Financial Accounting

Dyer Company had a beginning inventory of 200 units at a cost of $12 per
unit on August 1. During the month, the following purchases and sales
were made.

Purchases                               Â
 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  Sales

August 4 250 units at $13                       
August 7 150 units

August 15 350 units at $15                     
August 11 100 units

August 28 200 units at $14                    
August 17 250 units

                                    
                         August 24 220 units

Dyer uses a periodic inventory system.

Instructions:  Determine ending inventory and cost of goods sold under
(a) average cost, (b) FIFO, and (c) LIFO.

(a) Average cost:

Ending inventory = $____________; cost of goods sold = $_____________.

(b) FIFO:

Ending inventory = $_____________; cost of goods sold = $____________.

(c) LIFO:

Ending inventory = $_____________; cost of goods sold = $____________.

Thomas Company purchased equipment for $800,000 cash on January 1,
2002. The estimated life is 5 years or 1,000,000 units; salvage value is
estimated at $50,000. Actual activity was 180,000 units in 2002, and
200,000 units in 2003.

Instructions: Compute the annual depreciation expense for 2002 and 2003,
and book value at December 31, 2003, under the following depreciation
methods: (a) units-of-activity, (b) straight-line, and (c)
double-declining-balance.

(a) Units-of-activity

2002 depreciation = $_______________.

2003 depreciation = $_______________.

12/31/03 book value = $_______________.

(b) Straight-line

2002 depreciation = $_______________.

2003 depreciation = $_______________.

12/31/03 book value = $_______________.

(c) Double-declining-balance

2002 depreciation = $_______________.

2003 depreciation = $_______________.

12/31/03 book value = $_______________.



The condensed financial statements of Farr Corporation for 2003 are
presented below.

Farr
Corporation                              Â
 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  Farr Corporation

Balance
Sheet                                 Â
 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â  Income
Statement

December 31,
2003                                  
    For the Year Ended December 31, 2003

Assets                                 
                                
Revenues $2,000,000

Current
assets                                 
                        Expenses

Cash and
temporary                               Â
 Â Â Â Â Â Â Â  Cost of goods sold 1,020,000

  investments $  
60,000                                 
    Selling and administrative

Accounts receivable 70,000
                                  
            expenses 680,000

Inventories    
140,000                                Â
 Â Â Â Â Â Â Â Â  Interest expense      50,000

Total current assets
270,000                              
Total expenses        1,750,000

Property, plant,
and                                 
 Income before income taxes 250,000

equipment (net)     
730,000                        Income tax
expense             100,000

Total assets
$1,000,000                               
               Net income $   150,000

Liabilities and Stockholders' Equity

Current liabilities $   100,000

Long-term liabilities 380,000

Stockholders' equity      520,000

Total liabilities and

stockholders' equity $1,000,000

Additional data as of December 31, 2002: Inventory = $100,000; Total
assets = $800,000; Stockholders' equity = $480,000.

Instructions: Compute the following listed ratios for 2003 showing
supporting calculations.

(a) Current ratio = .

(b) Debt to total assets ratio = .

(c) Times interest earned = .

(d) Inventory turnover = .

(e) Profit margin = .

(f) Return on stockholders' equity = .

(g) Return on assets = .

PART VIII - STATEMENT OF CASH FLOWS (15 points)

Presented below is information related to the operations of Tanner
Corporation.

December

              
2003                                
2002                                  
        2003

Cash     $  55,000                 $ 
40,000                           
          Sales $380,000

Accounts receivable 60,000    
 48,000                 Cost of goods sold   190,000

Inventory   30,000                   
22,000                              Gross
profit 190,000

Prepaid expenses 15,000          20,000  
               Depreciation expense 14,000

Land      39,000                       
20,000         Other operating expenses   143,000

Building     100,000                
100,000              Income from operations 33,000

Accumulated depreciation-       
                     Loss on equipment sale
      3,000

  building      (17,000)               
(8,000)         Income before income taxes 30,000

Equipment      58,000               
80,000                 Income tax expense      
9,000

Accumulated depreciation-     
                                    
       Net income $  21,000

  equipment    (15,000)              (20,000)

Total            $325,000              $302,000

Accounts payable $  40,000   $  29,000

Bonds payable              0          100,000

Common stock      200,000       100,000

Retained earnings     85,000         73,000

Total                    $325,000      $302,000

Additional information:

(a) In 2003, Tanner declared and paid a cash dividend.

(b) The company converted $100,000 of bonds into common stock.

(c) Equipment with a cost of $22,000 and a book value of $12,000 was
sold for $9,000. Land was acquired for cash.

(d) Prepaid expenses pertain to operating expenses; accounts payable
pertains to merchandise purchases.

Instructions: 

(a) Prepare a statement of cash flows in proper form for 2003, using the
indirect method.