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Dunn Sporting Goods sells athletic clothing and footwear to retail customers. Dunn’s accountant indicates that the firm’s operating cycle averages 6 months. At December 31, 2019, Dunn has the following assets and liabilities:
a. Prepaid rent in the amount of $8,500. Dunn’s rent is$500 per month.
b. A $9,700 account payable due in 45 days.
c. Inventory in the amount of$46,230. Dunn expects to sell $38,000 of the inventory within 3 months. The remainder will be placed in storage until September 2020. The items placed in storage should be sold by November 2020.
d. An investment in marketable securities in the amount of$1,900. Dunn expects to sell $700 of the marketable securities in 6 months. The remainder are not expected to be sold until 2022.
e. Cash in the amount of$1,050.
f. An equipment loan in the amount of $60,000 due in March 2024. Interest of$4,500 is due in March 2020 ($3,750 of the interest relates to 2019, with the remainder relating to the first 3 months of 2020).
g. An account receivable from a local university in the amount of$2,850. The university has promised to pay the full amount in 3 months. h. Store equipment at a cost of $9,200. Accumulated depreciation has been recorded on the store equipment in the amount of$1,250.
- Prepare the current asset and current liability portions of Dunn’s December 31, 2019, balance sheet.
- Compute Dunn’s working capital and current ratio at December 31, 2019.
- As in investor or creditor, what do these ratios tell you about Dunn’s liquidity?
Using the information for Lighthizer Trading Company, prepare the income statement to include all costs, but separate out uncontrollable costs. Insert subtotals where appropriate (include one for operating income) before the uncontrollable costs. Income tax expense should be based on all expenses (that is, it will be the same amount as in the previous exercise). Calculate net income, profit margin, ROI, and RI excluding uncontrollable expenses. Prepare a short response to accompany the income statement that explains why uncontrollable costs are separated in the income statement.
The employment-population ratio for men and women (a FRED question): Using the FRED database, download graphs of the U.S. employment-population ratio for men and women.
(a) Display the graphs.
(b) What are some possible explanations for the different trends in the two series between and ?
(c) What might explain the change in the trend for women since ?