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E14-1 E14-3 E14-13 E14-9 P14-1A P14-A

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ACC560 Chapter 14

E14-1 Financial information for Gallup Inc. is presented below.

2014 2013
Current assets   128,000  100,000
Plant assets (net)   396,000  330,000
Current liabilities   91,000  70,000
Long-term liabilities   138,700  95,000
Common stock, $1 par   159,000  115,000
Retained earnings   135,300  150,000

Prepare a schedule showing a horizontal analysis for 2014 using 2013 as the base year

E14-3 The comparative condensed balance sheets of Garcia Corporation are presented
Garcia Corporation
Comparative Condensed Balance Sheets
2014 2013
    Current assets   76,000  80,000
    Property, plant & equipment (net)   100,000  90,000
    Intangibles   24,000  40,000
    Total assets   200,000  210,000
Liabilities and Stockholders' equity
 Current liabilities   40,000  48,000
 Long-term liabilities   140,000  150,000
 Stockholders’ equity   20,000  12,000
 Total liabilities and stockholders' equity   200,000  210,000

(a) Prepare a horizontal analysis of the balance sheet data for Garcia Corporation using
2013 as a base.
(b) Prepare a vertical analysis of the balance sheet data for Garcia Corporation in columnar
form for 2014

E14-9 The income statement for Christiansen, Inc., appears below.
Christiansen, Inc.

Net sales  400,000
Cost of goods sold  235,000
Gross profit  165,000
Expenses (including $14,000 interest and $17,000 income taxes) 105,000  105,000
Net income  60,000

Additional information:
1. The weighted-average common shares outstanding in 2014 were 30,000 shares.
2. The market price of Christiansen, Inc. stock was $10.80 in 2014.
3. Cash dividends of $21,000 were paid, $6,000 of which were to preferred stockholders.

Compute the following ratios for 2014.
(a) Earnings per share.
(b) Price-earnings.
(c) Payout.
(d) Times interest earned.

E14-13 Maulder Corporation has income from continuing operations of $290,000 for the year
ended December 31, 2014. It also has the following items (before considering income taxes).

1. An extraordinary loss of $70,000.
2. A gain of $35,000 on the discontinuance of a division.
3. A correction of an error in last year’s fi nancial statements that resulted in a $25,000
understatement of 2013 net income.
Assume all items are subject to income taxes at a 30% tax rate.

(a) Prepare an income statement, beginning with income from continuing operations.
(b) Indicate the statement presentation of any item not included in (a) above.

P14-1 Comparative statement data for Lionel Company and Barrymore Company, two
competitors, appear below. All balance sheet data are as of December 31, 2014, and
December 31, 2013.

(a) Prepare a vertical analysis of the 2014 income statement data for Lionel Company and
Barrymore Company in columnar form.
(b) Comment on the relative profi tability of the companies by computing the return
on assets and the return on common stockholders’ equity ratios for both companies.

P14-6 The comparative statements of Beulah Company are presented below.
Beulah Company
Income Statement
For the Years Ended December 31

Additional data:
The common stock recently sold at $19.50 per share.

Compute the following ratios for 2014.
(a) Current. (h) Return on common stockholders’ equity.
(b) Acid-test. (i) Earnings per share.
(c) Receivables turnover. (j) Price-earnings.
(d) Inventory turnover. (k) Payout.
(e) Profi t margin. (l) Debt to total assets.
(f) Asset turnover. (m) Times interest earned.
(g) Return on assets.

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