Project, Basic Statistics

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

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

Instructions
Journalize the adjusting entries.

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.

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%

Related Discussions:- Project

Linearity, The weight in Kg for each person was matched to their intake of ...

The weight in Kg for each person was matched to their intake of fat per day in Grams.  9 people were selected with the following results. Weight (Xi)         Fat (Yi) 45

Binomial expansion, what is the largest coefficient of (1+3x)^4 is ?

what is the largest coefficient of (1+3x)^4 is ?

Difference between estimated proportions of business owners, Question 1. In...

Question 1. In 2009, Research New Zealand conducted a survey on small businesses in New Zealand. Small businesses were defined as enterprises with 19 or fewer employees. 501 small

Index numbers, discuss the considerations to be borne in mind when construc...

discuss the considerations to be borne in mind when constructing index numbers

Bad debt reserve, Explain definition of bad debt reserve and provision in t...

Explain definition of bad debt reserve and provision in terms of accounts receivable likely to be uncollected. Bad debt reserve provision Bad debt reserve provision is a amount

Define Annuity , Annuity A sequence of equivalent money payments made or o...

Annuity A sequence of equivalent money payments made or obtained at equivalent durations over a specific time period.

What is AXlOM in accounting?, AXIOM, usually, it is a saying that is common...

AXIOM, usually, it is a saying that is commonly recognized on its own merits; in sense, it is an idea that is not vulnerable of confirmation or disproof; its reality is believed to

Calculate the expected profit and probability , An individual has $ 100 ini...

An individual has $ 100 initially. He repeatedly plays a game of chance in which he earns $ 100 with probability 0.8 or loses $ 100 with probability 0.2. The stops playing at the f

S, What is samplings and its methods

What is samplings and its methods

Help with homework, 1. Penny Pincher, Inc. had a contribution margin of $33...

1. Penny Pincher, Inc. had a contribution margin of $33,000 on sales of $50,000 and had fixed costs of $18,000. Calculate its break-even point in sales dollars. 2. Krueger Company

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd