Posted: June 14th, 2022

GB518 Unit 6 P12-04A Galley Corporation a merchandiser, recently completed its 2011 operations. P13-04A Selected year-end financial statements of McCord Corporation follow

P12-04A  

Galley Corp., a merchandiser, recently completed its 2011 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. The company’s balance sheets and income statement follow. 

 

Galley Corporation

Comparative Balance Sheet

December 31, 2011 and 2010 

 

Assets                                  2011

             2010 

Cash………………………………. 174,000       117,000 

Accts Rec. ……………………… 93,000           81,000 

Merch Rec. …………………….. 609,000        534,000 

Equipment …………………….. 333,000          297,000 

Accum. Depreciation-Eqip. …. (156,000)      (102,000) 

Total Assets …………………… 1,053,000        927,000 

 

Liabilities & Equity 

Accts Payable ………………….. 69,000             96,000 

Income taxes payable ………… 27,000             24,000 

Common Stock, $2 par value .. 582,000          558,000 

Paid-in Capital in excess 

of par value, common stock        198,000         162,000 

Retained earnings ………………   177,000           87,000 

Total

Liabilities and Equity

……. 1,053,000          927,000 

 Galley Corporation

Income Statement

For the Year ended December 31, 2011

 

Sales ……………………………….        1,992,000 

Cost of goods …………………….         1,194,000 

Gross Profit ……………………….           798,000 

Operating Expenses: 

Depreciation Exp. …………… 54,000 

Other Expenses ……………… 501,000

   555,000 

Income Before Taxes ……………           243,000 

Income Tax Expenses …………..            42,000

 

Net Income ……………………….            201,000 

 

Addiional Information on Year 2011 Transactions: 

a) Purchased equipment for $36,000 cash. 

b) Issued 12,000 shares of common stock for $5 cash per share. 

c) Declared and paid $111,000 in cash dividends. 

  

Required:

 

Prepare a complete statement of cash flows; report its cash inflows and cash outflows from operating activities according to the indirect method.

  

P13-04A  

Selected year-end financial statements of McCord Corporation follow.  (Note: All sales are on credit; selected balance sheet amounts at December 31, 2010, were inventory, $32,400; total assets, $182,400; common stock, $90,000; and retained earnings, $31,300.)

 

McCORD CORPORATION 

Income Statement 

For Year Ended

December 31, 2011 

 

Sales                             $    348,600 

Cost of goods sold                  229,150 

Gross profit                          119,450 

Operating expenses                   52,500 

Interest expense                     3,100 

Income before taxes                   63,850 

Income taxes                           15,800 

Net income                     $   48,050 

 McCORD CORPORATION 

Balance Sheet 

December 31, 2011  

Assets 

Cash                                      $ 9,000  

Short-term investments                7,400 

Accounts receivable, net              28,200

Notes receivable (trade)*               3,500

Merchandise inventory             31,150 

Prepaid expenses                       1,650 

 

Plant assets, net                     152,300

 

Total assets                            $      233,200

 Liabilities and Equity

Accounts payable                $16,500

Accrued wages payable                  2,200 

Income taxes payable                          2,300 

Long-term note payable, secured

by mortgage on plant assets        62,400 

Common stock                                90,000 

Retained earnings                        59,800 

Total liabilities and equity            $    233,200

  Required: 

Compute the following :

 

(1)  Current ratio

(2)  Acid-test ratio

(3)  Days’ sales uncollected

(4)  Inventory turnover

(5)  Days’ sales in inventory

(6)  Debt-to-equity ratio

(7)  Times interest earned

(8)  Profit margin ratio

(9)  Total asset turnover 

(10)  Return on total assets 

(11)  Return on common stockholders’ equity