Loose Leaf for Financial Accounting: Information for Decisions
9th Edition
ISBN: 9781260158762
Author: John J Wild
Publisher: McGraw-Hill Education
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Review the chapter’s opening feature involving Deb and Dan Carey and their company, New Glarus Brewing Company. Assume that the company currently has net sales of $8,000,000 and that it is planning an expansion that will increase net sales by $4,000,000. To accomplish this expansion, the company must increase its average total assets from $2,500,000 to $3,000,000. Required 1. Compute the company’s total asset turnover under (a) current conditions and (b) proposed conditions. 2. Evaluate and comment on the merits of the proposal given the analysis in part 1. Identify any concerns we would express about the proposal.
Pharoah Company has decided to expand its operations. The bookkeeper recently completed the following balance sheet in order to obtain additional funds for expansion.
PHAROAH COMPANYBALANCE SHEETFOR THE YEAR ENDED 2020
Current assets
Cash
$232,000
Accounts receivable (net)
342,000
Inventory (lower-of-average-cost-or-market)
403,000
Equity investments (marketable)-at cost (fair value $122,000)
142,000
Property, plant, and equipment
Buildings (net)
572,000
Equipment (net)
162,000
Land held for future use
177,000
Intangible assets
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82,000
Cash surrender value of life insurance
92,000
Prepaid expenses
14,000
Current liabilities
Accounts payable
137,000
Notes payable (due next year)
127,000
Pension obligation
84,000
Rent payable
51,000
Premium on bonds payable
55,000
Long-term liabilities
Bonds payable
502,000
Stockholders’ equity
Common stock,…
Novak Company has decided to expand its operations. The bookkeeper recently completed the following balance sheet in order to obtain additional funds for expansion.
NOVAK COMPANYBALANCE SHEETFOR THE YEAR ENDED 2020
Current assets
Cash
$241,500
Accounts receivable (net)
351,500
Inventory (lower-of-average-cost-or-market)
412,500
Equity investments (marketable)-at cost (fair value $131,500)
151,500
Property, plant, and equipment
Buildings (net)
581,500
Equipment (net)
171,500
Land held for future use
186,500
Intangible assets
Goodwill
91,500
Cash surrender value of life insurance
101,500
Prepaid expenses
23,500
Current liabilities
Accounts payable
146,500
Notes payable (due next year)
136,500
Pension obligation
93,500
Rent payable
60,500
Premium on bonds payable
64,500
Long-term liabilities
Bonds payable
511,500
Stockholders’ equity
Common stock,…
Chapter 8 Solutions
Loose Leaf for Financial Accounting: Information for Decisions
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQCh. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Identify events that might lead to disposal of a...Ch. 8 - Prob. 9DQCh. 8 - Prob. 10DQ
Ch. 8 - Prob. 11DQCh. 8 - Prob. 12DQCh. 8 - Prob. 13DQCh. 8 - Prob. 14DQCh. 8 - Prob. 15DQCh. 8 - Prob. 16DQCh. 8 - Prob. 17DQCh. 8 - Prob. 18DQCh. 8 - Refer to the December 31, 2016, balance sheet of...Ch. 8 - Prob. 20DQCh. 8 - Prob. 1QSCh. 8 - Prob. 2QSCh. 8 - Prob. 3QSCh. 8 - Prob. 4QSCh. 8 - Prob. 5QSCh. 8 - Prob. 6QSCh. 8 - Prob. 7QSCh. 8 - Prob. 8QSCh. 8 - Prob. 9QSCh. 8 - Prob. 10QSCh. 8 - Identify the following assets a through i as...Ch. 8 - Prob. 12QSCh. 8 - Prob. 13QSCh. 8 - Caleb Co. owns a machine that costs $42,400 with...Ch. 8 - Prob. 15QSCh. 8 - Prob. 16QSCh. 8 - Prob. 1ECh. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Prob. 6ECh. 8 - Prob. 7ECh. 8 - Prob. 8ECh. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - Prob. 14ECh. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Prob. 17ECh. 8 - Prob. 18ECh. 8 - Prob. 19ECh. 8 - Prob. 20ECh. 8 - Prob. 21ECh. 8 - Prob. 22ECh. 8 - Prob. 23ECh. 8 - On January 2, 2018, Bering Co. disposes of a...Ch. 8 - Prob. 25ECh. 8 - Prob. 26ECh. 8 - Timberly Construction negotiates a lump-sum...Ch. 8 - Prob. 2PSACh. 8 - Prob. 3PSACh. 8 - Prob. 4PSACh. 8 - Prob. 5PSACh. 8 - Onslow Co. purchases a used machine for $178,000...Ch. 8 - Prob. 7PSACh. 8 - Prob. 8PSACh. 8 - Prob. 2PSBCh. 8 - Prob. 4PSBCh. 8 - Prob. 5PSBCh. 8 - Prob. 6PSBCh. 8 - Prob. 7PSBCh. 8 - Prob. 8PSBCh. 8 - Selected ledger account balances for Business...Ch. 8 - Prob. 3FSACh. 8 - Prob. 5BTN
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- Analyze Home Depot The Home Depot (HD) reported the following data (in millions) in its recent financial statements: a. Determine the asset turnover ratio for Home Depot for Year 2 and Year 1. Round to two decimal places. b. What conclusions can be drawn from these ratios concerning the change in the ability of Home Depot to effectively use its assets to generate sales?arrow_forwardFor 2022, Bramble Corp. reported beginning total assets of $217,000 and ending total assets of $419,000. Its net income for this period was $57,000, and its net sales were $795,000.Compute the company’s asset turnover in times for 2022. (Round answer to 2 decimal places, e.g. 1.25.)arrow_forwardThe 2023 annual report for Pronghorn Industries Inc. contained the following information: Dec. 31, 2022 Dec. 31, 2023 Total assets 561,000 605,000Total liabilities 65,400 88,900Net revenue 410,000 530,000Net income 54,000 32,000 (a) Calculate the asset turnover ratio for 2023. (Round answer to 2 decimal places, e.g. 52.75.) b) Calculate the profit margin on sales for 2023. c) Calculate the rate of return on assets using total assets for 2023. d) Calculate the rate of return on assets using profit margin for 2023arrow_forward
- Obtain the latest two Ford and General Motors Annual Reports online, like you have been doing for other companies in previous Module discussions. Please make sure the Annual Report you obtain is the latest two years. A particularly important financial accounting and financial statement measure is a company’s ability to use its assets efficiently and effectively to generate sales. Calculate the total asset turnover for both Ford and General Motors for the latest two fiscal years ending. Show the bases for your calculation at the start of your initial response for both companies. Answer the following questions as part of your initial response: What is Ford’s trend for the total asset turnover ratio the past two years? What is General Motors' trend for the total asset turnover ratio the past two years? Comparing the trend in the total asset turnover for Ford and General Motors to each other the past two years, what do the trends tell us? Is there any reason(s) they are or may be…arrow_forwardLok Company reports net sales of $5,705,000 for Year 2 and $7,621,000 for Year 3. End-of-year balances for total assets are Year 1, $1,652,000; Year 2, $1,841,000; and Year 3, $1,964,000. (1) Compute Lok's total asset turnover for Year 2 and Year 3. (2) Lok's competitor has a Total Asset Turnover of 3.0 during Year 3. Is Lok performing better or worse than its competitor on the basis of total asset turnover?arrow_forwardBIGBANG Company generated a total of P310,000,000 Sales in its operation for 2022. It financial statements show a total of P75,000,000 fixed assets that were used in the company’s business operation at 80% of its full capacity. Determine the sales of Bigbang Company had it used its fixed assets at full capacity.arrow_forward
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