The following accounts (in no particular order) are for Perfect Reb Corporation
ID: 2423462 • Letter: T
Question
The following accounts (in no particular order) are for Perfect Reb Corporation for the fiscal year ended December 31, 2015. (S/T = Short-Term; L/T = Long-Term)
REQUIRED:
A) Calculate Perfect Reb Corporation’s net income or net loss for the 2015 fiscal year. You may solve this in any
manner that you wish, but it is highly recommended to prepare a multiple step income statement.
B) Using proper form, prepare Perfect Reb Corporation’s balance sheet for 2015.
C) Using the information provided, solve for the requested ratios and respond to the corresponding questions.
Common Stock (13,000 shares outstanding)
$52,000
Sales Discounts
$5,000
Accrued Expenses (Payables)
20,000
Income Tax Expense (25% of IBIT)
???
Miscellaneous Operating Expenses
50,000
Cash
142,000
Accounts Receivable
20,000
Interest Expense
4,000
Buildings
186,000
Marketable Securities
62,000
Retained Earnings
???
Notes Payable (due in 5 years)
12,000
Wages Expense
60,000
Rent Expense
11,000
Inventory
40,000
Unearned Revenue
19,000
Accumulated Depreciation – Buildings
48,000
Allowance for Uncollectible Accounts
15,000
Accounts Payable
41,000
Sales
433,000
Gain on Sale of Equipment
62,000
Mortgage Payable ($12,000 S/T)
144,000
Land
50,000
Sales Returns & Allowances
12,000
Bad Debt Expense
2,000
Depreciation Expense
11,000
L/T Investments
7,000
Cost of Goods Sold
109,000
Notes Receivable ($2,000 S/T)
13,000
Interest Revenue
3,000
A) NET INCOME (10 points) – SHOW ALL WORK AND CALCULATIONS!!!!
B) CLASSIFIED BALANCE SHEET (15 points)
Perfect Reb Corporation Balance Sheet December 31, 2015
ASSETS
LIABILITIES
Current Assets
Current Liabilities
Total Current Liabilities
Total Current Assets
Long-Term Assets
Long-Term Liabilities
Total Long-Term Assets
Total Long Term Liabilities
Fixed Assets
Total Liabilities
EQUITY
Total Fixed Assets
Total Equity
TOTAL ASSETS
TOTAL LIABILITIES & EQUITY
C) RATIOS AND ANALYSIS (15 points):
Use the financial statements and additional information to calculate the ratios. Round your answers to two decimal places. Be sure to label your answer correctly (example, %, times, days, etc.). IF AN ANSWER SHOULD BE EXPRESSED AS A PERCENTAGE, DO NOT LEAVE IT IN DECIMAL FORM!!!! (i.e. 0.5015 = 50.15%!!!!)
Previous (December 31, 2014) year end balances for:
Accounts receivable, net of allowance Inventory
Stockholders’ Equity
Market price per share for one share of common stock at Dec 31, 2015 Dividend per share for one share of common stock for FYE Dec 31, 2015
$2,000 15,000 139,000
$94.50/share $1.25/share
No new shares of common stock were issued during 2015. The company’s credit policy is net 15.
RATIO
CALCULATION
ANSWER
1) Quick (Acid-Test) Ratio (2 points)
2) Dividend Yield (2 points)
3) Gross Profit Percentage (2 points)
4) Average Days’ Sales Uncollected 2 points)
5) Inventory Turnover (2 points)
6) Price-Earnings Ratio (2 points)
7) Using the liquidity ratios (and general accepted norms for the current ratio and quick/acid-test ratio), comment on the company’s financial position. (3 points)
Common Stock (13,000 shares outstanding)
$52,000
Sales Discounts
$5,000
Accrued Expenses (Payables)
20,000
Income Tax Expense (25% of IBIT)
???
Miscellaneous Operating Expenses
50,000
Cash
142,000
Accounts Receivable
20,000
Interest Expense
4,000
Buildings
186,000
Marketable Securities
62,000
Retained Earnings
???
Notes Payable (due in 5 years)
12,000
Wages Expense
60,000
Rent Expense
11,000
Inventory
40,000
Unearned Revenue
19,000
Accumulated Depreciation – Buildings
48,000
Allowance for Uncollectible Accounts
15,000
Accounts Payable
41,000
Sales
433,000
Gain on Sale of Equipment
62,000
Mortgage Payable ($12,000 S/T)
144,000
Land
50,000
Sales Returns & Allowances
12,000
Bad Debt Expense
2,000
Depreciation Expense
11,000
L/T Investments
7,000
Cost of Goods Sold
109,000
Notes Receivable ($2,000 S/T)
13,000
Interest Revenue
3,000
Explanation / Answer
1. Net income calculation
2. Balance sheet
3. Ratios
Perfect Reb Corporation Income statement for the year ended December 31, 2015 Sales 433,000 Sales discounts 5,000 Sales returns and allowances 12,000 Net Sales 416,000 Cost of goods sold 109,000 Gross Profit 307,000 Wages 60,000 Bad debt expenses 2,000 Depreciation 11,000 Interest expense 4,000 Rent expense 11,000 Miscellanoues Operating expenses 50,000 Total Operating expenses 138,000 Net Ordinary Income 169,000 Other income Interest revenue 3,000 Gain on sale of equipment 62,000 Total other income 65,000 Net Income (IBIT) 234,000 Income tax @25% 58,500 Net income after tax 175,500