ACCT 221 Week 3 Homework - Philadelphia Widget Corporation
Question # 00181225
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Updated on: 01/28/2016 12:34 AM Due on: 01/28/2016
This is a comprehensive problem all contained on this spreadsheet tab. You are to prepare a cash flow statement, a vertical
analysis, a horizontal analysis, and some ratio calculations. Scroll down the spreadsheet to complete each part.
Philadelphia Widget Corporation is in the process of preparing financial statements for the year ended 12/31/2015.
They have completed the balance sheet and income statement as shown.
Philadelphia Widget Corporation
Income Statement
For the year ended 12/31/2015
Revenue 12,35,000
Cost of Goods Sold 8,06,356
Gross Profit 4,28,644
Administrative Expenses:
Salaries 2,12,450
Rent 82,500
Depreciation 24,800
Total Administrative Expense 3,19,750
Operating Profit 1,08,894
Gain on Sale of Equipment 4,500
Interest Expense (42,115)
Net Income 71,279
Philadelphia Widget Corporation
Balance Sheet
As of 12/31/2015, 12/31/2014, and 12/31/2013
2015 2014 2013
Cash 1,19,411 89,564 1,05,644
Accounts Receivable 85,455 83,118 78,400
Inventory 41,600 48,560 62,600
Prepaid Expenses 14,500 18,100 24,000
Total Current Assets 2,60,966 2,39,342 2,70,644
Land 50,000 50,000 50,000
Buildings and Equipment 1,82,450 1,72,450 1,66,800
Accumulated Depreciation 78,900 1,03,550 62,600 1,09,850 54,580 1,12,220
Total Assets 4,14,516 3,99,192 4,32,864
Accounts Payable 62,525 51,480 45,200
Wages payable 4,500 4,500 1,500
Unearned Revenue 3,000 - -
Current Portion of Long-Term Debt 50,000 50,000 50,000
Total Current Liabilities 1,20,025 1,05,980 96,700
Long-Term Debt 1,75,000 2,25,000 2,75,000
Common Stock, 3500 shares outstanding 35,000 35,000 35,000
Retained Earnings 84,491 33,212 26,164
Total Stockholders' Equity 1,19,491 68,212 61,164
Total Liabilities and Equity 4,14,516 3,99,192 4,32,864
A. Prepare a Statement of Cash Flow using the indirect method for 2015 using the above statements and the following additional information:
1. Equipment costing $30,000 was purchased in 2015.
2. Equipment having an original cost of $20,000 and accumulated depreciation of $8,500 was sold for $16,000 during 2015.
3. A dividend of $20,000 was declared and paid in 2015.
Philadelphia Widget Corporation
Statement of Cash Flow
For the year ended 12/31/2015
B. Prepare a vertical analysis (1 year) of the income statement above and a horizontal analysis (2 years) of the balance sheet.
Philadelphia Widget Corporation
Vertical Analysis of Income Statement
Philadelphia Widget Corporation
Horizontal Analysis of Balance Sheet
* n/c = not calculable
C. Calculate the following ratios based on 12/31/2015 numbers:
1. Earnings per share
2. Return on common stockholder's equity
3. Return on assets
4. Current ratio
5. Acid-test ratio
6. Accounts receivable turnover
analysis, a horizontal analysis, and some ratio calculations. Scroll down the spreadsheet to complete each part.
Philadelphia Widget Corporation is in the process of preparing financial statements for the year ended 12/31/2015.
They have completed the balance sheet and income statement as shown.
Philadelphia Widget Corporation
Income Statement
For the year ended 12/31/2015
Revenue 12,35,000
Cost of Goods Sold 8,06,356
Gross Profit 4,28,644
Administrative Expenses:
Salaries 2,12,450
Rent 82,500
Depreciation 24,800
Total Administrative Expense 3,19,750
Operating Profit 1,08,894
Gain on Sale of Equipment 4,500
Interest Expense (42,115)
Net Income 71,279
Philadelphia Widget Corporation
Balance Sheet
As of 12/31/2015, 12/31/2014, and 12/31/2013
2015 2014 2013
Cash 1,19,411 89,564 1,05,644
Accounts Receivable 85,455 83,118 78,400
Inventory 41,600 48,560 62,600
Prepaid Expenses 14,500 18,100 24,000
Total Current Assets 2,60,966 2,39,342 2,70,644
Land 50,000 50,000 50,000
Buildings and Equipment 1,82,450 1,72,450 1,66,800
Accumulated Depreciation 78,900 1,03,550 62,600 1,09,850 54,580 1,12,220
Total Assets 4,14,516 3,99,192 4,32,864
Accounts Payable 62,525 51,480 45,200
Wages payable 4,500 4,500 1,500
Unearned Revenue 3,000 - -
Current Portion of Long-Term Debt 50,000 50,000 50,000
Total Current Liabilities 1,20,025 1,05,980 96,700
Long-Term Debt 1,75,000 2,25,000 2,75,000
Common Stock, 3500 shares outstanding 35,000 35,000 35,000
Retained Earnings 84,491 33,212 26,164
Total Stockholders' Equity 1,19,491 68,212 61,164
Total Liabilities and Equity 4,14,516 3,99,192 4,32,864
A. Prepare a Statement of Cash Flow using the indirect method for 2015 using the above statements and the following additional information:
1. Equipment costing $30,000 was purchased in 2015.
2. Equipment having an original cost of $20,000 and accumulated depreciation of $8,500 was sold for $16,000 during 2015.
3. A dividend of $20,000 was declared and paid in 2015.
Philadelphia Widget Corporation
Statement of Cash Flow
For the year ended 12/31/2015
B. Prepare a vertical analysis (1 year) of the income statement above and a horizontal analysis (2 years) of the balance sheet.
Philadelphia Widget Corporation
Vertical Analysis of Income Statement
Philadelphia Widget Corporation
Horizontal Analysis of Balance Sheet
* n/c = not calculable
C. Calculate the following ratios based on 12/31/2015 numbers:
1. Earnings per share
2. Return on common stockholder's equity
3. Return on assets
4. Current ratio
5. Acid-test ratio
6. Accounts receivable turnover
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Solution: ACCT 221 Week 3 Homework - Philadelphia Widget Corporation