Class 9 Disscusion Problem

Topics: Balance sheet, Generally Accepted Accounting Principles, Accounts receivable Pages: 3 (390 words) Published: December 4, 2012
Class9discussionproblem

Q.1
Assume the following data for IT Corporation and SS Corporation

| |IT Corporation |SS Corporation | |Net income |15000 |50000 | |Sales |150000 |1000000 | |Total assets |160000 |400000 | |Total debt |60000 |240000 | |Shareholder’s equity |100000 |160000 |

a. Compute return on shareholders’ equity. Which firm has the higher return? a. Compute the following ratios for both firms:
Net income/sales
Net income/total assets
Sales/total assets
Debt/total assets

Q.2

The balance sheet for Bryan Corporation is given below. Sales for the year were $3,040,000 with 75 percent of sales sold on credit.

BRYAN CORPORATION

Balance Sheet as at Dec.31, 1999

|Assets |$ |Liabilities & Equity |$ | |Cash |60,000 |Accounts payable |220,000 | |Accounts receivable |240,000 |Accrued taxes |30,000 | |Inventory |350,000 |Bonds payable (long-term) |150,000 | |Plant & equipment |410,000 |Common stock...
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