BUSI 3403---Unit 4 Study Exercises
.docx
School
Yorkville University**We aren't endorsed by this school
Course
BUSI 3403
Subject
Accounting
Date
Dec 19, 2024
Pages
10
Uploaded by CoachWaterSquid31
1Unit 4 Study ExercisesYorkville UniversityBUSI 3403: Intermediate Accounting 1 - AssetsTazish FareedNovember 2, 20244.1
2Cash provided/used by financing activities 1. Issuance of common sharesCash provided/used by investing activities2. Purchase of land and buildingCash provided/used by financing activities3. Redemption of bondsCash provided/used by investing activities4. Proceeds on sale of equipmentCash provided/used by operating activities5. Depreciation of machineryCash provided/used by operating activities6. Amortization of patentNot a cash flow item7. Issuance of bonds in exchange for landCash provided/used by financing activities8. Payment of cash dividendsNot a cash flow item9. Exchange of furniture for equipmentCash provided/used by operating activities10. Loss on disposal of equipmentCash provided/used by operating activities11. Increase in accounts receivable during yearCash provided/used by operating activities12. Decrease in accounts payable during year4.2
31.Profit margin on sales = Net Income/Net sales = 109000/877000 x 100 = 12.43%2.Quick (acid-test) ratio = (Cash + Short term (trading) investments + Accounts Receivable) / Total current Liabilities = 21,000 + 28,000 + 102,000 / 205,000 = 151,000 /205,000 = 0.743.Receivables turnover = Net Sales / Average Accounts Receivable= 877,000 / (102,000 + 116,000) / 2= 877,000 /109,000= 8.054.Debt to total assets = Total current Liabilities / Total Assets= 205,000 /1,503,000= 13.64%5.Times interest earned = Operating income (EBIT) / Interest Expense= 165,000 /36,000= 4.586.Rate of return on assets = Net Income / Total Assets
4= 109,000/1,503,000 x 100= 7.25%7.Rate of return on common share equity = Net Income / Average total shareholders equity x 100Where,Net income = $109,000Average shareholders equity = (Total shareholder's equity at the end of 2021 + Total shareholder's equity at the end of 2022) / 2Total shareholders equity = Common shares + Retained earningsTotal shareholder's equity at the end of 2021 = 420,000 + 74,000 = $494,000Total shareholder's equity at the end of 2022 = 420,000 + 153,000 = $573,000Average shareholder's equity = (494,000 + 573,000) / 2 = $533,500Therefore, Rate of return on common share equity = (Net income / average total shareholders equity) x 100Rate of return on common share equity = (109,000 / 533,500) x 100Rate of return on common share equity = 20.43%4.3
51.Taika Waititi Ltd. Cash Flow StatementFor the year ended December 31, 2022Particulars Details Amount ($)Cash flow from operating activitiesNet Income13,500Depreciation expense17,000 Gain on sale of equipment(1,000)Decrease in inventories10,000 Increase in Accounts receivable(8,500)Increase in prepaid insurance(500) Increase in accounts payable3,000 Decrease in interest payable(1,000)Increase in wages payable2,000 Decrease in income taxes payable(1,000)Net cash provided by operating activities33,500Cash flows from investing activitiesSales of equipment4,000 Purchase of equipment(22,000Net cash used in investing activities(18,000)
6Cash flows from financing activitiesRepayment of long-term notes payable(4,500)Payment of cash dividends(3000) Cash flows from financing activities(7,500)Net increase (decrease) in cash8,000Cash at beginning of 202212,500Cash at end of 202220,500WorkingsDepreciation expense 22500 – (12500 – 7000) = 17,000Decrease in inventories 30000 – 20000 = 10,000 Increase in Accounts receivable 25500 – 34000 = (8,500) Increase in prepaid insurance 2000 – 2500 = (500)Increase in accounts payable 23000 – 20000 = 3,000Decrease in interest payable 2000 – 3000 = (1,000) Increase in wages payable 4000 – 2000 = 2,000 Decrease in income taxes payable 4000 – 5000 = (1,000)
7Sales of equipment 10000 – 7000 + 1000 = 4,000 Purchase of equipment 102000 – (90000 – 10000) = (22,000) Repayment of long-term notes payable 30000 – 34500 = (4,500)Payment of cash dividends 28500 – 13500 – 18000 = (3000) 4.4DescriptionAmount $Operating activities
8Cash received from customers162,000Cash paid to suppliers(104,000)Income tax paid(9,000)Other operating expenses paid(28,000)Net cash flows from operating activities21,000Workings:Cash received from customers = Sales − Increase in receivables = $165,000 – ($11,750 - $8,750)= $165,000 − $3,000 = $162,000Cash paid to suppliers = Cost of goods sold +Increase in inventory+Decrease in accounts payable = $97,500 + ($16,500 - $11,750) + $1,750 = $97,500 + $4,750 + $1,750 =$104,000Income taxes paid =Beginning income tax payable + Income tax expense − Ending income tax payable=$1,000 + $11,000 − $3,000=$9,000
9Operating expense payment = Operating expenses + Increase in prepaid insurance= $27,500 + ($2500 - $2000) = $27,500 + $500 = $28,0004.5
10Calculation of December 31, 2020 ending balance of retained earnings for Groot Corp.ParticularsAmount ($)Income before income taxes and before discontinued operations165,000Add: Gain from discontinued operations50,000Less: Correction of accounting error(35,000)Net income before taxes180,000Less: Taxes (180,000 x 40%)(72,000)Net income after taxes108,000Less: Cash dividends(45,000)Transfer to retained earnings63,000Add: Opening balance of retained earnings275,000Ending balance of retained earnings338,000