Kaplan ACC499 unit 4 assignment (part 1 and 2)

Unit 4 Practice Activity: Financial Report

Analysis – Rainbow Paint Co.

Note:This is a practice activity to be performed before completing the Assignment for this unit. Also,this is the data to be used as the basis for your Unit 9 Final Project. The solutions for the Unit 4 Practice activity are located here.

Rainbow Paint Co.'s comparative financial statements for the years ending December 31, 2013 and 2012 are as follows. The market price of Rainbow Paint Co.'s common stock was $30 on December 31, 1999 and $25 on December 31, 2013.

Rainbow Paint Co.

Comparative Income Statement

For the Years Ended December 31, 2013 and 2012

				2013				2012
Sales	$ 5,125,000		$ 3,257,600
Sales returns and allowances				125,000			57,600
Net sales		$ 5,000,000		$ 3,200,000
Cost of goods sold				3,400,000		2,080,000
Gross profit	$ 1,600,000		$ 1,120,000
Selling expenses				650,000			464,000
Administrative expenses				325,000			224,000
Total operating expenses		$	975,000		$	688,000
Income from operations	$	625,000		$	432,000
Other income				25,000		19,200
Income before Interest & Taxes				$			$	451,200
650,000
Other expense (interest)				105,000			64,000
Income before income tax		$	545,000		$	387,200
Income tax expense				300,000			176,000
Net income				$ 245,000		$	211,200
	========		========
	Rainbow Paint Co.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2013 and 2012
				2013				2012
Retained earnings, January 1	$		723,000			$	581,800
Add net income for year				245,000				211,200
Total	$		968,000			$	793,000
Deduct dividends:
On preferred stock	$		40,000			$	40,000
On common stock				45,000				30,000
Total		$		85,000			$	70,000
Retained earnings, December 31	$		883,000			$	723,000
	========		========

Unit 4 [AC499: Bachelor’s Capstone in Accounting]

Rainbow Paint C0,

Comparative Balance Sheet

December 31, 2013 and 2012

Assets	2013			2012
Current assets:
Cash	$ 175,000			$	125,000
Marketable securities	150,000			50,000
Accounts receivable (net)	425,000			325,000
Inventories	720,000			480,000
Prepaid expenses		30,000				20,000
Total current assets	$ 1,500,000		$	1,000,000
Long-term investments	250,000			225,000
Property, plant, and equipment (net)		2,093,000			1,948,000
Total assets	$ 3,843,000				$ 3,173,000
	========				========
Liabilities
Current liabilities	$ 750,000				$	650,000
Long-term liabilities:
Mortgage note payable, 10%, due 2016	$ 410,000					-
Bonds payable, 8%, due 2017		800,000				$	800,000
Total long-term liabilities	$ 1,210,000			$	800,000
Total liabilities	$ 1,960,000			$	1,450,000
Stockholders' Equity
Preferred 8% stock, $100 par	$ 500,000				$	500,000
Common stock, $10 par	500,000					500,000
Retained earnings		883,000					723,000
Total stockholders' equity	$ 1,883,000			$	1,723,000
Total liabilities and stockholders' equity	$ 3,843,000				$	3,173,000
	========				=========

Instructions: Determine the following measures for 2013:

1. Working capital

2. Current ratio

3. Quick ratio

4. Accounts receivable turnover

5. Number of days' sales in receivables

6. Inventory turnover

7. Number of days' sales in inventory

8. Ratio of fixed assets to long-term liabilities

Unit 4 [AC499: Bachelor’s Capstone in Accounting]

9. Ratio of liabilities to stockholders' equity

10. Number of times interest charges earned

11. Number of times preferred dividends earned

12. Ratio of net sales to assets

13. Rate earned on total assets

14. Rate earned on stockholders' equity

15. Rate earned on common stockholders' equity

16. Earnings per share on common stock

17. Price-earnings ratio

18. Dividends per share of common stock

19. Dividend yield

Unit 4 Assignment: Management Tools

Application

Step 1: Practice

Complete the AC499 Financial Report Analysis – Rainbow Paint Co. as practice for the Unit 4 Assignment. The solutions for the review problem can be found here.

Step 2: Review Ratio Sheet

Review the AC499 Financial Report Analysis Unit 4 Ratio Sheet.

Step 3: Financial Analysis

Complete a financial analysis of the company financials for Quixote Consulting. Use the Excel Template titled: "Unit 4 Financial Report Analysis Template.” Be sure to review the Excel tab titled “Hints & Instructions” before you attempt the Assignment tab.

Note: This Quixote Company file will be your graded Unit 4 Assignment,notthe Rainbow CompanyPractice Assignment.

When you are ready, you may submit your Quixote Ratio Analysis Excel template to the Unit 4 Dropbox page.

Note:Include your name in the filename of the Assignment.

Very Important Note:The Practice Set isbased on data for “Rainbow Paint Company.” Do NOTsubmit the Rainbow solutions in the Unit 4 Assignment Dropbox.

The Unit 4 Assignment is based on the Quixote data accumulated in Units 2 and 3. However, The Rainbow Paint Company data will be a VITAL and integral component of your Unit 9 Final Project. So, please complete the Practice Exercise AND keep your work saved in a file for later use.