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Homework Week 7 Chapter 24

Problem 1:
Plastics Inc is a company that operates in four different divisions. The following information relating to each segment is available for 2013.

Sales revenue Bottles Containers Dollhouses Silverware $ 65,000 $ 95,000 $ 620,000 $18,000

Cost of goods sold $ 26,000 $ 62,000 $ 353,000 $ 8,000

Operating expenses $8,000 $ 48,000 $140,000 $ 6,500

Total expenses $ 34,000 $ 110,000 $ 493,000 $14,500

Operating profit (loss) $31,000 $ (15,000) $ 127,000 $3,500

Identifiable assets $ 66,000 $ 80,000 $ 640,000 $36,000

Sales of segments Containers and Dollhouses included intersegment sales of $30,000 and $150,000, respectively. Required Determine which of the segments are reportable based on the: Revenue Test Operating profit (loss) test. Identifiable assets test.

Answer Determination of reportable segments: 1 Total Revenue 10% Rev $ 798,000 $ 79,800 Bottles Containers Dollhouses Silverware 2 Oper Profit 10% Profit $ 161,500 $ 16,150 Bottles Containers Dollhouses Silverware 3 Ident Assets 10% assets $ 822,000 $ 82,200 Bottles Containers Dollhouses Silverware no Yes Yes no Yes no Yes no no no Yes no

Homework Week 7 Chapter 24


Problem 2:
The following information pertains to Walrus Inc. Cash Accounts receivable Inventory Plant assets (net) Total assets Accounts payable Accrued taxes and expenses payable Long-term debt Common stock ($10 par) Paid-in capital in excess of par Retained earnings Total equities Net sales (all on credit) Cost of goods sold Net income Required: Compute the following (ignore Avg for balance sheet accounts) (a) Current ratio (b) (c) (d) (e) (f) (g) (h) Answer Current ratio Inventory turnover Receivables turnover Book value per share Earnings per share Debt to total assets Profit margin on sales Return on common stock equity $2.17 14 12 $24.62 $4.62 35.8% 6% 18.8% (60000+170000+100000)/(110000+42 000) 1400000/100000 120000/170000 (260000+50000+330000)/(260000/10) 120000/(260000/10 (110000+42000+120000)/(760000) 120000/2000000 (120000)/(260000+50000+330000) Inventory turnover Receivables turnover Book value per share Earnings per share Debt to total assets Profit margin on sales Return on common stock equity $60,000 170,000 100,000 430,000 $760,000 $110,000 42,000 120,000 260,000 50,000 330,000 $760,000 $2,000,00 0 1,400,000 120,000