Chapter 5 Accounting homework PDF

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Chapter 5 P5-4 Delcosta Corporation Statement of Financial Position December 31st 2017 Assets Current assets Cash FV - NI investments Accounts receivable Inventory Total current assets Long-term investments FV - OCI investments Assets allocated to trustee for expansion: Cash Treasury notes, at fair value Total long-term investments Property, plant, and equipment Land Buildings Less accumulated depreciation—buildings

$175,900 75,000 170,000 312,100 $733,000

200,000 $120,000 138,000

258,000 458,000

950,000 $1,070,000 410,000

660,000

Total assets

1,610,000 $2,801,000

Liabilities and Shareholders’ Equity Current liabilities Accounts payable Income tax payable Current portion of notes payable Total current liabilities Long-term liabilities Notes payable Total liabilities

$420,000 75,000 100,000 $ 595,000

500,000 1,095,000

b) Goodwill is not separately recognized, because it is too complication and because no transaction would’ve occurred.

P5-5 A MLT Inc Statement of Income For the Five months that ended on May 31, 2017 Sales Cost of goods sold Purchases Less inventory Gross profit Operating expenses

$32,426 $14,526 (2,075)

Salaries and wages Utilities Rent Insurance Advertising Depreciation Maintenance Income from operations Interest expense* Income before income taxes Income taxes (20%) Net income

5,770 4,270 1,500 800 424 300 110

Earnings per share ($5,366  1,000)

12,451 19,975

13,174 6,801 93 6,708 1,342 $5,366 $5.37

B MLT Inc. Statement of Financial Position May 31, 2017 Assets Current assets Cash Accounts receivable Inventory of baking materials Prepaid insurance Prepaid rent Total current assets Property, plant, and equipment Display cases and equipment Less accumulated depreciation Total assets

$ 1,548 4,336 2,075 1,120 300 9,379 $3,600 300

3,300 $12,679

Liabilities and Shareholder’s Equity Current liabilities Current portion of bank loan Accounts payable Salaries and wages payable Income tax payable Interest payable

$ 960 526 270 1,342 35 3,133

Total current liabilities Long-term liabilities Less current maturities Total long-term liabilities Total liabilities

960 4,093

Shareholders’ equity Common shares, 1,000 shares issued and outstanding Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity

2,500 5,366 7,866 $11,959

C Current Ratio = $9,379 / $3,133 = 2.99 = current ratio is good. Times Interest Earned Ratio = $6,801 / $93 = 73.13 = ratio is very high.

P5-10 - Income Taxes should be titled Income Tax Payable. - Surplus should be titled Retained Earnings. - Titles “Liabilities and Equity” should be changed to “Liabilities and Shareholders’ Equity” -...