acc, Basic Statistics

Project I


The trial balance of the Parton Wholesale Company contained the following accounts at December 31, 2010 the end of the company’s calendar year.

PARTON WHOLESALE COMPANY
Trial Balance
31-Dec-10

Debit Credit
Cash $ 34,400
Accounts Receivable 36,600
Merchandise Inventory (Beginning) 62,400
Land 92,000
Buildings 197,000
Accumulated Depreciation-Buildings $ 54,000
Equipment 83,500
Accumulated Depreciation-Equipment 42,400
Notes Payable 50,000
Accounts Payable 37,500
Common Stock 200,000
Retained Earnings 67,800
Dividends 10,000
Sales 886,100
Sales Discounts 4,600
Purchases 725,100
Purchase Discounts 16,000
Freight-in 12,400
Salaries Expense 69,800
Utilities Expense 9,400
Repair Expense 5,900
Gas and Oil Expense 7,200
Insurance Expense 3,500
$ 1,353,800 $ 1,353,800




Adjustment data:
1. Depreciation is $10,000 on buildings and $9,000 on equipment. (Both are administrative expenses.)
2. Interest of $7,000 is unpaid on notes payable at December 31.

Other data:
1. Merchandise inventory on hand at December 31, 2010 is $90,000.
2. Salaries are 80% selling and 20% administrative.
3. Utilities expense, repair expense, and insurance expense are 100% administrative.
4. $15,000 of the notes payable are payable next year.
5. Gas and oil expense is a selling expense.
6. The beginning balance of accounts receivable is $34,750.
7. The amount of total assets at the beginning of the year is $469,225.

Instructions
1) Journalize the adjusting entries.

2) Prepare a multiple-step income statement and a retained earnings statement for the year ended, as well as a classified balance sheet as of December 31, 2010.

3) Prepare the following ratios and show all support for your computations:

a) Current Ratio
b) Quick Ratio
c) Working Capital
d) Accounts Receivable Turnover
e) Average Collection Period
f) Inventory Turnover
g) Days in Inventory
h) Debt to Total Assets Ratio
i) Gross Profit Ratio
j) Profit Margin Ratio
k) Return on Assets Ratio
l) Asset Turnover Ratio


4) Based on the ratios computed in 3) above, answer the following questions and use the financial statement ratios to support your answers where appropriate:

• Do you feel that the company is able to meet its current and long term obligations as they become due?

• Comment on the profitability of the company with respect to the various profitability ratios that you computed.

• Would you lend money to this company for the long term?

• Comment on the ability of the company to collect its receivables and mange inventory.



2007 2008 2009 Industry Average
Liquidity
Current 2.39 2.68 2.90 3.12
Quick 1.10 1.16 1.21 1.56
Working Capital $ 98,750.00 $ 100,450.00 $ 103,000.00 $ 110,000.00
Leverage
Debt to Total Assets (%) 20.97% 21.98% 22.89% 20.89%
Times Interest Earned 8.75 9.12 9.56 10.22
Activity
Inventory Turnover (sales) 8.21 9.91 10.12 10.52
Fixed Asset Turnover 3.43 3.51 3.59 3.64
Total Asset Turnover 2.15 2.20 2.25 2.56
Average Collection Period (days) 14.95 14.69 14.42 14.28
Accounts Receivable Turnover 24.08 24.50 24.97 25.21
Days in Inventory 44.46 36.83 36.07 43.21
Profitability
Gross Profit Margin (%) 21.10% 22.50% 24.03% 24.56%
Net Profit (%) 6.89% 7.25% 7.89% 8.03%
Return on Total Assets (%) 15.50% 16.10% 16.24% 16.07%
Return on Equity (%) 20.15% 21.89% 22.15% 22.06%
Payout Ratio (%) 15.10% 15.84% 16.09% 16.86%

Posted Date: 4/26/2012 4:12:05 PM | Location : United States







Related Discussions:- acc, Assignment Help, Ask Question on acc, Get Answer, Expert's Help, acc Discussions

Write discussion on acc
Your posts are moderated
Related Questions

Check numbers for No Neighboring States with Video Gaming, 2% inflation, 4 Average Bets Numbers for 2018 Average Return -0.082 Net Income -$2,052,859 End of Year Cash $5,0

Explain public budget A plan of financial process embodying an estimate of proposed expenditures and any other expenditure for a given era of time and the proposed means of finan

I have a midterm coming up the teacher is allowing us to have a front & back cheats on anything we want on it. Is there a way you guys can make me one?

Find the probability of drawing a diamond card in each of the consecutive draws from a well shuffled pack of cards, if the card drawn is not replaced after the first draw

How does the t-distribution changes its shape with the change of the size of the sample?

An employer provides taxable fringe benefits of $11,000 (GST inclusive) for his employees during the relevant period, all being for creditable purposes and input tax credits of

Why do Jovian planets have rings? - Ring particles cannot have lasted for billions of years so the particles we see today must have been created recently. - New ring particles

The unfortunately-named (and fictitious) town of Avalanche, Utah maintains a vibrant and growing ski industry.  As Director of Avalanche's search-and-rescue operations, you are alw

Assume that you have a client that is a paper manufacturer and they have expressed concern that the government will pass a new regulation banning the use of chlorine-based technolo