SUNLAND COMPANY
Income Statements
For the Years Ended December 31
2020 2021
Net sales $2,178,400 $2,030,000
Cost of goods sold 1,207,000 1,187,080
Gross profit 971,400 842,920
Selling and administrative expenses 590,000 565,220
Income from operations 381,400 277,700
Other expenses and losses
Interest expense 25,960 23,600
Income before income taxes 355,440 254,100
Income tax expense 106,632 76,230
Net income $ 248,808 $ 177,870
SUNLAND COMPANY
Balance Sheets
December 31
Assets 2022 2021
Current assets
Cash $ 70,918 $ 75,756
Debt investments (short-term) 87,320 59,000
Accounts receivable 139,004 121,304
Inventory 148,680 136,290
Total current assets 445,922 392,350
Plant assets (net) 765,820 613,954
Total assets $1,211,742 $1,006,304
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $ 188,800 $171,572
Income taxes payable 51,330 49,560
Total current liabilities 240,130 221,132
Bonds payable 259,600 236,000
Total liabilities 499,730 457,132
Stockholders’ equity
Common stock ($5 par) 342,200 354,000
Retained earnings 369,812 195,172
Total stockholders’ equity 712,012 549,172
Total liabilities and stockholders’ equity$1,211,742 $1,006,304
All sales were on account. Net cash provided by operating activities for 2022 was $259,600. Capital expenditures were $160,480, and cash dividends were $74,168.
Compute the following ratios for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)
(a) Earnings per share
$enter earnings per share in dollars
(b) Return on common stockholders’ equity
enter return on common stockholders’ equity in percentages %
(c) Return on assets
enter return on assets in percentages
%
(d) Current ratio
enter current ratio
(e) Accounts receivable turnover
enter accounts receivable turnover in times
(f) Average collection period
enter average collection period in days
(g) Inventory turnover
enter inventory turnover in times
(h) Days in inventory
enter days in inventory
(i) Times interest earned
enter times interest earned
(j) Asset turnover
enter asset turnover in times
(k) Debt to assets ratio
enter debt to assets ratio in percentages
(l) Free cash flow
$enter free cash flow in dollars

Answer:

a) $3.57

(b) Return on common stockholders’ equity = 39.46%

(c) Return On Assets = 22.43%

(d) Current Ratio = 1.86 times

(e) Account Receivables Turnover Ratio = 16.74 times

(f) Average collection period = 21.8 days

(g) Inventory Turnover = 8.47 times

(h) Days in inventory = 43.09 days

(i) Times interest earned = 14.69 times

(j) Asset turnover = 1.96 times

(k) Debt to assets ratio = 41.24%

(l) Free cash flow = $24,952

Explanation:

(a) Earnings per share

Net income = $248,808

Beginning number of shares = Beginning Common stock / Par value = $354,000 / $5 = 70,800

Ending number of shares = Ending Common stock / Par value = $342,200 / $5 =  = 68,440

Average Number of Shares Outstanding = (Beginning number of shares + Ending number of shares) / 2 = (68,440 + 70,800) / 2 = 69,620

Earning Per Shares = Net Income/ Average Number of Shares Outstanding = $248,808 /  69,620 = $3.57

(b) Return on common stockholders’ equity

Average Stockholders Equity = (Beginning Stockholders Equity + Ending Stockholders Equity) / 2 = ($549,172 + $712,012) / 2 = $630,592  

Return on Stockholders Equity = Net Income / Average Stockholders Equity = $248,808 / $630,592 = 0.3946, or 39.46%

(c) Return on assets

Average total assets = (Ending total assets + Beginning total assets) / 2 = ($1,211,742 + 1,006,304) / 2 = $1,109,023

Return On Assets = Net Income / Average total assets = $248,808 / $1,109,023 = 0.2243, or 22.43%

(d) Current ratio

Current Ratio = Current Assets / Current Liabilities = $445,922 / $240,130 = 1.86 times

(e) Accounts receivable turnover

Average Account Receivables = (Beginning Account Receivables + Ending Account Receivables) / 2 = ($139,004 + $121,304) / 2 = $130,154

Account Receivables Turnover Ratio = Sales / Average Account Receivables = $2,178,400 / $130,154 = 16.74 times

(f) Average collection period

Average collection period = 365 / Account Receivables turnover ratio = 365 days /16.74 = 21.8 days

(g) Inventory turnover

Average Inventory = (Beginning inventory + Ending inventory) / 2 = ($148,680 + $136,290) / 2 = $142,485

Inventory Turnover = Cost of goods sold / average inventory = $1,207,000 / $142,485 = 8.47 times

(h) Days in inventory

Days in inventory = 365/ inventory turnover ratio = 365 days / 8.47 = 43.09 days

(i) Times interest earned

Times Interest Earned = Earnings before interest, taxes, depreciation, and amortization / Interest expenses = Income from operations / Interest expenses = $381,400 / $25,960 = 14.69 times

(j) Asset turnover

Asset turnover = Net sales / Average total assets = 2,178,400 / $1,109,023 = 1.96 times

(k) Debt to assets ratio

Debt to Asset Ratio = Total Debt / Total Assets = $499,730 / $1,211,742 = 0.4124, or 41.24%

(l) Free cash flow

Free cash flow = Net cash provided by operating activities - Capital expenditures - Cash dividends = $259,600- $160,480 - $74,168 = $24,952

Apple Inc. just paid a dividend of $3 per share. You expect that Apple's dividend will increase at the rate of 10% per year for the next 10 years. After that, you expect that Apple Inc. will increase its dividend at the rate of 3% per year forever. The required rate of return for Apple is 20%. What is the price of Apple just after the current dividend was paid?

Jane Industries manufactures plastic toys. During October, Jane's Fabrication Department started work on 10,400 models. During the month, the company completed 11,200 models, and transferred them to the Distribution Department. The company ended the month with 2200 models in ending inventory. There were 3000 models in beginning inventory. All direct materials costs are added at the beginning of the production cycle and conversion costs are added uniformly throughout the production process. The FIFO method of process costing is being followed. Beginning work in process was 30% complete as to conversion costs, while ending work in process was 55% complete as to conversion costs.


Beginning inventory​:

Direct materials costs $20,000
Conversion costs $11,100

Manufacturing costs added during the accounting period​:

Direct materials costs $70,700
Conversion costs $240,500

What is the amount of direct materials cost assigned to ending work-in-process inventory at the end of October?


a. $19,783
b. $20,337
c. $10,923
d. $14,916

Inside the packaging of a new bread machine she purchases, Ginger finds a paper stating, "All our products will be replaced within the first year if they fail to operate correctly. However, consumer misuse or abuse will effectively end this policy." This is a(n) a. implied warranty. b. express warranty. c. statement of guarantee. d. set of instructions for use. e. labe

The Fabricating Department started the current month with a beginning Work in Process inventory of $10,900. During the month, it was assigned the following costs: direct materials, $76,900; direct labor, $24,900; and factory overhead, 70% of direct labor cost. Also, inventory with a cost of $113,500 was transferred out of the department to the next phase in the process. The ending balance of the Work in Process Inventory account for the Fabricating Department is: Group of answer choices $83,461. $196,961. $68,030. $16,630. $112,700.

A publishing house is using 400 printers and 200 printing presses to produce books. The printers' wage rate is $20 and the price of a printing press is $100. The last printer added 20 books to total output, while the last press added 50 books to total output. In order to maximize the number of books published with a budget of $28,000, the publishing house

Organizations face myriad barriers and obstacles to effectively increasing and embracing diversity in their workplaces. Some of these barriers stem from people in the organization who are resistant to changing the organization to make it more diverse. This activity is important because resistance to this type of change is an attitude that managers will come up against frequently, and managers should be able to recognize when this occurs so that they can manage the organization and its employees through this challenging but very important type of change.
The goal of this exercise is to challenge your knowledge of the barriers to diversity.
Stereotypes and Prejudices
Fear of Discrimination Against Majority Group Members
Resistance to Diversity Program Priorities
A Negative Diversity Climate
Lack of Support for Family Demands
A Hostile Work Environment for Diverse Employees
First, hover over the terms to read examples of barriers to diversity in action. Then, click and drag each term to indicate the specific barrier to diversity its example best depicts.

Approach Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 14,800 Actual fixed overhead incurred: $791,000 Standard fixed overhead rate: $13 per hour Budgeted fixed overhead: $780,000 Planned level of machine-hour activity: 60,000 If Approach estimates four hours to manufacture a completed unit, the company's fixed-overhead volume variance would be: Multiple Choice $10,400 negative. $10,400 positive. $11,000 negative. $11,000 positive. None of the answers is correct.

Sage Company began operations at the beginning of 2021. The following information pertains to this company.

1. Pretax financial income for 2021 is $87,000.
2. The tax rate enacted for 2021 and future years is 20%.
3. Differences between the 2021 income statement and tax return are listed below:

a. Warranty expense accrued for financial reporting purposes amounts to $6,600. Warranty deductions per the tax return amount to $1,900.
b. Gross profit on construction contracts using the percentage-of-completion method per books amounts to $84,500. Gross profit on construction contracts for tax purposes amounts to $66,300.
c. Depreciation of property, plant, and equipment for financial reporting purposes amounts to $57,900. Depreciation of these assets amounts to $84,300 for the tax return.
d. A $3,200 fine paid for violation of pollution laws was deducted in computing pretax financial income.
e. Interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500.

4. Taxable income is expected for the next few years. (Assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.)

Required:
a. Compute taxable income for 2021.
b. Compute the deferred taxes at December 31, 2021, that relate to the temporary differences described above.
c. Prepare the journal entry to record income tax expense

Here is the income statement for Teal Mountain Inc.
TEAL MOUNTAIN INC.
Income Statement
For the Year Ended December 31, 2017
Sales revenue $402,900
Cost of goods sold 256,700
Gross profit 146,200
Expenses (including $ 10,200 interest and $29,600 income taxes) 89,200
Net income $57,000
Additional information:
1. Common stock outstanding January 1, 2017, was 30,000 shares, and 39,000 shares were outstanding at December 31, 2017.
2. The market price of Teal Mountain stock was $15 in 2017.
3. Cash dividends of $24,700 were paid, $ 6,500 of which were to preferred stockholders.
Compute the following measures for 2017.
(a) Earnings per share $_____
(b) Price-earnings ratio _____ times
(c) Payout ratio _____ %
(d) Times interest earned _____ times

Setrakian Industries needs to raise $48.5 million to fund a new project. The company will sell bonds that have a coupon rate of 5.56 percent paid semiannually and that mature in 10 years. The bonds will be sold at an initial YTM of 6.13 percent and have a par value of $2,000. How many bonds must be sold to raise the necessary funds

Castle Corporation conducts business in States 1, 2, and 3. Castle’s $630,000 taxable income consists of $555,000 apportionable income and $75,000 allocable income generated from transactions conducted in State 3. Castle’s sales, property, and payroll are evenly divided among the three states, and the states all employ a three-equal-factors apportionment formula.
Determine how much of Castle’s income is taxable in each of the following states.
a. State 1: $ _________
b. State 2: $ _________
c. State 3: $ _________

Setting and achieving goals is essential to success.

a. True
b. False

You are planning to save for retirement over the next 35 years. To do this, you will invest $710 per month in a stock account and $310 per month in a bond account. The return of the stock account is expected to be 9.1 percent, and the bond account will earn 5.1 percent. When you retire, you will combine your money into an account with an annual return of 6.1 percent. Assume the returns are expressed as APRs.

How much can you withdraw each month from your account assuming a 30-year withdrawal period?

On January 1, Alan King decided to deposit $58,800 in a savings account that will provide funds four years later to send his son to college. The savings account will earn 8% annually. Any interest earned will be added to the fund at year-end (rather than withdrawn). (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) Required:

8. Zelda owns a 50% general interest in YZ Partnership. At the beginning of the current year, the adjusted basis in her partnership interest was $95,000. In the current year, YZ generated a $110,000 business loss, earned $15,000 dividend and interest income on its investments and recognized a $7,000 capital gain. YZ also made a $5,000 distribution to Zelda. Compute Zelda’s adjusted basis in the partnership at the end of the year.

Both __________ and __________ affect the awareness and motivation of a firm to undertake actions and responses. a. first-mover advantages; corporate size b. market commonality; resource similarity c. management capabilities; competitive analysis d. speed of management decisions; management actions

On average, your firm receives 65 checks a day from customers. These checks, on average, are worth $39.90 each and clear the bank in 1.5 days. In addition, your firm disburses 38 checks a day with an average amount of $89.50. These checks clear your bank in 2 days. What is the average amount of the collection float? $2,473.80 $3,401.00 $3,890.25 $5,101.50 $6,802.00

Super Saver Groceries purchased store equipment for $43,000. Super Saver estimates that at the end of its 10-year service life, the equipment will be worth $4,000. During the 10-year period, the company expects to use the equipment for a total of 13,000 hours. Super Saver used the equipment for 1,200 hours the first year. Required: Calculate depreciation expense of the equipment for the first year, using each of the following methods. (Do not round your intermediate calculations.)

An investor thought that market interest rates were going to decline. He paid $19,000 for a corporate bond with a face value of $20,000. The bond has an interest rate of 10% per year payable annually. If the investor plans to sell the bond immediately after receiving the 4th interest payment, how much will he have to receive in order to make a return of 14% per year? Solve using:

a. tabulated factors
b. the GOAL SEEK tool on a spreadsheet.

The following note transactions occurred during the year for Towell Company: Nov. 10 Towell issued a 90-day, 9% note payable for $8,000 to Hyatt Company for merchandise. Dec. 1 Towell signed a 120-day, 10% note at the bank for $12,000. Dec. 20 Towell gave Barr, Inc., a 60-day, 10%, $12,000 note for payment of account. Prepare the general journal entries necessary to adjust the interest accounts at December 31. Use 360 days for calculations and round to the nearest dollar.

Chen Company's Small Motor Division manufactures a number of small motors used in household and office appliances. The Household Division of Chen then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis.
Fixed cost per unit $5.20
Variable cost per unit $10.81
Selling price per unit $34.55
Assuming that the Small Motor Division has excess capacity, compute the minimum acceptable price for the transfer of small motor LN233 to the Household Division. (Round answer to 2 decimal places.)
Minimum transfer price $ per unit
Assuming that the Small Motor Division does not have excess capacity, compute the minimum acceptable price for the transfer of the small motor to the Household Division. (Round answer to 2 decimal places.)

John received a promotion at work and felt new clothes would be necessary in the new position. John went to a local store and charged three ties on his charge account at a cost of $60 each. Bill, a friend of John's, saw a sidewalk vendor selling ties at a cost of three for $10 and bought three at that price. The friends compared purchases that night and found that they had purchased identical ties. John became enraged and said that he would not pay the charge-account bill because the ties were clearly not worth $60 each. Bill indicated that he would testify on John's behalf if litigation ensued. What would be the probable outcome of the lawsuit

Times-Roman Publishing Company reports the following amounts in its first three years of operation: ($ in thousands) 2021 2022 2023 Subscription revenue recognized (earned) $ 350 $ 360 $ 320 Subscription payments received in cash 390 340 360 The difference between pretax accounting income and taxable income is due to subscription revenue for one-year magazine subscriptions being reported for tax purposes in the year received, but reported in the income statement in later years when the performance obligation is satisfied. The income tax rate is 25% each year. Times-Roman anticipates profitable operations in the future. Required: 1. What is the balance sheet account that gives rise to a temporary difference in this situation

Suppose a firm produces with a technology that exhibits constant returns to scale at all levels of production. The firm's inputs are workers and laptops. The firm sells its output in a perfectly competitive market. It also hires its inputs (hires workers and rents laptops) in perfectly competitive markets. Assume that in the long run the firm produces y units of output using x1 workers and x2 laptops. If the firm doubles the amount of workers and laptops (using 2x1 and 2x2), we would expect the firm's long-run profits to

The amount of money that is earned on a deposit is​

Answer each of the following independent questions. Required: Alex Meir recently won a lottery and has the option of receiving one of the following three prizes: (1) $88,000 cash immediately, (2) $34,000 cash immediately and a six-period annuity of $9,300 beginning one year from today, or (3) a six-period annuity of $18,400 beginning one year from today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1.1 Assuming an interest rate of 7%, determine the PV value for the above options.
1.2 Which option should Alex choose? Option (1) Option (2) Option (3)
2. The Weimer Corporation wants to accumulate a sum of money to repay certain debts due on December 31, 2022. Weimer will make annual deposits of $175,000 into a special bank account at the end of each of 10 years beginning December 31, 2013. Assuming that the bank account pays 8% interest compounded annually, what will be the fund balance after the last payment is made on December 31, 2022?
Table of calculation function?
Payment?
N?
I?
Future value?

Negotiations often involve three types of issues. For ______________ issues, the parties' preferences are directly opposed. For ______________ issues, the parties have directionally-opposed preferences but value the issues differently. For ______________ issues, the parties have the same preferences.

Henry Ford is known for the introduction of the assembly line and the Model T. As his manufacturing effort expanded, however, he also adopted an attitude that came to be known as Fordism. What was one of the central tenets in his system?

Assume you gave up a $60,000 per year job at an accounting firm to start your own tax preparation business. To simplify, assume your tax personal obligations are the same whether you run your own firm or work for another firm. If your revenue during the first year of business is $75,000, and you incurred $5,000 in expenses for equipment and supplies, how much is your accounting profit

Which of the following industries is most likely to outsource jobs to another country because of slight increases in labor costs?

a. Milk dairy.
b. High-tech research facility.
c. Textile plant.
d. Automobile assembly plant.