Question 1: Complete the following balance sheet for the Range Company using the following information:
Debt to Assets = 60 percent
Quick Ratio = 1.1
Asset Turnover = 5x
Fixed Asset Turnover = 12.037x
Current Ratio = 2
Average Collection Period = 16.837 days
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Cash
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Current Liabilities
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______
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Receivables
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________
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Bonds Payable
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______
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Inventory
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________
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Total Liabilities
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______
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Total Current Assets
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________
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Net Worth
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______
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Plant and Equipment
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________
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Total Liabilities and Net Worth
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______
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Total Assets
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$325,000
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Assume all sales are on credit and a 360-day year.
Question 2: Frank's Sporting Goods projects sales for the second quarter of 200X to be as follow:
April $100,000 May $120,000 June $110,000
10% of Frank's sales are for cash, 70% of accounts receivable are collected one month following the sale, and the rest are collected two months following the sale. January sales were $40,000, February sales were $60,000, and March sales were $80,000.
a) Prepare a monthly schedule of cash receipts for the second quarter of 200X.
b) What is the balance in accounts receivable at the end of June?
Question 3: Linkup Systems, which provides investors with computerized information about stock prices, is considering the establishment of a lockbox system with its bank. The firm receives daily remittances of $1.5 million, and could earn 9% on any funds freed up through faster collections. If the lockbox system can save 2 days in the collection process, and the firm's bankers will charge $200,000 per year to operate the lockbox system, is it worth it to establish the system? Show your work to support your decision.
Question 4: Gray House is issuing bonds paying $105 annually that will mature fifteen years from today. The bond is currently selling for $980.
Calculate:
a) Coupon Rate
b) Current Yield
c) Yield To Maturity