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    Convert Cash-Basis Income to Accrual Basis; Compute Ratios; Assets and Liabilities; Balance Sheet

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    Problem 2:
    O'Connor, Inc. maintains its books and records on the cash basis. You have been
    assigned to convert the cash-basis income to the accrual basis for reporting purposes. Presented in the attachment is the cash-basis income statement and additional information.
    Required: Prepare the accrual basis income statement for O'Connor, Inc. for the year ended December 31. 2003. 0'Connor's tax rate is 40%.

    Problem Three:
    The attached information is available for the Armillei Corporation (Condensed Balance Sheet)
    Required: Compute the following ratios for 2003 from the information provided.
    A. Total Asset Turnover
    B. Quick Ratio
    C. Current Ratio
    D. Inventory Turnover
    E. Long-Term Debt to Assets
    F. Return on Common Equity
    G. Financial Structure Leverage
    H. Accounts Receivable Turnover

    Problem Four:
    The Trost Corporation has a loan with the bank that requires the maintenance of a
    minimum Current Ratio of 2.00 to 1. On December 1, current assets are $245,000 and current liabilities are $135,000.
    A. With the fourth quarter report due to the bank after the books close on December 31, will Trost be in compliance with this covenant if there is no change in the current assets and liabilities?
    B. What action might management take to correct any problem in advance?
    C. Is there any ethical problem with your strategy?

    Required: Use the attached information along with your knowledge of financial ratios and balance sheet relationships to fill in the missing items on the balance sheet Of Walters Corporation. Round all amounts to the nearest dollar.

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    Please refer to attached.
    <br>There could be some discrepancies in the ...