Reference no: EM13504464

1. On the basis of the following data for Teller Co. for 2008 and the preceding year ended December 31, 2008, prepare a statement of cash flows.  Use the indirect method of reporting cash flows from operating activities.  Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.

	Year	Year
	2008	2007
Cash	$100,000	$  78,000
Accounts receivable (net)	78,000	85,000
Inventories	101,500	90,000
Equipment	410,000	370,000
Accumulated depreciation	(150,000)	(158,000)
	$539,500	$465,000
Accounts payable (merchandise creditors)	$  58,500	$  55,000
Cash dividends payable	5,000	4,000
Common stock, $10 par	200,000	170,000
Paid-in capital in excess of par--
common stock	62,000	60,000
Retained earnings	214,000	176,000
	$539,500	$465,000

 

2. Balances of the current asset and current liability accounts at the end and beginning of the year are as follows:

	End	Beginning
Cash	$  62,000	$73,000
Accounts receivable (net)	75,000	60,000
Inventories	54,000	47,000
Accounts payable
(merchandise creditors)	43,000	37,000
Salaries payable	2,800	3,800
Sales (on account)	210,000
Cost of merchandise sold	70,000
Operating expenses other than depreciation	67,000

Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.

 

3. The comparative balance sheet of Drango Company appears below:

HUERTO COMPANY
Comparative Balance Sheet
December 31, 2007

Assets	2007	2006
Current assets	$   340	$280
Plant assets	675	520
Total assets	$1,015	$800
Liabilities and stockholders' equity
Current liabilities	$  180	$120
Long-term debt	250	160
Common stock	325	320
Retained earnings	260	200
Total liabilities and stockholders' equity	$1,015	$800

Instructions

(a) Using horizontal analysis, show the percentage change for each balance sheet item using 2006 as a base year.

(b) Using vertical analysis, prepare a common size comparative balance sheet.

 

4. Selected data from the Conner Company are presented below:

	Total assets	$1,500,000
	Average assets	1,700,000
	Net income	250,000
	Net sales	1,400,000
	Average common stockholders' equity	1,000,000
	Net cash provided by operating activities	275,000
	Shares of common stock outstanding	10,000

Instructions

Calculate the profitability ratios that can be computed from the above information.