A04 Intermediate Accounting I Assignment 04 Assignment 08

Assignment 04

A04 Intermediate Accounting I

Directions:  Be sure to make an electronic copy of your answer before submitting it to Ashworth College for grading.  Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar.  Sources must be cited in APA format.  Refer to the "Assignment Format" page for specific format requirements.

Part A (40 points)

Vince Corporation has current assets of $300,000 and current liabilities of $175,000.

Compute the effect of each of the following transactions on Vince’s current ratio:

1. Refinanced a $50,000 long-term mortgage with a short-term note.
2. Purchasing $80,000 of merchandise inventory with short-term accounts payable.
3. Paying $30,000 of  short-term accounts payable.
4. Collecting $40,000 of short-term accounts receivable.

Part B (20 points)

Selected data of the Peninsula Company follow:

	As of December 31
Balance Sheet Data	2014	2013
Accounts receivable	$671,000	$642,000
Allowance for doubtful accounts	31,000	22,000
Net accounts receivable	$640,000	$620,000
Inventories—lower of cost or market	$542,500	$642,500
	Year Ended December 31
Income Statement Data	2014	2013
Net credit sales	$3,150,000	$3,000,000
Net cash sales	800,000	600,000
Net sales	$3,950,000	$3,600,000
Cost of goods sold	$2,370,000	$2,160,000
Selling, general, and administrative expenses	475,000	350,000
Other	150,000	125,000
Total operating expenses	$2,995,000	$2,635,000
Net income	$955,000	$965,000

1. What is the accounts receivable turnover for 2014?
2. What is the inventory turnover for 2014?

Part C (40 points)

Selected information taken from the 2014 annual report of Aardvark Company follows.  During 2014, the company had no nonoperating or nonrecurring items included in income and had no outstanding preferred stock.

($ in millions)	2014	2013
Sales	$19,903	$18,781
Interest expense	130	169
Net income	1,153	1,088
Total assets	12,673	12,461
Dividends	(153)	(131)
Total stockholders’ equity	$4,288	$4,007
Assumed tax rate	35%	35%
Industry ROA	7.32%
Industry operating profit margin	6.1%

For 2014, calculate:

a.       ROA

b.      ROCE

c.       Operating profit margin

d.      Asset turnover. 

Round your percentage answers to one decimal place.  For example, .1234 = 12.3%.

Assignment 08

A04 Intermediate Accounting I

Directions:  Be sure to make an electronic copy of your answer before submitting it to Ashworth College for grading.  Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar.  Sources must be cited in APA format.  Refer to the "Assignment Format" page for specific format requirements.

Part A (30 points)

The Bravo Company manufactures a single product.  On December 31, 2012 Bravo adopted the dollar-value LIFO inventory method.  The inventory on that date using the dollar-value LIFO inventory method was determined to be $500,000.  Inventory data for succeeding years are as follows:

Year Ended December 31	Inventory at Respective Year-end Prices	Relevant Price Index (Base Year 2012)
2012	$500,000	1.00
2013	527,000	1.08
2014	635,000	1.15
2015	645,000	1.21

Compute the inventory amount at December 31, 2013, 2014, and 2015 using the dollar-value LIFO inventory method for each year.  (Round all amounts to the nearest dollar, 10 points each)

Part B (40 points)

Information from Hope Company’s records for the year ended December 31, 2015 is available as follows:

Net sales	$2,800,000
Cost of goods manufactured:
Variable	$1,260,000
Fixed	$630,000
Operating expenses:
Variable	$196,000
Fixed	$240,000
Units manufactured	70,000
Units sold	60,000
Finished goods inventory, 1/1/2015	$0

Hope had no work-in-process inventories at either the beginning or end of 2015.

a.       What would be Hope’s finished goods inventory cost under the variable (direct) costing method at December 31, 2015? (20 points)

b.      What would Hope’s operating income be under the absorption costing method? (20 points)

Part C (30 points, 10 each)

Tool City, Inc. had 300 cordless screwdrivers on hand at January 1, 2015 costing $45 each.  Purchases and sales of cordless screwdrivers during the month of January were as follows:

Date	Purchases	Sales
January 9		200 @ $75
January 14	100 @ $47
January 23		75 @ $76
January 25	100 @ $48
January 30		75 @ $77

Tool City does not maintain perpetual inventory records.  According to a physical count, 150 cordless screwdrivers were on hand at January 31, 2015.

a.       What is the cost of the inventory at January 31, 2015 under the FIFO method?

b.      What is the cost of the inventory at January 31, 2015 under the LIFO method?

c.       What is the cost of the inventory at January 31, 2015 under the FIFO method if only 145 cordless screwdrivers were on hand at the time of the physical count? 

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