ASSIGNMENT 04
A04 Intermediate Accounting I
Directions: Be sure to make an electronic copy of your answer before submitting it to
Ashworth College for grading. Unless otherwise stated, answer in complete sentences,
and be sure to use correct English spelling and grammar. Sources must be cited in APA
format. Refer to the "Assignment Format" page for specific format requirements.
Part A (40 points)
Vince Corporation has current assets of $300,000 and current liabilities of $175,000.
Compute the effect of each of the following transactions on Vince’s current ratio:
a.
b.
c.
d. Refinanced a $50,000 long-term mortgage with a short-term note.
Purchasing $80,000 of merchandise inventory with short-term accounts payable.
Paying $30,000 of short-term accounts payable.
Collecting $40,000 of short-term accounts receivable. Part B (20 points)
Selected data of the Peninsula Company follow:
A
s
o
f
D
e
c
e
m
b
e
r
3
1
Balance Sheet Data
Accounts receivable
Allowance for doubtful accounts
Net accounts receivable 2014
$671,000
31,000
$640,000 2013
$642,000
22,000
$620,000 Inventories—lower of cost or market $542,500 $642,500 Y
e
a
r
E
n
d
e
d
D
e
c
e
m
b
e
r
3
1
Income Statement Data
Net credit sales
Net cash sales
Net sales
Cost of goods sold
Selling, general, and administrative expenses
Other
Total operating expenses
Net income 2014
$3,150,000
800,000
$3,950,000
$2,370,000
475,000
150,000
$2,995,000
$955,000 2013
$3,000,000
600,000
$3,600,000
$2,160,000
350,000
125,000
$2,635,000
$965,000 a. What is the accounts receivable turnover for 2014?
b. What is the inventory turnover for 2014?
Part C (40 points)
Selected information taken from the 2014 annual report of Aardvark Company follows.
During 2014, the company had no nonoperating or nonrecurring items included in
income and had no outstanding preferred stock.
($ in millions)
Sales
Interest expense
Net income
Total assets
Dividends
Total stockholders’ equity
Assumed tax rate
Industry ROA 2014
2013
$19,903 $18,781
130
169
1,153
1,088
12,673 12,461
(153)
(131)
$4,288 $4,007
35%
35%
7.32% Industry operating profit margin 6.1% For 2014, calculate:
a.
b.
c.
d. ROA
ROCE
Operating profit margin
Asset turnover. Round your percentage answers to one decimal place. For example, .1234 = 12.3%.

 

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