ACCOUNTING

8. A comparative balance sheet and income statement for Momma, Inc. is presented below:

Additional information • Bonds matured and were paid off at face value for cash. • Plant assets costing $119,000 were purchased for cash during the year. • Old plant assets having an original cost of $80,500 were sold for $2,100 cash. • Hint: You can determine cash dividends paid using information about retained earnings and net

income.

Instructions For the year ended 2013, prepare a statement of cash flows using the indirect method.

Due Date: Sunday, April 7 @ 11 p.m. ET submit via WebTycho Assignment Folder

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Momma, Inc. Comparative Balance Sheets

December 31

Momma, Inc. Comparative Balance Sheets

December 31

Momma, Inc. Comparative Balance Sheets

December 31

Assets 2013 2012

Cash 129,222 167,760

Accounts Receivable 129,920 146,200

Inventories 157,500 143,990

Prepaid Expenses 39,760 36,400

Investments 193,200 159,600

Plant Assets 378,000 339,500

Accumulated Depreciation (77,400) (72,800)

Total Assets 950,202 920,650

Liabilities & Equity

Accounts Payable 156,800 194,220

Accrued Expenses 23,100 23,800

Bonds Payable 175,000 210,000

Common Stock 320,000 245,000

Retained Earnings 275,302 247,630

Total Liabilities & Equity 950,202 920,650

Momma, Inc. Income Statement

For the Year Ended December 31, 2013

Momma, Inc. Income Statement

For the Year Ended December 31, 2013

Momma, Inc. Income Statement

For the Year Ended December 31, 2013

Sales 459,427

Less:

Cost of Goods Sold 201,865

Operating Expenses 112,274

Depreciation Expense 73,500

Income Taxes 12,350

Interest Expense 7,766

Loss on Sale of Plant Assets 10,500 418,255

Net Income 41,172

9. The financial statements of Dobson Company appear below:

Additional information • All sales were credit sales. • Market value of common stock on December 31, 2013, was $28 per share. • Hint: You can determine the weighted-average common shares and cash dividends paid using

information in the stockholders’ equity section of both balance sheets and net income.

Due Date: Sunday, April 7 @ 11 p.m. ET submit via WebTycho Assignment Folder

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Dobson, Inc. Income Statement

For the Year Ended December 31

Dobson, Inc. Income Statement

For the Year Ended December 31

Dobson, Inc. Income Statement

For the Year Ended December 31

2013 2012

Net Sales 615,000 580,000

Cost of Goods Sold 405,000 354,000

Gross Margin 210,000 226,000

Selling & Administrative Expenses 120,800 114,800

Income from Operations 89,200 111,200

Other Expense & Losses

Interest Expense 7,800 6,000

Income before Taxes 81,400 105,200

Income Tax Expense 18,000 14,000

Net Income 63,400 91,200

Dobson, Inc. Balance Sheets December 31

Dobson, Inc. Balance Sheets December 31

Dobson, Inc. Balance Sheets December 31

Assets 2013 2012

Current Assets

Cash 31,000 18,000

Short-term Investments 13,000 15,000

Accounts Receivable, net 98,000 74,000

Inventories 102,000 88,000

Total Current Assets 244,000 195,000

Plant Assets, net 421,400 393,000

Total Assets 665,400 588,000

Liabilities & Equity

Current Liabilities

Accounts Payable 112,000 110,000

Income Taxes Payable 23,000 28,000

Total Current Liabilities 135,000 138,000

Bonds Payable 114,000 92,000

Stockholders’ Equity

Common Stock ($5 par) 150,000 150,000

Retained Earnings 266,400 208,000

Total Stockholders’ Equity 416,400 358,000

Total Liabilities & Equity 665,400 588,000

Instructions Compute the following ratios for Dobson Company for 2013 (round to 3 decimal places): (a) Current Ratio (b) Acid-test (quick ratio) (c) Receivables Turnover (d) Inventory Turnover (e) Profit Margin (f) Asset Turnover (g) Return on Assets (h) Return on Common Stockholders’ Equity (i) Earnings per Share (j) Price-Earnings (P-E) Ratio (k) Payout Ratio (l) Debt to Total Assets Ratio (m) Times Interest Earned Ratio

What additional information would you want in order to evaluate Dobson, Inc.?

Due Date: Sunday, April 7 @ 11 p.m. ET submit via WebTycho Assignment Folder

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