# FINANCE

1.  Prepare a comparative income statement with horizontal analysis for the two-year period, using 2011 as the base year. If required, round to one decimal place.

 Eurie Company

 Comparative Income Statement

 For the Years Ended December 31, 2012 and 2011

 2012

 2011

 Difference – Amount

 Difference – Percent

 Sales

 \$928,000

 \$800,000

 \$ [removed]

 [removed] %

 Sales returns and allowances

 70,000

 50,000

 [removed]

 [removed]

 Net sales

 \$858,000

 \$750,000

 \$ [removed]

 [removed]

 Cost of goods sold

 640,000

 500,000

 [removed]

 [removed]

 Gross profit

 \$218,000

 \$250,000

 \$ [removed]

 [removed]

 Selling expenses

 \$85,800

 \$65,000

 \$ [removed]

 [removed]

 43,400

 35,000

 [removed]

 [removed]

 Total operating expenses

 \$129,200

 \$100,000

 \$ [removed]

 [removed]

 Income from operations

 \$88,800

 \$150,000

 \$ [removed]

 [removed]

 Other income

 16,000

 10,000

 [removed]

 [removed]

 Income before income tax

 \$104,800

 \$160,000

 \$ [removed]

 [removed]

 Income tax expense

 9,200

 8,000

 [removed]

 [removed]

 Net income

 \$95,600

 \$152,000

 \$ [removed]

 [removed] %

2.  To the extent the data permit, comment on the significant relationships revealed by the horizontal analysis prepared in (1).

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

Problem 15-3A
Effect of Transactions on Current Position Analysis

Data pertaining to the current position of Brin Company are as follows:

Instructions:

1.  Compute (a) the working capital, (b) the current ratio, and (c) the quick ratio. Round ratios to one decimal place.

 a.  Working capital: \$[removed] b.  Current ratio: [removed] c.  Quick ratio: [removed]

2.  Compute the working capital, the current ratio, and the quick ratio after each of the following transactions, and record the results in the appropriate columns. Consider each transaction separately and assume that only that transaction affects the data given above. Round ratios to one decimal place.

 Transaction Working Capital Current Ratio Quick Ratio a. Sold temporary investments at no gain or loss, \$90,000. \$[removed] [removed] [removed] b. Paid accounts payable, \$175,000. \$[removed] [removed] [removed] c. Purchased goods on account, \$125,000. \$[removed] [removed] [removed] d. Paid notes payable, \$200,000. \$[removed] [removed] [removed] e. Declared a cash dividend, \$160,000. \$[removed] [removed] [removed] f. Declared a common stock dividend on common stock, \$45,000. \$[removed] [removed] [removed] g. Borrowed cash from bank on a long-term note, \$300,000. \$[removed] [removed] [removed] h. Received cash on account, \$140,000. \$[removed] [removed] [removed] i. Issued additional shares of stock for cash, \$700,000. \$[removed] [removed] [removed] j. Paid cash for prepaid expenses, \$80,000. \$[removed] [removed] [removed]

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