Accounting and Finance Practice Problems – Chapters 1 through 4 (Part 2)
Murray Company Income Statement
Year Ended May 31, 2019
Revenue:
Sales $87,000
Expenses:
Wages 27,000
Rent 12,000
Utilities 6,000
Insurance 5,000
Depreciation 2,000
Miscellaneous 750 52,750
Net Income $34,250
A. What is Murray Company’s profit margin?
Balance Sheet (Year ended June 30, 2019):
de la Vega Corporation
Assets Liabilities
Cash 1,545,000 Accounts Payable 70,000
Available-for-sale
Investments – McCulley Corp. 500,000
Accounts Receivable 110,000 Accrued Expenses 60,000
Inventory 722,000 Current Portion – Long-term debt 665,000
Prepaid Expenses 10,000 Long-term debt 1,825,000
Property, plant and equipment 1,250,000 Total Liabilities 2,620,000
Accumulated Depreciation 20,000
Property, plant and equip. (Net) 1,230,000 Common stock 700,000
Paid-in Capital in Excess of Par 300,000
Retained earnings 497,000
Shareholder’s Equity 1,497,000
Total Assets 4,117,000 Total Liab. & Owner’s Equity 4,117,000
A, What are total quick assets?
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B. What are the total current assets?
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C. If de la Vega Corporation’s depreciation expense was $5,000 for the year ended June 30, 2019, why would this amount be different than the Accumulated Depreciation above?
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D. What is the amount owed to suppliers for goods received but not paid for yet?
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F. What is the Return on Assets using $150,000 as Net Income for the year ended June 30, 2019?
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G. Is this company using financial leverage to its advantage? How can you tell?
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2019 2018
Cash $370,000 $135,000
Accounts receivable (net) $ 175,000 $200,000
Inventory 130,000 170,000
Property, plant and equipment 425,000 295,000
Total assets 1,100,000 800,000
Current liabilities 140,000 110,000
Long-term debt 410,000 300,000
Owner’s equity 550,000 390,000
Total liabilities and owner’s equity 1,100,000 800,000
Net sales 900,000 700,000
Cost of goods sold 600,000 530,000
Interest expense 40,000 25,000
Income tax expense 60,000 29,000
Net income 120,000 85,000
Net cash provided by operating activities 220,000 135,000
Instructions
Answer the following questions relating the Francona Company to the year ended December 31, 2019.
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