Chapter 5 Problems

Assets Book Value Cash P Fair Value 40,000.00 200,000.00 40,000.00 P 200,000.00 Accounts Receivable-net Inventories 100,000.00 400,000.00 Plant Assets - Net 200,000.00 240,000.00 P 540,000.00 880,000.00 Equities Accounts Payable P 100,000.00 P 100,000.00 Martin, Capital (50%) 240,000.00 Bossworth, Capital (50%) 200,000.00 540.000.00 The partnership of Martin and Bosworth is being dissolved, and the assets and equities at book value and fair value and profit and loss sharing ratios at January 1, 2021 are as follows: Martin and Bosworth agree admit Trent into the partnership for one-third interest. Trent invests P190,000 cash and a building to be used in the business with a book value to Trent of P200,000 and a fair value of P220,000. Assuming that the assets are to be revalued, how much capital should be credited to Trent?

Book Value Realizable Value Cash P20,000 P20,000 Accounts receivable-net 100,000 75,000 Inventories 150,000 250,000 70,000 260,000 Plant assets-net Total P520,000 Preferred Creditors P70,000 Accounts Payable-unsecured Notes payable-secured by 150,000 accounts receivable 100,00 Mortgage payable-secured by all plant assets Total 200,000 P520,000 In the event of liquidation: 7. What is the estimated amount available to unsecured creditors without priority? 8. What is the estimated deficiency in the payment of creditors?

Delta Itd has $820 in inventory, $640000 in fixed assets, $670 in accounts receivable, $800 in accounts payable, $5980 in long- term debt, and $360 in cash. What is the amount of the net working capital of Delta Ltd? $12000 $1050 $1,460 only correct option need $5000

LIABILITIES AND EQUITY Accounts payable Income tax payable 1,560,000 Note payable (secured by equipment) 800,000 Loan payable (secured by land & bldg ) ASSETS 100,000 Cash Accounts receivable 600,000 1,600,000 900,000 Inventory 1,000,000 1,200,000 Land 1,200,000 Share capital Building Equipment, net Total 400,000 Retained earnings (deficit) 2,000,000 4,660,000 Total (2,040,000) 4,660,000 Additional information: Only 60% of the accounts receivable is collectible. The entire inventory is expected to be sold half the price. The land and building are expected to be sold at a lump sum price of P2,300,000. The equipment is expected to be sold at its carrying amount but after refurbishment costs of P70,000. Certain accounts payable are measured gross of P23,000 cash discount which Monday intends to take. A supplier waived repayment of a P420,000 account. • The taxing authority gave Monday a six-month tax amnesty to settle the tax liability for P780,000. • Interests of P80,000 and P70,000 are…

Liabilities OMR Assets OMR Share capital 400,000 Land and building 280,000 Net profit 60,000 Plant and machinery 700,000 General reserve 80,000 Stock 400,000 Debentures 840,000 Debtors 200,000 Creditors 200,000 Bills receivables 20,000 Bills payable 100,000 Cash 80,000 Total 1,680,000 Total 1,680,000   1- calculate Capital Employed 2-Calculate Shareholders Equity

Given the following information: Assets Liabilities and Equity Line item Value Cash 9,000 Accounts payable 18,000 Sales 85,000 Marketable securities 2,000 Notes payable 6,000 - Operating expenses 69,700 |- Depreciation = EBIT - Interest Accounts receivable 3,000 Current liabilities 24,000 2,000 Inventory 31,000 Long-term debt 95,000 13,300 Current assets 45,000 Total liabilities 119,000 800 Machines 34,000 Paid-in capital 20,000 = Taxable income 12,500 Real estate 80,000 Retained earnings 20,000 Fixed assets Total assets - Тахes = Net income 114,000 Equity 40,000 4,125 159,000 Total liab. & equity 159,000 8,375 1. What is the profit margin? Show your work. 2. What is the return on assets? Show your work. 3. What is the return on equity? Show your work.

Blue Water Prime Fish Balance sheet: $ 41,200 $ 20,800 Cash Accounts receivable (net) Inventory Property & equipment (net) 39,000 31,600 98,eee 143,000 41,200 403,400 84, 200 $ 405,400 $ 98,eee 66,400 Other assets 307,000 $ 804,000 $ 52,000 60,400 Total assets Current liabilities Long-term debt (interest rate: 10%) Capital stock ($10 par value) Additional paid-in capital Retained carnings 149,400 29, 200 62,400 $ 405,400 514,000 106, 200 71,400 $ 804,000 Total liabilities and stockholders' equity Income statement: Sales revenue (1/3 on credit) Cost of goods sold Оperating exхрenses Net income $ 444,eee (240,000) (161,400) $ 42,600 $ B00, 000 (400, 200) (311,200) $ 88,600 Other data: Per share stock price at end of current year Average income tax rate Dividends declered and paid in current year 22.2 17 30% $ 33,200 $ 149,000 Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and each has had steady growth. The…

Balance Sheet Ending Balance Assets Cash $ 120,000 Accounts receivable $ 140,000 450,000 530,000 Inventory 320,000 380,000 Plant and equipment, net 680,000 620,000 Investment in Buisson, S.A. 250,000 280,000 Land (undeveloped) 180,000 170,000 Total assets $ 2,020,000 $ 2,100,000 Liabilities and Stockholders' Equity Accounts payable Long-term debt $360,000 $ 310,000 1,500,000 1,500,000 Stockholders' equity 160,000 290,000 Total liabilities and stockholders' equity $ 2,020,000 $ 2,100,000 Joel de Paris, Incorporated Income Statement Sales $ 4,050,000 3,645,000 405,000 Operating expenses Net operating income. Interest and taxes: Interest expense Tax expense $ 150,000 110,000 260,000 Net income $ 145,000 The company paid dividends of $15,000 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 15%. Required: 1. Compute the company's average operating assets for last…

Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 20Y2. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Υ2 20Υ1 Retained earnings, January 1 $3,704,000 $3,264,000 Net income $ 600,000 $ 550,000 Dividends: On preferred stock (10,000) (10,000) On common stock (100,000) (100,000) Increase in retained earnings $ 490,000 $ 440,000 Retained earnings, December 31 $4,194,000 $3,704,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Υ1 Sales $ 10,850,000 $10,000,000 Cost of goods sold (6,000,000) (5,450,000) $ 4,850,000 $ (2,170,000) Gross profit $ 4,550,000 Selling expenses $ (2,000,000) Administrative expenses (1,627,500) (1,500,000) Total operating expenses $(3,797,500) $ (3,500,000) Operating income $ 1,052,500 $ 1,050,000 Other revenue and expense:…

15. You work for the CEO of a new company that plans to manufacture and sell a new product, a watch that has an embedded TV set and a magnifying glass crystal. The issue now is how to finance the company, with only equity or with a mix of debt and equity. Expected operating income is $510,000. Other data for the firm are shown below. How much higher or lower will the firm's expected ROE be if it uses some debt rather than all equity, i.e., what is ROEL - ROEU? Do not round your intermediate calculations. 0% Debt, U 60% Debt, L

10. An investment entity provided the following data for the current year: Dividend income from investments 10,000,000Distribution income from trusts 500,000Interest income on deposits 700,000Income from bank treasury bills 100,000Income from dealing in securities held for trading 600,000Write-down on securities held for trading 150,000Other income 250,000Finance cost 300,000Administrative staff costs 3,800,000Sundry administrative costs 1,400,000Income tax expense 2,000,000Question 1: What is the income before tax?a. 12,000,000 c. 11,750,000b. 12,150,000 d. 11,550,000 Question 2: What is the total amount of expenses before tax?a. 7,500,000 c. 5,500,000b. 5,650,000 d. 7,650,000 Question 3: What is the net income for the year?a. 6,500,000 c. 4,650,000b. 4,500,000 d. 4,250,000

Total fixed assets 31420 OMR Total long term liabilities 9970 OMR Total current assets 18930 OMR Total current liabilities 4765 OMR Shareholders’ funds 35615 OMR Capital employed 45585 OMR Gross profit 175000 OMR Net profit 113950 OMR  Return on capital employed 25% Current ratio 3.97 Liquid ratio 3.34 Return on Equity 3.191 Gross Profit  Margin 53,03% Net Profit Margin 34.53%   Q/Give a brief report on the financial position of the company based on the above figures?

BALANCE SHEET    Cash  2,000,000  Accounts Payable and Accruals  18,000,000  Accounts Receivable  28,000,000    Notes Payable  40,000,000  Inventories  42,000,000  Long-Term Debt  60,000,000        Preferred Stock  10,000,000  Net Fixed Assets  133,000,000  Common Equity  77,000,000              Total Assets  205,000,000  Total Claims  205,000,000     Market Values of Capital • The company has 60,000 bonds with a 30-year life outstanding, with 15 years until maturity. The bonds carry a 10 percent semiannual coupon and are currently selling for $874.78.  You also have 100,000 shares of $100 par, 9% dividend perpetual preferred stock outstanding. The current market price is $90.00. Any new issues of preferred stock would incur a $3.00 per share flotation cost. The company has 5 million shares of common stock outstanding with a current price of $14.00 per share. The stock exhibits a constant growth rate of 10…

Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet:   Current assets   $30,000,000   Current liabilities   $20,000,000         Notes payable   10,000,000 Fixed assets   70,000,000   Long-term debt   30,000,000         Common stock (1 million shares)   1,000,000         Retained earnings   39,000,000 Total assets   $100,000,000   Total liabilities and equity   $100,000,000   The notes payable are to banks, and the interest rate on this debt is 11%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 7%, and a 25-year maturity. The going rate of interest on new long-term debt, rd, is 11%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $56 per share. Calculate the firm's…

A.4 ABC Company has on its books the following amounts and specific costs of each type of capital: Type of Book Value Market Value Specific Costs Capital ($) ($) Debt Preference Equity Retained Earnings 600,000 1,000,000 800,000 2,000,000 480,000 1,100,000 900,000 3,000,000 (a)Book Value weights, and (b) Market Value weights (%) 5 4,400,000 5,480,000 Determine the weighted average cost of capital using 8 15 13

Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $82.60 on December 31, 20Y2. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Υ2 20Υ1 Retained earnings, January 1 $3,704,000 $3,264,000 Net income $ 600,000 $ 550,000 Dividends: On preferred stock (10,000) (10,000) On common stock (100,000) (100,000) Increase in retained earnings $ 490,000 $ 440,000 Retained earnings, December 31 $4,194,000 $3,704,000 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Υ1 Sales $ 10,850,000 $10,000,000 Cost of goods sold (6,000,000) (5,450,000) $ 4,850,000 $ (2,170,000) Gross profit $ 4,550,000 Selling expenses $ (2,000,000) Administrative expenses (1,627,500) (1,500,000) Total operating expenses $(3,797,500) $ (3,500,000) Operating income $ 1,052,500 $ 1,050,000 Other revenue and expense:…

The company capital structure consist of debt 380000 @ 4.05%, common stock 220000@12.09% and preferred stock 400000 @ 19.50%, calculate company's weighted average cost of capital Select one: O a. 12.99% O b. 11% O c. 9.50% O d. None O e. 11.99%

Data pertaining to the current position of Lucroy Industries Inc. follow:Cash                                                                $ 800,000Marketable securities                                        550,000Accounts and notes receivable (net)                  850,000Inventories                                                         700,000Prepaid expenses                                               300,000Accounts payable                                              1,200,000Notes payable (short-term)                               700,000Accrued expenses                                              100,000Instructions1. Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios in parts b through j to one decimal place.2. List the following captions on a sheet of paper:Transaction        Working Capital          Current Ratio         Quick RatioCompute the working capital, the current ratio, and the quick ratio after each of the…

17. Current Attempt in Progress         The following information pertains to Sheridan Company: Cash   $21,500   Accounts receivable   125,000   Inventory   75,500   Plant assets (net)   384,000   Total assets   $606,000           Accounts payable   $74,500   Accrued taxes and expenses payable   25,500   Long-term debt   48,500   Common stock ($10 par)   155,000   Paid-in capital in excess of par   89,500   Retained earnings   213,000   Total equities   $606,000           Net sales (all on credit)   $801,000   Cost of goods sold   601,500   Net income   81,500   Compute the following: (Round answers to 2 decimal places e.g. 15.25.) (a)   Current ratio     : 1   (b)   Inventory turnover     times   (c)   Accounts receivable turnover     times   (d)   Book value per share   $      (e)   Earnings per share   $      (f)   Debt to assets     %   (g)   Profit margin on sales     %   (h)   Return on common stockholders’…

This Year Last Year Assets     Current assets:     Cash $360,000  $310,000  Marketable securities 220,000  80,000  Accounts receivable, net 775,000  700,000  Inventory 925,000  750,000  Other current assets 355,000  195,000  Total current assets 2,635,000  2,035,000  Plant and eqipment, net 1,975,000  1,800,000  Other assets 75,000  100,000  Total assets $4,685,000  $3,935,000  Liabilities and Stockholders' Equity     Current Liabilities:     Accounts payable $250,000  $225,000  Short-term bank loans 750,000  600,000  Accrued payables 550,000  395,000  Other current liabilities 275,000  223,400  Total current liabilities 1,825,000  1,443,400  Bonds payable, 10% 575,000  400,000  Total liabilities 2,400,000  1,843,400  Stockholders' equity:     Common stock 1,150,000  1,150,000  Retained earnings 1,135,000  941,600  Total stockholders' equity 2,285,000  2,091,600  Total liabilities and stockholders' equity $4,685,000  $3,935,000…

Assuming a business entity has a total asset of 25,000,000 its total liabilities is 1/3 of the said amount. How much is the equity? 16,000,000,00 16,666,666.67 13,333,333.33 13,000,000.00

REQUIRED Calculate the working capital cycle of Provalis Limited.   INFORMATION   The following financial information is provided by Provalis Limited                                             R Sales (all credit) 8 000 000 Cost of Sales 5 600 000 Purchases (60% on credit) 7 000 000 Accounts Receivable 1 800 000 Accounts Payable 1 200 000 Inventory 900 000

The financial statements of Persimmon Company include the following items:   20X9 20X8       Cash $51,500 $44,000 Short-term Investments 33,000 16,000 Net Accounts Receivable 100,000 105,000 Merchandise Inventory 165,000 148,000 Total Assets 535,000 551,000 Total Current Liabilities 275,000 294,000 Long-term Note Payable 57,000 56,000       What is working capital for 20X9? Group of answer choices A $203,000 B $90,500 C $74,500 D $41,500

Title INGRAM INDUSTRIES Balance Sheet June 30, 2008 Assets Current assets: Cash (including $13,000 in... Description INGRAM INDUSTRIES Balance Sheet June 30, 2008   Assets Current assets: Cash (including $13,000 in sinking fund for bonds payable) $ 70,000 Marketable securities 23,400 Investment in subsidiary company 23,000 Accounts receivable 21,000 Inventories (lower-of-cost-or-market) 117,00 $254,400 Plant assets: Land and buildings $160,000 Less: Accumulated depreciation 100,000 60,000 Investments: Treasury stock 4,000 Deferred charges: Discount on bonds payable $ 6,000 Prepaid expenses 2,000 8,000 Total Assets $326,400 Liabilities and Stockholders’ Equity Liabilities: Notes payable to bank $ 60,000 Accounts payable 18,000 Bonds payable 61,000 Total liabilities $139,000 Stockholders’ equity: Preferred and common (each $10 par, 5,000 shares preferred and 6,000 shares common) $110,000 Capital in excess of par 61,000 Retained earnings 16,400 187,400 Total liabilities and…

Joey Legoria Corporation Company Cash and Receivables $57,000 $30,000 Inventory 160,000 350,000 BLD/Equipment (net) $435,000 $80,000 Investment in Legoria Stock 230,000 Total Assets $877,000 $460,000 Current Liabilities $115,000 $110,000 Long-Term Debt 425,000 200,000 Common Stock 100,000 100,000 APIC 105,000 40,000 Retained Earnings 137,000 10,000 Total Liabilities and Equity $877,000   $460,000 Joey Corporation acquired 100 percent of Legoria Company’s common stock on January 1, 2022, for $230,000. Balance sheet data for Joey and Legoria on January 1, 2022, are presented above. At the date of the business combination, Legoria’s cash and receivables had a fair value of $28,000, inventory had a fair value of $357,000, and buildings and equipment had a fair value of $92,000. Current Liabilities of Legoria Co had a fair value of $115,000. Required: 1). Give all the Consolidation [Elimination entries] needed to prepare a Consolidated Balance Sheet as of January 1, 2022. 2) Compare and…

Balance sheet   2020 2021 Plots 80.000 98.000 Mechanical equipment 100.000 140.000 Accumulated depreciation machine.  Equipment (25.000) (26.000) Commodities finished stock 25.000 33.000 Customers 45.000 17.000 Promissory notes receivable 30.000 20.000  Suppliers' advances 3.000 6.500 Cash resources 51.000 35.000 Total assets 309.000 323.500       Share capital 145.000 145.000 Results in re-employment 11.000 104.000 Long-term liabilities (same loan) 51.000 67.000 Suppliers 30.000 3.500 Cheques payable 70.000 1.000 Interest payable 2.000 3.000 Total own funds and liabilities 309.000 323.500  Profit and loss statement Sales   215.000 Cost of sales (67.000)   Other operating expenses (16.000)   Depreciation (14.000)   Loss from the sale of mechanical equipment (3.000)   Earnings before interest…

The following appeared in the ledger of PORTO Manufacturing Company Ltd after the preparation of the Income Statement.    SH. Ordinary Share Capital 100,000 8% Preference Share Capital 40,000 Finished Goods Inventory 29,000 Fixed Assets at cost -      141,000 Provision for Depreciation - Fixed Assets 55,200 Reserve for increased replacement of Fixed Assets          15,000 Interim Ordinary Dividend paid      7,500 Receivables   59,200 Payables                                     40,400 Work-in-progress                        36,000           Raw Material stock                  26,000 Bank Overdraft  10,000 Profit & Loss Account balance 1st January 2019 4,000 Preference Dividend paid 30th June 2019 1,600 Net Profit for 2019 35,700 Additional information i)       The Authorized Capital of the business is 300,000 Ordinary Shares of Sh.0.50 each and 75,000 8% preference shares of Sh. 1.00…