ratios

 

• Debt to total assets
• Times interest earned

 

Showyour calculations for each ratio.

Create a horizontal and vertical analysis for the balance sheet and the income statement.

Write a 350- to 700-word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:

 

• What do the liquidity, profitability, and solvency ratios reveal about the company’s financial position?
• Which users may be interested in each type of ratio?

What does the collected data reveal about the company’s performance and position?

PSY 870: Module 3 Problem Set

 

GAF, Consumer Satisfaction, and Type of Clinical Agency (Public or Private)

A researcher wants to know if mental health clients of private versus public service agencies differ on Global Assessment of Functioning (GAF) scores and on Satisfaction with Services (Satisfaction). She has collected data for 34 clients from a private agency and for 47 clients of a public agency.

 

Directions:

Use the SPSS data file for Module 3 (located in Topic Materials) to answer the following questions:

1.      What is the independent variable in this study? What are the dependent variables?

2.      The first step for the researcher will be to clean and screen the data. Please do this for the researcher and report your findings. Be sure to check it for possible coding errors, as well as complete the screening of the data to see if the data meet assumptions for parametric tests. Did you find any errors that the researcher made when setting up the SPSS data file (check the variable view)? If so, what did you find? How did you correct it?

HINT:

Yes, one of the variables is incorrectly listed as scale.

3.      Were there missing values on any of the variables? If so, what might you do for those for the independent variable? What about those for each of the dependent variables? Explain your reasoning.

HINTS:

·         Yes, each variable has some missing data. Describe how many (and % of all) are missing on each variable.

·         When considering what to do about the missing values on each variable, consider if you really can guess what agency a person came from.  Next, for the continuous variables, consider (1) what % of values are missing (if more than 5% are missing, what might this mean?); (2) is there a pattern to the missing scores?  Include information from the Output file of your SPSS Explore analyses to provide specific number and % of missing values on each of the dependent variables.  Based on this, what recommendation would you make for what to do about the missing values?

4.      Did you find any outliers on the dependent variables that were due to errors of coding? If so, what and why? How would you correct an error of coding?3

HINT:

One of the outliers on one continuous variable clearly is a coding error. Which one is that? What would be the best way to handle that outlier?

5.      How might you deal with outliers that are not due to coding errors? Explain your reasoning.

HINT:

Use the information you have from your Output file from your Explore analyses to describe the outliers (e.g. how many outliers are there on each continuous variable; do they fall above and/or below the mean). What are ways to handle outliers on the continuous variables? Might there be some arguments against deleting outliers? What are these?

6.      Check the descriptive statistics, histograms, stem-and-leaf plots, and the tests for normality that you obtained from your analyses (see box to check in “Plots” when using Explore to analyze descriptive statistics of your data). Considering the skewness and kurtosis values, as well as the Shapiro-Wilk’s results (preferred for small sample sizes), did the distribution of scores on either of the dependent variables violate the assumption of normality? How can you tell from the information you obtained from your analyses?

HINTS:

·         First, you can look at your histograms and stem-and-leaf plots to see if you observe marked skewness or other indicators of differences between the distribution of scores from the normal distribution.

·         Next, you can inspect the computed values for skewness and kurtosis for your variables from your analyses. Report these values in your answer for the continuous dependent variables? Which ones are greater than + 1.0? What does having a skewness or kurtosis value that is greater than + 1.0 tell you about normality? Then, discuss what having these kinds of values tell you about the normality of the distribution of scores on that variable.

·         Next, look at the Shapiro-Wilks’ tests of normality that you ran. Results with p < .001 or less indicate a violation of the normality assumption using this type of evaluation.

7.      If in #6, you identified any distributions that violate the assumption of normality, what are some options you might use to try to correct the distribution to get closer to normality? (You do not need to do these steps. Just describe them.)

8.      Write a sample result section, discussing your data screening activity.

Week Three Exercise Assignment

Inventory

 

1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows.

Painting

Cost

1/2 Beginning inventory

Woods

$21,000

4/19 Purchase

Sunset

21,800

6/7 Purchase

Earth

31,200

12/16 Purchase

Moon

4,000

 

 

Woods and Moon were sold during the year for a total of $35,000. Determine the firm’s

a. cost of goods sold.

b. gross profit.

c. ending inventory.

2. Inventory valuation methods: basic computations. The January beginning inven­tory of the White Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.

 

FIFO

    LIFO

Weighted Average

 

 

 

 

Goods available for sale

$

$

$

Ending inventory, March 31

Cost of goods sold

 

 

 

3. Perpetual inventory system: journal entries. At the beginning of 20X3, Beehler Company implemented a computerized perpetual inventory system. The first transactions that occurred during 20X3 follow:

·         1/2/20X3 Purchases on account: 500 units @$6 =  $3,000

·         1/15/20X3 Sales on account: 300 units @ $8.50 = $2,550

·         1/20/20X3 Purchases on Account: 200 units @ 5 = $1,000

·         1/25/20X3   Sales on Account: 300 units @ $8.50 = $2,550

The company president examined the computer-generated journal entries for these transactions and was confused by the absence of a Purchases account.

a. Duplicate the journal entries that would have appearedon the computer printout under FIFO & LIFO

b. Calculate the balance in the firm’s Inventory account under each method.

c. Briefly explain the absence of the Purchases account to the company president.

 

 

4. Inventory valuation methods: computations and concepts.

 

Wild Riders Surfboard Company began business on January 1 of the current year. Purchases of surfboards were as follows:

 

Date

Quantity

Unit Cost

Total Cost

1/3

100

$125

$12,500

4/3

200

$135

$27,000

6/3

100

$145

$14,500

7/3

100

$155

$15,500

Total

500

 

$69,500

 

 

Wild Riders sold 400 boards at $250 per board on the dates listed below.  The company uses a perpetual inventory system.

 

Date

Quantity Sold

Unit Price

Total Sales

3/17

50

$250

$12,500

5/17

75

$250

$18,750

8/10

275

$250

$68,750

Total

400

 

$100,000

Instructions

a.       Calculate cost of goods sold, ending inventory, and gross profit under each of the following inventory valuation methods:

·         First-in, first-out

·         Last-in, first-out

·         Weighted average

 

b. Which of the three methods would be chosen if management’s goal is to

(1) produce an up-to-date inventory valuation on the balance sheet?

(2) show the lowest net income for tax purposes?

 

5. Depreciation methods. Mike Davis Enterprises purchased a delivery van for $40,000 in January 20X7. The van was estimated to have a service life of 5 years and a resid­ual value of $6,000. The company is planning to drive the van 20,000 miles annually. Compute depreciation expense for 20X8 by using each of the following methods:

a. Units-of-output, assuming 17,000 miles were driven during 20X8

b. Straight-line

c. Double-declining-balance

6. Depreciation computations. Alpha Alpha Alpha, a college fraternity, purchased a new heavy-duty washing machine on January 1, 20X3. The machine, which cost $2,000, had an estimated residual value of $100 and an estimated service life of 4 years (1,800 washing cycles). Calculate the following:

a. The machine’s book value on December 31, 20X5, assuming use of the straight-line depreciation method

b. Depreciation expense for 20X4, assuming use of the units-of-output depreciation method. Actual washing cycles in 20X4 totaled 500.

c. Accumulated depreciation on December 31, 20X5, assuming use of the double-declining-balance depreciation method.

 

7. Depreciation computations: change in estimate. Aussie Imports purchased a specialized piece of machinery for $50,000 on January 1, 20X3. At the time of acquisition, the machine was estimated to have a service life of 5 years (25,000 operating hours) and a residual value of $5,000. During the 5 years of operations (20X3 – 20X7), the machine was used for 5,100, 4,800, 3,200, 6,000, and 5,900 hours, respectively.

Instructions

a. Compute depreciation for 20X3 – 20X7 by using the following methods: straight line, units of output, and double-declining-balance.

b. On January 1, 20X5, management shortened the remaining service life of the machine to 15 months. Assuming use of the straight-line method, compute the company’s depreciation expense for 20X5.

 

c. Briefly describe what you would have done differently in part (a) if Aussie Imports had paid $47,800 for the machinery rather than $50,000 In addition, assume that the company incurred $800 of freight charges $1,400 for machine setup and testing, and $300 for insurance during the first year of use.

ACC 205 Week 4 Exercise Assignment – Liability

 

1. Payroll accounting. Assume that the following tax rates and payroll information pertain to Brookhaven Publishing:

• Social Security taxes: 4% on the first $55,000 earned per employee
• Medicare taxes: 1.5% on the first $130,000 earned per employee
• Federal income taxes withheld from wages: $7,500
• State income taxes: 4% of gross earnings
• Insurance withholdings: 1% of gross earnings
• State unemployment taxes: 5.4% on the first $7,000 earned per employee
• Federal unemployment taxes: 0.8% on the first $7,000 earned per employee

 

The company incurred a salary expense of $50,000 during February. All employees had earned less than $5,000 by month-end and no wages have been paid during the month.

a. Prepare the necessary entry to record Brookhaven’s February payroll. The entry will include deductions for the following:

• Social Security taxes
• Medicare taxes
• Federal income taxes withheld
• State income taxes
• Insurance withholdings

 

b. Prepare the journal entry to record Brookhaven’s payroll tax expense. The entry will include the following:

• Matching Social Security taxes
• Matching Medicare taxes
• State unemployment taxes
• Federal unemployment taxes

 

 

2.  Current liabilities: entries and disclosure. A review of selected financial activities of Visconti’s during 20XX disclosed the following:

 

 

 

 

 

1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable.

 

Interest and principal are due at maturity.

 

 

10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected to

 

total 1,000 units during the month.  Past experience with similar products indicates

 

that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only).

 

22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.

 

26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest)

 

31-Dec: Repaired six XY-80s during the month at a total cost of $162

 

 

31-Dec: Accrued three days of salaries at a total cost of $1,400.

 

 

 

Instructions

a. Prepare journal entries to record the transactions.

b. Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable.

 

 

3. Notes payable. Red Bank Enterprises was involved in the following transactions during the fiscal year ending October 31:

2-Aug: Borrowed $55,000 from the Bank of Kingsville by signing a 90-day, 12% note.

20-Aug: Issued a $50,000 note to Harris Motors for the purchase of a $50,000 delivery truck. The note is due in 180 days and carries a 12% interest r ate.

10-Sep: Purchased merchandise from Pans Enterprises in the amount of $15,000.  Issued

a 30-day, 12% note in settlement of the balance owed.

11-Sep: Issued a $60,000 note to Datatex Equipment in settlement of an overdue account

payable of the same amount.  The note is due in 30 days and carries a 14% interest rate.

10-Oct: The note to Pans Enterprises was paid in full.

11-Oct: The note to Datatex Equipment was paid in full.

30-Oct: Paid note to Bank of Kingsville.

 

Instructions

a. Prepare journal entries to record the transactions.

b. Prepare adjusting entries on December 31 to record accrued interest. (Daily interest is calculated utilizing the 360 day method).

c. Prepare the Current Liability section of Red Bank’s balance sheet as of December 31. Assume that the Accounts Payable account totals $203,600 on this date.

ACC 205 Week 5 Exercise Assignment – Financial Ratios

 

1. 1.      Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:

 

 

Edison

Stagg

Thornton

Cash

$6,000

$5,000

$4,000

 

Short-term investments

3,000

2,500

2,000

 

Accounts receivable

2,000

2,500

3,000

 

Inventory

1,000

2,500

4,000

 

Prepaid expenses

800

800

800

 

Accounts payable

200

200

200

 

Notes payable: short-term

3,100

3,100

3,100

 

Accrued payables

300

300

300

 

Long-term liabilities

3,800

3,800

3,800

 

 

 

 

1. Compute the current and quick ratios for each of the three companies. (Round calculations to two decimal places.) Which firm is the most liquid? Why?

 

2.      Computation and evaluation of activity ratios. The following data relate to Alaska Products, Inc:

 

 

20X5

20X4

Net credit sales

$832,000

$760,000

 

Cost of goods sold

530,000

400,000

 

Cash, Dec. 31

125,000

110,000

 

Average Accounts receivable

205,000

156,000

 

Average Inventory

70,000

50,000

 

Accounts payable, Dec. 31

115,000

108,000

 

 

 

Instructions

1. Compute the accounts receivable and inventory turnover ratios for 20X5. Alaska rounds all calculations to two decimal places.

 

 

 

 

 

 

 

 

 

 

3. Profitability ratios, trading on the equity. Digital Relay has both preferred and common stock outstanding. The com­pany reported the following information for 20X7:

 

 

 

Net sales

$1,750,000

Interest expense

120,000

Income tax expense

80,000

Preferred dividends

25,000

Net income

130,000

Average assets

1,200,000

Average common stockholders’ equity

500,000

 

 

 

 

1. Compute the profit margin on sales ratio, the return on equity and the return on assets, rounding calculations to two decimal places.
2. Does the firm have positive or negative financial leverage? Briefly ex­plain.

 

4.      Horizontal analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.

 

20X2

20X1

Current Assets

$86,000

$80,000

Property, Plant, and Equipment (net)

99,000

90,000

Intangibles

25,000

50,000

Current Liabilities

40,800

48,000

Long-Term Liabilities

153,000

160,000

Stockholders’ Equity

16,200

12,000

Net Sales

500,000

500,000

Cost of Goods Sold

322,500

350,000

Operating Expenses

93,500

85,000

 

 

1. Prepare a horizontal analysis for 20X1 and 20X2. Briefly comment on the results of your work.

 

 

5.Vertical analysis. Mary Lynn Corporation has been operating for several years. Selected data from the 20X1 and 20X2 financial statements follow.

 

20X2

20X1

Current Assets

$86,000

$80,000

Property, Plant, and Equipment (net)

99,000

80,000

Intangibles

25,000

50,000

Current Liabilities

40,800

48,000

Long-Term Liabilities

153,000

150,000

Stockholders’ Equity

16,200

12,000

Net Sales

500,000

500,000

Cost of Goods Sold

322,500

350,000

Operating Expenses

93,500

85,000

 

 

1. Prepare a vertical analysis for 20X1 and 20X2. Briefly comment on the results of your work.

 

 

 

6. Ratio computation. The financial statements of the Lone Pine Company follow.

 

 

 

LONE PINE COMPANY

 

Comparative Balance Sheets

 

December 31, 20X2 and 20X1 ($000 Omitted)

 

20X2

20X1

 

Assets

 

Current Assets

 

Cash and Short-Term Investments

$400

 

$600

 

Accounts Receivable (net)

3,000

 

2,400

 

Inventories

3,000

 

2,300

 

Total Current Assets

$6,400

 

$5,300

 

Property, Plant, and Equipment

 

Land

$1,700

 

$500

 

Buildings and Equipment (net)

1,500

 

1,000

 

Total Property, Plant, and Equipment

$3,200

 

$1,500

 

Total Assets

$9,600

 

$6,800

 

Liabilities and Stockholders’ Equity

 

Current Liabilities

 

Accounts Payable

$2,800

 

$1,700

 

Notes Payable

1,100

 

1,900

 

Total Current Liabilities

$3,900

 

$3,600

 

Long-Term Liabilities

 

Bonds Payable

4,100

 

2,100

 

Total Liabilities

$8,000

 

$5,700

 

Stockholders’ Equity

 

Common Stock

$200

 

$200

 

Retained Earnings

1,400

 

900

 

Total Stockholders’ Equity

$1,600

 

$1,100

Total Liabilities and Stockholders’ Equity

$9,600

 

$6,800

 

 

 

 

 

LONE PINE COMPANY

 

Statement of Income and Retained Earnings

 

For the Year Ending December 31,20X2 ($000 Omitted)

 

Net Sales*

 

$36,000

 

 

Less: Cost of Goods Sold

$20,000

 

 

Selling Expense

6,000

 

 

Administrative Expense

4,000

 

 

Interest Expense

400

 

 

Income Tax Expense

2,000

32,400

 

 

Net Income

 

$3,600

 

 

Retained Earnings, Jan. 1

 

900

 

 

Ending Retained Earnings

 

$4,500

 

 

Cash Dividends Declared and Paid

 

3,100

 

 

Retained Earnings, Dec. 31

 

$1,400

 

 

*All sales are on account.

 

 

Instructions

Compute the following items for Lone Pine Company for 20X2, rounding all calcu­lations to two decimal places when necessary:

a. Quick ratio

b. Current ratio

c. Inventory-turnover ratio

d. Accounts-receivable-turnover ratio

e. Return-on-assets ratio

f. Net-profit-margin ratio

g. Return-on-common-stockholders’ equity

h. Debt-to-total assets

i. Number of times that interest is earned