Intermediate Accounting

Bruno Company has decided to expand its operations. The bookkeeper recently completed the balance sheet presented below in order to obtain additional funds for expansion.

BRUNO COMPANY

BALANCE SHEET

DECEMBER 31, 2012

Current assets

Cash    $262,650

Accounts receivable (net)       342,650

Inventories (lower-of-average-cost-or-market)           403,650

Equity investments (trading)—at cost (fair value $123,330) 143,330

Property, plant, and equipment        

Buildings (net)            573,330

Equipment (net)          163,330

Land held for future use          178,330

Intangible assets         

Goodwill         82,650

Cash surrender value of life insurance            92,650

Prepaid expenses        14,650

Current liabilities       

Accounts payable       138,330

Notes payable (due next year)            127,650

Pension obligation       85,330

Rent payable   51,650

Premium on bonds payable    55,650

Long-term liabilities   

Bonds payable            503,330

Stockholders’ equity  

Common stock, $1.00 par, authorized 400,000 shares, issued 292,650        292,650

Additional paid-in capital       182,650

Retained earnings        ?

Prepare a revised balance sheet given the available information. Assume that the accumulated depreciation balance for the buildings is $162,650 and for the office equipment, $107,650. The allowance for doubtful accounts has a balance of $19,650. The pension obligation is considered a long-term liability. (List current assets in order of liquidity. List property plant and equipment in order of buildings and equipment.)

Presented below is the trial balance of Vivaldi Corporation at December 31, 2012.

Debit   Credit

Cash    $200,110       

Sales    $7,902,670

Debt Investments (trading) (cost, $145,000) 155,670         

Cost of Goods Sold    4,802,670      

Debt Investments (long-term)            302,110         

Equity Investments (long-term)         280,110         

Notes Payable (short-term)    92,670

Accounts Payable       457,670

Selling Expenses          2,002,670      

Investment Revenue   64,260

Land    260,000         

Buildings         1,043,110      

Dividends Payable      139,110

Accrued Liabilities      98,670

Accounts Receivable   437,670         

Accumulated Depreciation—Buildings          352,000

Allowance for Doubtful Accounts     27,670

Administrative Expenses        901,260         

Interest Expense         212,260         

Inventory        600,110         

Extraordinary Gain     81,260

Notes Payable (long-term)      903,110

Equipment      602,670         

Bonds Payable            1,003,110

Accumulated Depreciation—Equipment        60,000

Franchises       160,000         

Common Stock ($5 par)         1,002,670

Treasury Stock           193,670         

Patents            195,000         

Retained Earnings       81,110

Paid-in Capital in Excess of Par          83,110

$12,349,090    $12,349,090

Calculate ending retained earnings and prepare a balance sheet at December 31, 2012, for Vivaldi Corporation. Ignore income taxes. (List current assets in order of liquidity. List property plant and equipment in order of land, building and equipment.)

Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31.

2012    2011

Cash    $205,670        $102,180       

Accounts receivable    235,800          242,350         

Investments    68,120            96,940           

Equipment      390,380          314,400         

Less: Accumulated depreciation—equipment            (138,860         )           (116,590         )

Current liabilities        175,540          197,810         

Capital stock   209,600          209,600         

Retained earnings        375,970          231,870         

Additional information:

Investments were sold at a loss (not extraordinary) of $9,170; no equipment was sold; cash dividends paid were $65,500; and net income was $209,600.

(a) Prepare a statement of cash flows for 2012 for Sondergaard Corporation. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

As loan analyst for Madison Bank, you have been presented the following information.

Plunkett Co.    Herring Co.

Assets

Cash    $117,200        $319,000       

Receivables     210,300          306,200         

Inventories      579,400          510,100         

Total current assets    906,900          1,135,300      

Other assets    505,200          614,100         

Total assets     $1,412,100     $1,749,400    

Liabilities and Stockholders’ Equity  

Current liabilities        $308,100        $349,600       

Long-term liabilities    390,400          505,200         

Capital stock and retained earnings    713,600          894,600         

Total liabilities and stockholders’ equity       $1,412,100     $1,749,400    

Annual sales    $935,700        $1,517,200    

Rate of gross profit on sales   30       %         40       %

Each of these companies has requested a loan of $50,010 for 6 months with no collateral offered. In as much as your bank has reached its quota for loans of this type, only one of these requests is to be granted.

Compute the various ratios for each company. (Round answer to 2 decimal places, e.g. 2.25.)