accountant project

accountant project

THIS TEAM ASSIGNMENT IS DUE IN THE DROP BOX ON OR BEFORE:
MARCH 17th BEFORE 11:00pm
1. Laura Anderson has just been assigned as the senior accountant on the audit of Larsen Manufacturing Company. Laura currently is planning the audit and has been considering what procedures to perform in examining the company’s inventories of raw materials, work-in-process, and finished goods. She has determined that the calculation of certain ratios and other financial analysis techniques will prove useful to her in deciding how to approach the audit of the company’s inventory accounts.
Write a short paper in which you identify and discuss the ratios to be calculated and the factors to be considered in Laura’s analysis of the company’s inventory accounts.
2. A large body of scholarly literature exists relating to the subject of choices of accounting methods. The choice of depreciation methods is an example of these accounting choices. The choice of depreciation method affects several ratios.
Required:
a.
Explain which financial statement ratios are affected by the choice of depreciation methods, with specific attention to the effects of straight-line vs. accelerated depreciation on the ratios.
b.
Comment on the effects on financial statement users of the issues discussed in part 1.
Page 2 of 3
3. The following are comparative data for Gates Company for the three-year period 2006-2008:
Income Statement Data
2008 2007 2006
Net sales (80% are on credit each
period) …………………….
$900,000
$720,000
$840,000
Net purchases ………………. 480,000 390,000 330,000
Balance Sheet Data
Accounts receivable, December 31 $150,000 $132,000 $126,000
Compute the following measurements for 2008 and 2007:
(1) The receivables turnover rate.
(2) The average collection period for accounts receivable.
4. Income statements for LaRue Co. show the following:
2008 2007 2006
Sales (net) ………………… $500,000 $400,000 $350,000
Cost of goods sold:
Beginning inventory …………. 110,000 90,000 20,000
Purchases ………………….. 420,000 330,000 370,000
$530,000 $420,000 $390,000
Ending inventory ……………. 170,000 110,000 90,000
360,000 310,000 300,000
Gross profit ……………….. $140,000 $ 90,000 $ 50,000
From the data presented, calculate the following ratios for 2008 and 2007:
(1) Inventory turnover rate.
(2) Number of days’ sales in inventories.
(3) Gross profit margin on sales.
Page 3 of 3
5. Comparative data for Kerry Inc. for the two-year period 2007-2008 are given as follows:
Income Statement Data
2008
2007
Net sales ……………………………..
$1,400,000
$800,000
Cost of goods sold ……………………..
840,000
440,000
Gross profit on sales …………………..
$ 560,000
$360,000
Selling, general, and other expenses ……..
400,000
130,000
Income tax expense ……………………..
40,000
30,000
Net income …………………………….
$ 120,000
$200,000
Dividends paid …………………………
80,000
80,000
Net increase in retained earnings ………..
$ 40,000
$120,000
Balance Sheet Data
2008
2007
Assets
Current assets …………………………
$ 540,000
$ 440,000
Land, buildings, and equipment …………..
800,000
720,000
Total assets …………………………..
$1,340,000
$1,160,000
Liabilities and Stockholders’ Equity
Current liabilities …………………….
$ 300,000
$ 240,000
Bonds payable (8%) ……………………..
320,000
320,000
Common stock ($5 par) …………………..
480,000
400,000
Retained earnings ………………………
240,000
200,000
Total liabilities and stockholders’ equity ..
$1,340,000
$1,160,000
From the given data, compute the following for 2008 and 2007:
(1)
Current ratio.
(2)
Net profit margin on sales.
(3)
Gross profit margin on sales.
(4)
Debt-to-equity ratio.
(5)
Times interest earned.

Is this the question you were looking for? If so, place your order here to get started!