Handley Grocery Corporation reported the following information in its comparative financial statements for the fiscal year ended January 31, 2018:
January 31,January 31,20182017Net sales$50,000$48,350Net earnings2,2002,100Average total assets40,00039,300\begin{array}{lrr} & \textbf{January 31,} & \textbf{January 31,}\\ & \textbf{2018} & \textbf{2017}\\ \\ \text{Net sales} & \$50,000 & \$48,350\\ \text{Net earnings} & 2,200 & 2,100\\ \text{Average total assets} & 40,000 & 39,300\\ \end{array} Net salesNet earningsAverage total assetsJanuary 31,2018$50,0002,20040,000January 31,2017$48,3502,10039,300
Requirements
Compute the net profit margin ratio for the years ended January 31, 2018, and 2017. Did it improve or worsen in 2018?
Compute asset turnover for the years ended January 31, 2018, and 2017. Did it improve or worsen in 2018?
Compute return on assets for the years ended January 31, 2018, and 2017. Did it improve or worsen in 2018? Which component—net profit margin ratio or asset turnover—was mostly responsible for the change in the company’s return on assets?
Match each of the control procedures listed below with the most closely related control procedures type. Your answer should pair each of the numbers 1 through 10 with the appropriate letter.
Control Procedure Types
a. Adequate documents and records
b. Checks on recorded amounts
c. Clearly defined authority and responsibility
d. Safeguards over assets and records
e. Segregation of duties
Control Procedures
Only the cashier assigned to the cash register is allowed to perform transactions.
Division managers are evaluated annually on the basis of their division’s profitability.
Invoices received from outside suppliers are filed with purchase orders.
Employees with access to the accounting records are not permitted to open the mail because it contains many payments by check from customers.
The extent of access to the many segments of the company’s computer system is tightly controlled by individual identification cards and passwords that change at regular intervals.
Each shipment to customers from inventory is recorded on a specially printed form bearing a sequential number; these forms are the basis for entries into the computer system, which makes entries to inventory records and produces periodic reports of sales and shipments.
At regular intervals, internal audit reviews a sample of expenditure transactions to determine that payment has been made to a bona fide supplier and that the related goods or services were received and appropriately used.
A construction company stores large steel girders in an open yard surrounded by a 5-foot fence and stores welding supplies in a controlled-access, tightly secured concrete building.
Cash registers display the price of each item purchased to the customer as it is recorded and produce a customer receipt that describes each item and gives its price.
The person in the controller’s office who prepares and mails checks to suppliers cannot make entries in the general ledger system.
The fire department has a number of failures with its oxygen masks and is evaluating the possibility of outsourcing preventive maintenance to the manufacturer. Because of the risk associated with a failure, the cost of each failure is estimated at $2,000. The current maintenance policy (with station employees performing maintenance) has yielded the following history:
This manufacturer will guarantee repairs on any and all failures as part of a service contract. The cost of this service is$5,000 per year. What is the expected number of breakdowns per year with station employees performing maintenance?
Mentally estimate the product in previous exercise by rounding each number to the first digit. Then find the exact product.
3,128×478‾\begin{aligned} 3,128\\ \underline{\times \quad 478}\end{aligned} 3,128×478
