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Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Chapter 3, Problem 3.7.3MBA
To determine
Concept Introduction:
Acid test ratio or Quick Ratio:
Acid test ration is also called Quick ratio. This ratio is calculated by dividing the quick assets (Cash, Cash equivalents, Short term investments and current receivables) by total current liabilities for the year. The formula for Acid test ratio is as follows:
To Indicate:
The Change in liquidity from year 2 to 1
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Refer to the above company’s financial statements. Calculate the current and quick ratios. Has the company’s liquidity position improved or worsened? Explain.
A computer manufacturer has financial statements as follows:
Income Statements for Year Ending December 31
(Thousands of Dollars)
2019
2018
Sales
$945,000
$900,000
Expenses excluding depreciation and amortization
812,700
774,000
EBITDA
$132,300
$126,000
Depreciation and amortization
33,100
31,500
EBIT
$99,200
$94,500
Interest Expense
10,470
8,600
EBT
$88,730
$85,900
Taxes (25%)
22,183
21,475
Net income
$66,547
$64,425
Common dividends
$56,609
$54,115
Addition to retained earnings
$9,938
$10,310
Balance Sheets for Year Ending December 31
(Thousands of Dollars)
Assets
2019
2018
Cash and cash equivalents…
Refer to the following selected financial information from Texas Electronics. Compute the company's acid-test ratio for Year 2.
Cash
Short-term investments
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets
Accounts payable
Net sales
Cost of goods sold
Year 2 Year 1
$ 38,400
$ 33,150
99,000
64,500
90,000
84,000
125,500
129,500
13,000
10,600
392,500 342,500
108,900 112,300
715,500 680,500
394,500
379,500
Use the financial statements of Heifer Sports Inc. to find the information below for Heifer. (Use 365 days a year. Round all answers to
2 decimal places except $ amounts.)
Income Statement
Sales
Cost of goods sold
Depreciation
Selling and administrative expenses
EBIT
Interest expense
Taxable income
Taxes
Net income
Balance Sheet, Year-End
Assets
Cash
Accounts receivable
Inventory
Total current assets
Fixed assets
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Short-term debt
Total current liabilities
Long-term bonds
Total liabilities
2020
$ 5,720,000
3,010,000
298, 200
1,597,000
$
$
$
814,800
167,000
647,800
293,500
354,300
Common stock
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
$
$
2020
$ 1,095,700
2,876,000
$ 3,971,700
318,300
496,000
814,300
1,913,700
$ 2,728,000
$
$
43,200 $ 81,000
604,000 1,404,300
448,500
976,800
$ 2,462,100
5,752,000
$ 8,214,100
2019
311,400 $
932,300
$ 1,243,700
$ 3,971,700
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Chapter 3 Solutions
Survey of Accounting (Accounting I)
Ch. 3 - Assume that a lawyer bills her clients $15000 on...Ch. 3 - On January 24, 20Y8, Niche Consulting collected...Ch. 3 - Prob. 3SEQCh. 3 - If the supplies account indicated a balance of...Ch. 3 - The balance in the unearned rent account for Jones...Ch. 3 - Would AT&T and Microsoft Use the cash basis or the...Ch. 3 - How are revenues and expenses reported on the...Ch. 3 - Fees for services provided are billed to a...Ch. 3 - Employees performed services in 20Y8, but the...Ch. 3 - Prob. 5CDQ
Ch. 3 - Is the Land balance before the accounts have been...Ch. 3 - Is the Supplies balance before the accounts have...Ch. 3 - Prob. 8CDQCh. 3 - Prob. 9CDQCh. 3 - Prob. 10CDQCh. 3 - If the effect of an adjustment is to increase the...Ch. 3 - Prob. 12CDQCh. 3 - (a) Explain the purpose of the accounts...Ch. 3 - Prob. 14CDQCh. 3 - Transactions using accrual accounting Terry Mason...Ch. 3 - Adjustment process Using the data from Exercise...Ch. 3 - Financial statements Using the data from Exercises...Ch. 3 - Prob. 3.4ECh. 3 - Accrual basis of accounting Margie Van Epps...Ch. 3 - Classify accruals and deferrals Classify the...Ch. 3 - Classify adjustments The following accounts were...Ch. 3 - Adjustment for supplies Answer each of the...Ch. 3 - Adjustment for prepaid insurance The prepaid...Ch. 3 - Adjustment for unearned fees The balance in the...Ch. 3 - Adjustment for unearned revenue For a recent year....Ch. 3 - Effect of omitting adjustment At the end of...Ch. 3 - Adjustment for accrued salaries Laguna Realty Co....Ch. 3 - Determine wages paid The balances of the two...Ch. 3 - Effect of omitting adjustment Accrued salaries of...Ch. 3 - Effect of omitting adjustment Assume that the...Ch. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements The...Ch. 3 - Effects of errors on financial statements If the...Ch. 3 - Adjustment for accrued fees At the end of the...Ch. 3 - Adjustments for unearned and accrued fees The...Ch. 3 - Effect on financial statements of omitting...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Adjustments Clean Air Company is a consulting firm...Ch. 3 - Book value of fixed assets For a recent year....Ch. 3 - Classify assets Identify each of the following as...Ch. 3 - Balance sheet classification At the balance sheet...Ch. 3 - Classified balance sheet Pounds-Away Services Co....Ch. 3 - Prob. 3.29ECh. 3 - Balance sheet List any errors you can find in the...Ch. 3 - Accrual basis accounting San Mateo Health Care...Ch. 3 - Prob. 3.2PCh. 3 - Financial statements Data for San Mateo Health...Ch. 3 - Statement of cash flows Data for San Mateo Health...Ch. 3 - Statement of cash flows Data for San Mateo Health...Ch. 3 - Adjustments and errors At the end of May, the...Ch. 3 - Adjustment process and financial statements...Ch. 3 - Adjustment process and financial statements...Ch. 3 - Adjustment process and financial statements...Ch. 3 - Adjustment process and financial statements...Ch. 3 - Prob. 3.1MBACh. 3 - Prob. 3.2MBACh. 3 - Prob. 3.3MBACh. 3 - Prob. 3.4MBACh. 3 - Prob. 3.5.1MBACh. 3 - Prob. 3.5.2MBACh. 3 - Prob. 3.5.3MBACh. 3 - Prob. 3.5.4MBACh. 3 - Quick ratio The Gap Inc. (GPS)operates specialty...Ch. 3 - Prob. 3.6.2MBACh. 3 - Quick ratio The Gap Inc. (GPs)operates specialty...Ch. 3 - Quick ratio American Eagle Outfitters Inc. (AEO)...Ch. 3 - Quick ratio American Eagle Outfitters Inc. (AEO)...Ch. 3 - Prob. 3.7.3MBACh. 3 - Prob. 3.8MBACh. 3 - Prob. 3.9.1MBACh. 3 - Prob. 3.9.2MBACh. 3 - Prob. 3.9.3MBACh. 3 - Prob. 3.1CCh. 3 - Adjustments for financial statements Several years...Ch. 3 - Prob. 3.3.1CCh. 3 - Prob. 3.3.2CCh. 3 - Prob. 3.4.1CCh. 3 - Prob. 3.4.2CCh. 3 - Accrual versus cash net income. Cigna Corp. (CI)...Ch. 3 - Prob. 3.5.1CCh. 3 - Prob. 3.5.2C
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