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    Assignment I

    Uploaded by

    Mk56wow
    Accounting assignment

    Copyright:

    © All Rights Reserved
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    Assignment I

    Uploaded by

    Mk56wow
    5 views5 pages
    Accounting assignment

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

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    Accounting assignment

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    5 views5 pages

    Assignment I

    Uploaded by

    Mk56wow
    Accounting assignment

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    Page |1

    ADMN2556B SP24 Assignment I

    Question One
    Jenny's Mart had sales of $6,000,000 in the most recent year. Operating expenses were $4,200,000.
    Interest and taxes totaled $600,000. Total liabilities were $300,000 and owners’ equity was $900,000.

    Required

    Calculate the following:

    (a) The return on assets

    (b) The return on equity

    Question Two
    Carter's Transport is a trucking business. On January 1, the company owed its drivers a total of $25,000
    for trips driven in the previous year. During the year, it paid drivers a total of $640,000 for trips driven.
    On December 31, the company owed drivers a further $35,000 for trips driven in December.

    Required

    Calculate the wage expense for the year.

    Question Three
    Lara’s Groceries purchased a new secure storage cabinet in the current year for $9,000. The store
    expects to use it for 12 years and then replace it with a new one, selling the old one for $2,500.

    Required

    Using the straight-line depreciation method, calculate the annual depreciation expense.
    Page |2
    ADMN2556B SP24 Assignment I

    Question Four
    The balance sheet of Iron Traders Inc. as of December 31, 2021, was as follows:
    Current assets Current liabilities
    Cash $ 60,000 Trade payables $ 180,000
    Receivables 500,000 Bank loan 200,000
    Inventory 480,000 Income tax due 60,000
    Total current assets 1,040,000 Total current liabilities 440,000
    Long-term liabilies 500,000
    Long-term assets 600,000 Total liabilities 940,000

    Equity
    Share capital 200,000
    Retained Earnings 500,000
    Total equity 700,000
    Total $ 1,640,000 Total $ 1,640,000

    You are told that the sales revenue for 2021 was $10,000,000 and that the company made a net income
    of $600,000 in 2021.

    Required

    (a) Calculate the following ratios:

    (i) Current ratio

    (ii) Quick ratio

    (iii) Receivables turnover ratio

    (iv) Receivables collection period

    (v) Inventory turnover ratio

    (vi) Inventory holding period

    (b) Is the company liquid?


    Page |3
    ADMN2556B SP24 Assignment I

    Question Five
    Logan Co. has the following balance sheet:
    Assets
    Current assets
    Cash $ 12,000
    Trade receivables 260,000
    Inventory 110,000
    Prepaid expenses 45,000 $ 427,000
    Long-term assets
    Cost $ 500,000
    Accumuated depreciation (275,000) 225,000
    Total assets $ 652,000

    Liabilies & equity capital


    Current liabilities
    Trade Payables $ 210,000
    Bank loan 110,000 $ 320,000
    Long-term liabilities 120,000
    Total liabilities 440,000
    Equity
    Common stock $ 12,000
    Retained earnings 200,000 212,000
    Total liabilities & equity $ 652,000

    Required

    (a) Calculate the current ratio.

    (b) Calculate the quick ratio.

    (c) Is the company liquid or illiquid?

    (d) Calculate the debt-to-equity ratio.

    (e) Calculate the debt-to-assets ratio.

    (f) Comment on the level of the company’s leverage.


    Page |4
    ADMN2556B SP24 Assignment I

    Question Six
    Last year, Nova Inc. raised $120,000 from an issue of common shares. The company paid off a long-term
    loan of $60,000 and issued a new debenture loan for $300,000. It borrowed $550,000 by way of a
    mortgage on a building it bought for $800,000.

    Required

    Calculate the cash used in or cash from financing activities.


    Page |5
    ADMN2556B SP24 Assignment I

    Question Seven
    You are given the following summarized financial statements of Delta Inc. for the year 2023.
    Delta Inc.
    Income statement for 2023
    Sales revenue $ 3,000,000
    COGS & various operating expenses $ 2,150,000
    Depreciation 350,000 2,500,000
    Operating income 500,000
    Interest $ 20,000
    Income tax 175,000 195,000
    Net income 305,000

    Delta Inc.
    Balance Sheet as at the end of 2023
    Assets
    Current assets
    Cash $ 12,000
    Trade receivables 300,000
    Inventory 600,000 $ 912,000
    Long-term assets
    Cost $ 1,000,000
    Accumuated depreciation (575,000) 425,000
    Total assets $ 1,337,000

    Liabilies & equity capital


    Current liabilities
    Trade Payables $ 590,000
    Long-term liabilities 70,000
    Total liabilities 660,000
    Equity
    Common stock $ 120,000
    Retained earnings 557,000 677,000
    Total liabilities & equity $ 1,337,000

    Required

    Using financial ratio analysis, prepare a report on how well Delta Inc. is doing in 2023.

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