Financial Accounting > EXAM REVIEW > University of Massachusetts, Dartmouth - ACT 454Exam 3 Part 2>Fall 2017 ACT 454 EXAM III (Out-Class (All)

University of Massachusetts, Dartmouth - ACT 454Exam 3 Part 2>Fall 2017 ACT 454 EXAM III (Out-Class Part) WITH VERIFIED ANSWERS

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Part I: Problem (5 questions × 10 points = 50) 1. Glad Rags, Inc. sells women's clothes. Provided below is selected financial statement information: Glad Rags, Inc. Selected Financial Statement d... ata Fiscal year end 2010 2009 (amounts in thousands of dollars) Net sales $47,895 $42,589 Cost of Goods Sold (35,952) (32,588) Gross profit $11,943 $10,001 Inventory $ 5,548 $ 4,948 Required: a. Compute the inventory turnover ratio for 2010. b. Clothes, Inc. projects that sales will grow at a compound rate of 7% per year for years 2011- 2013 and that the cost of goods sold to sales percentage will equal that realized in 2010. Compute the projected implied level of inventory at the end of 2011 to 2013. ANS: a. Inventory Turnover ..... b. Sales COGS Inv. T.O. Avg. Inv. Beg Inv. End Inv. Change % 2010 47,895.00 35,952 6.85 5,248 4,949 5,548 12% 2011 51,247.65 38,469 6.85 5,616 5,548 5,684 2% 2012 54,834.99 41,161 6.85 6,009 5,684 6,334 11% 2013 58,673.43 44,043 6.85 6,430 6,334 6,525 3% 2. The following balance sheet and income statement pertain to Goode Corp., using the following assumptions complete a forecasted 2013 income statement: Assumptions for 2013: Revenue growth rate 45% COGS 70% of sales Operating expenses 18% of sales Interest expense 12% of beginning long-term debt Tax rate 35% Goode Corp. Consolidated Statement of Income (Thousands except per share amounts) 2012 Net Revenues $345,871 1 Cost of Revenue (226,546) SG&A (83,009) Operating Income 36,316 Interest Expense (484) Income Before Income Taxes 35,832 Income taxes (12,541) Net Income $23,291 Goode Corp Consolidated Balance Sheet (Thousands) 2012 Current Assets Cash and Equivalents 7,905 Merchandise inventory 6,308 Accounts receivable 6,614 PPE (including intangibles), net 39,458 Total Assets 60,285 Liabilities and Stockholders' Equity Accounts payable 9,643 Long-term debt 13,500 Shareholders' Equity Common stock and APIC 28,613 Retained earnings 8,529 Total Liabilities and Shareholders' Eq. 60,285 ANS: ) (226,546) SG&A (90,272.33) (83,009) Operating Income 60,181.55 36,316 Interest Expense (1,620) (484) Income before taxes 58,561.55 35,832 Income Taxes (20,496.54) (12,541) Net Income 38,065.01 23,291 3. Techtronics is a leader in manufacturing computer chips, which is very capital-intensive. Because the production processes in computer chip manufacturing require sophisticated and rapidly changing technology, production and manufacturing assets in the chip industry tend to have relatively short useful lives. The following summary information relates to Techtronics’ property, plant, and equipment for 2009 and 2010: [Show More]

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