You are thinking of investing in one of two corporations, both in the same industry, the XYZ Corporation or the ABC Corporation. Selected data follows:
Sales data for the year ended 12/31/10:
XYZ: Gross revenue $31,485,000; Returns $ 725,000
ABC: Gross revenue $37,245,000; Returns $1,230,000
XYZ: Payroll $2,642,000; benefits $1,150,000, travel $275,200; supplies $310,150, commissions $420,300, marketing $720,000, postage $210,300, misc $39,500.
ABC: Payroll $3,110,000; benefits $1,310,000, travel $320,200; supplies $460,300, commissions $502,300, marketing $790,000, postage $242,100, misc $82,300.
XYZ: Distribution $1,028,000, warehouse $959,000, IT $625,200, finance $529,400, human resources $413,250; administrative $310,000, depreciation $122,000
ABC: Distribution $1,212,310, warehouse $1,020,220, IT $616,420, finance $515,270, human resources $385,450; administrative $350,600, depreciation $156,100.
Other Gains and Losses
XYZ: Sale of machine with a book value of $32,000 for $45,000 cash.
ABC: Sold a marketable security with at a profit of $15,000.
XYZ: Extraordinary loss due to warehouse fire of $240,000 before tax effect.
ABC: Loss on sale of discontinued division of $575,000 before tax effect.
Tax rates: 35% for both companies:
Outstanding shares of common stock:
XYZ: 800,000 shares
ABC: 950,000 shares.
Selected Balance Sheet Information:
XYZ: Cash $1,520,000; marketable securities (at cost $410,300, at fair value $495,400); Account receivable (gross $1,725,400 less allowance for doubtful accounts of $112,100); Finished goods inventory, opening balance $322,000, purchases $9,450,000, ending balance $242,000. Prepaid expenses $55,210. Plant assets at cost $21,400,000, accumulated depreciation $7,312,000. Accounts payable, $613,410, accrued expense payable $191,260, bonds payable $7,383,375, capital stock $1,450,000, retained earnings beginning balance $1,500,210, dividends paid, $1 per share.
ABC: Cash $1,960,000; marketable securities (at cost $352,430, at fair value $292,400); Account receivable (gross $2,935,400 less allowance for doubtful accounts of $172,300); Finished goods inventory, opening balance $420,000, purchases $11,842,400, ending balance $358,420. Prepaid expenses $22,110. Plant assets at cost $19,240,000, accumulated depreciation $8,245,000. Accounts payable, $693,450, accrued expense payable $201,220, bonds payable $3,579,217, Capital stock $2,210,000, retained earnings beginning balance $2,240,000, dividends paid $ per share.
1) Prepare a separate schedule comparing the selling and administrative expenses of the two companies. Separate subtotals are required for both selling and administrative expenses. You should have a column which compares the dollar difference by line item of the two companies.
a. Sort XYZ Company Selling expenses from highest amounts to lowest using the sort function listed in the table function on the tool bar.
2) Prepare a separate schedule of cost of goods sold for each of the companies.
3) Prepare a comparative income statement in good form (chapter 4) for the two companies. Be sure the selling, administrative and cost of goods number comes from your first two schedules by way of formula. DO NOT SIMPLY TYPE IN THE NUMBERS. Percentage of sale data should be presented for cost of goods sold, gross margin, selling expense and administrative expense and net income.
4) Prepare an EPS summary following your income statement.
5) Prepare a classified balance sheet.
6) Prepare a Statement of Retained Earnings.