Accounting Fundamentals Final Assignment: Problem Set
35 points total: do any or all

1. (18 points)
The following are Lozier’s 2010 and 2011 balance sheets and income statements for the years ended December 31, 2010 and December 31, 2011, respectively.

2010 2011 Cash $ 200,000 $ 325,000 Accounts Receivable 400,000 450,000 Inventory 400,000 325,000 Intangible Assets 60,000 54,000 Total Assets $1,060,000 $1,154,000 Accounts Payable $ 396,000 $ 420,000 Short-term Notes Payable 100,000 100,000 Common Stock 3,000 3,000 Retained Earnings 564,000 636,000 Total Liabilities and Owner’s Equity $1,063,000 $1,159,000 2010 2011 Sales Revenue $ 945,000 $1,190,000 Cost of Goods Sold (400,000) (500,000) Advertising Expense (20,000) (25,000) Office Supplies Expense (10,000) (13,000) Interest Expense (5,000) (5,000) Net Income $ 510,000 $ 647,000

Required: 3 points each
Using an Excel spreadsheet, calculate the following ratios for 2010 and 2011:
1. Quick ratio
2. Accounts receivable turnover ratio
3. Average age of receivables. Assume a 360-day calendar year.
4. Inventory turnover ratio.
5. Calculate the average age of Lozier’s inventory for 2010 and 2011. Assume a 360-day calendar year.
6. Given your calculations in parts 1-5, what conclusions might you draw about Lozier’s business operations?

3. (8 points)

On January 1, 2010, LoCoco Corporation purchased a new assembly line for $100,000 cash and a $200,000, 10%, 5-year note payable. The assembly line has an estimated salvage value of $20,000 and an estimated useful life of 14 years.

Required:
Prepare a journal entry to record the acquisition of the assembly line.
Assume that LoCoco depreciates its assets using the straight-line method.
Compute depreciation expense for 2010 and 2011. Prepare a journal entry to record 2011 depreciation expense.
Compute accumulated depreciation at the end of 2010 and…