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    Ratio Analysis and Statement for Manufacturing Firms

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    Problem 1. The following information applies to Barnhart Company:

    Additional information:
    • Net Credit Sales = $220,000
    • Beginning Accounts Receivable = $10,000
    Solutions:
    a) Quick ratio = Quick Assets/Current Liabilities =
    (Cash + Accounts Receivable)/(Accounts Payable + Salaries Payable)
    ($12,000+5000)/($9,000+4,000) = 17,000/13,000 = 1.31
    b) Current ratio = Current Assets/Current Liabilities
    (Cash + Accounts Receivable + Inventory)/ (Accounts Payable + Salaries Payable)
    $32,000/13,000 = 2.46

    c) Working capital = Current Assets - Current Liabilities
    $32,000 - 13,000 = $19,000

    d) Accounts receivable turnover = Net Sales / Average Accounts Receivable
    Average Accts Rec = [Acct Rec at beginning of year/Accts Rec a end of year] / 2
    Average Accts Rec = ($12,000 + 10,000)/2 = 11,000
    Accounts Rec Turnover = 220,000/11000 = 20

    e) Average days to collect receivables = 365/Acct Receivable Turnover
    365/20 = 18.25

    Problem 2. The Jiffy Manufacturing Company started operations in 2012 when it acquired $100,000 from its owners. During the year, the company incurred the following costs:
    The company placed 12,000 units into production, completed 10,000 units, and sold 8,000 units. The average selling price was $17 per unit.

    Required:

    1) Prepare a schedule of cost of goods manufactured and sold for the year ended December 31, 2012.
    2) Prepare an income statement for the year ended December 31, 2012.

    Schedule of cost of goods manufactured
    Beginning Work in process inventory $0
    Manufacturing costs:
    Direct Materials $40,000
    Direct Labor 50,000
    Overhead 20,000 $110,000
    Less: Ending Work in process Inventory ($110,000/12,000)*2000 (18,333)
    Cost of Finished Goods Manufactured $91,667
    Schedule of cost of goods Sold
    Beginning inventory of Finished Goods $0
    Add: Cost of Finished goods manufactured 91,667
    Less: Ending inventory of finished goods [($91,667/10,000)*2,000] 18,333
    Cost of Goods Sold 73,334

    Income Statement
    Sales Revenue (8,000 * $17) $136,000
    Less: Cost of Goods Sold 73,334
    Gross Profit 62,666
    Less: Selling and Administrative Costs 30,000
    Net Income 32,666

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    https://brainmass.com/business/financial-ratios/ratio-analysis-statement-manufacturing-firms-442528

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    Problem 1. The following information applies to Barnhart Company:

    Additional information:
    â?¢ Net Credit Sales = $220,000
    â?¢ Beginning Accounts Receivable = $10,000
    Solutions:
    a) Quick ratio = Quick Assets/Current Liabilities =
    (Cash + Accounts Receivable)/(Accounts Payable + Salaries Payable)
    ($12,000+5000)/($9,000+4,000) = 17,000/13,000 = 1.31
    b) Current ratio = Current Assets/Current Liabilities
    (Cash + Accounts Receivable + Inventory)/ (Accounts Payable + Salaries Payable)
    $32,000/13,000 = 2.46

    c) Working capital = Current Assets - Current Liabilities
    $32,000 - 13,000 = $19,000

    d) Accounts receivable turnover = Net Sales / Average Accounts Receivable
    Average Accts Rec = [Acct Rec at beginning of ...

    Solution Summary

    Ratio analysis for a manufacturing firm.....Step by step detailed analysis

    $2.19

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