ACCOUNTINGBelow is the Trial Balance for Clay Employment Services

PROBLEM A Below is the Trial Balance for Clay Employment Services year ending December 31 2011. Previous period’s information were as follows: net receivables $290 000 and inventory $82 000. Total revenues were $350 000 for 2010 360 000 for 2009 and 295 000 for 2008. Requirements: 1) Prepare the income statement statement of retained earnings and balance sheet. 2) Calculate the following ratios: current ratio quick ratio debt ratio accounts receivable turnover and inventory turnover. Briefly explain your answers. 3) Calculate the vertical analysis for total current assets. 4) Calculate the horizontal analysis on total revenues from 2008 thru 2011. Cash 198 000 Accounts receivable 300 000 Inventories 78 000 Prepaid insurance expense 4 000 Supplies 2 000 Furnitures 100 000 Accumulated depreciation furnitures 60 000 Building 250 000 Accumulated depreciation building 140 000 Accounts payable 310 000 Salaries payable 5 000 Unearned service revenue 13 000 Notes payable ($12 000 due in the current year) 40 000 Mortgage payable (1/3 is due in the current year) 30 000 Retained earnings 293 000 Dividends 65000 Service revenue 300 000 Professional fees revenue 30 000 Salary expense 170 000 Supplies expense 4 000 Depreciation expense furnitures 20 000 Depreciation expense building 11 000 Rent expense 9 000 Interest expense 7 000 Utilities expense 3 000 PROBLEM B ABC Corporation accountants have assembled the following data for the year ended December 31 2007. REQUIRED: Prepare ABC Corporation’s statement of cash flows using the indirect method. Include an accompanying schedule of noncash investing and financing activities. 12/31/07 12/31/06 Current Accounts: Current assets: Cash and cash equivalents $85 000 $22 000 Accounts receivable 69 200 64 200 Inventories 80 000 83 000 Current liabilities: Accounts payable $57 800 $55 800 Income tax payable 14 700 16 700 Transaction data for 2007: Net income $ 57 000 Purchase of treasury stock $14 000 Issuance of common stock for cash 41 000 Loss on sale of equipment 11 000 Depreciation expense 21 000 Payment of cash dividends 18 000 Purchase of building 125 000 Issuance of longterm note Retirement of bonds payable by payable to borrow cash 34 000 issuing common stock 65 000 Sale of equipment 58 000 PROBLEM C At the beginning of the current year MegaSounds opened a music store that sells compact disks. At the end of the year a physical inventory count revealed that 2 500 of those disks are on hand. Date No. of disks purchased Cost/Unit Total Cost Jan 1 1 400 $8.00 $ Feb 4 3 500 $8.50 $ July 5 4 800 $8.25 $ Aug 6 6 800 $8.30 $ Oct 11 11 300 $8.40 $ Total 27 800 $ Required: 1) Calculate the total cost for each purchase date. 2) Calculate the ending inventory using (a) FIFO (b) LIFO and Average Cost methods. PROBLEM D: Machinery purchased on January 1 2011: Cost of machinery 250 000 Estimated residual value 10 000 Estimated useful life: Years 6 years Units of production 200 000 machine hours Required: Calculate depreciation at each year end that applies: 1) Straight-line method 2) Units of production method Assumption: Machinery machine hours on the 1st year 66 000; 2nd year 60 000; 3rd year 38 000; 4th year 22 000; 5th year 8 000; and 6th year 6 000 3) Double-declining method