BL

"P2-9 "Case of Penticton "Penticton Balance Sheet "2009 "2008 "change "Cash "5000 "10000 "Account Receivable "205000 "175000 "Inventory "264200 "225000 "Total current Asset "474200 "410000 "0 .3659 "Equipment , furniture , fixtu "720000 "530000 "Other non-current assets "75000 "100000 "total non-current assets "795000 "630000 "total "1269200 "1040000 "Banks Loan "100000 "75000 "Account Payble "200000 "150000 "Goods to be provided to customers "42000 "35000 "total Current liabilities "342000 "260000 "0 .4615 "Long-term debt "250000 "150000 "Total liabilities "592000 "410000 "Shareholders ' Equity "Capital Stock "260000 "250000 "Retained Earnings "417200 "380000 "total Stockholders equity "677200 "630000 "Total liabilities and stockholders ' equity "1269200 "1040000 "Penticton Income

statement "2009 "2008 "Revenues "2475000 "1925000 "0 .4286 "Cost of Goods Sold "1350000 "1098000 "0 .1311 "Gross Profit "1125000 "827000 "SGA "550000 "495000 "Amortization Expense "120000 "100000 "Interest Expense "125000 "120000 "Tax expense "132000 "44800 "Total expense "927000 "759800 "net income "198000 "67200 "Answers "a "2009 "2008 "i "working capital "453000 "370000 "ii "current ratio "1 .234 "1 .308 "iii "debt to equity ratio "0 .0443 "0 .3651 "iv "gross margin "1125000 "827000 "v "gross margin percentage "0 .5455 "0 .039 "b "The amounts calculated in (a ) changed from 2008 and 2009 changed because "working capit increased from 2008 to 2009 because of higher current assets in 2009 "Current ratio decreased from 2009 to 2008 because of higher rate of increase in current liabilities than current assets assets "Debt to equity ratio increase because of more liabilities in 2009 than in 2008 "Gross Margin increased because if higher sales in 2009 "Gross Margin Increased because of higher increase in sale than in cost of sales "c "The liquidity position of Penticton on December 31 , 2009 is strong because it is at least greater than 1 .0 "As a prospective lender of money to Penticton , I have no concerns about its current liquidity position "d "To improve liquidity , Penticton 's management will have to do any or all of the following " It should increase its sales revenues " It should should lessen it current liabilities by paying the same " It should minimize on unnecessary operatin expense " It should convert it current liabilities to non-current one by restructuring if possible "P2-15 "Thaxted Ltd "Thaxted Ltd "Worksheet "December 31 ,2009 "trial "balance "income "statement "balance "sheet "debit "credit "debit "credit "debit "credit "Acounts payable "27500 "27500 "Accounts receivable "50000 "50000 "Accrued liabilities "11500 "11500 "Accumulated depreciation and amortization "187500 "187500 "Capital Stock "375000 "375000 "Cash "6250 "6250 "Cost of closing west coast division "18750 "18750 "Cost of sales "237500 "237500 "Current portion of notes payable "12500 "12500 "Deposits from customers "6250 "6250 "Depreciation and amortization expense "52500 "52500 "Dividends "6250 "6250 "General and administrative expense "68750 "68750 "Income taxes payable "5000 "5000 "Income taxes recoverable from government "7750 "7750 "Intellectual property "300000 "300000 "Interest Expense "26250 "26250 "Interest revenue "5500 "5500 "Inventory "75000 "75000 "Investments in market place "62500 "62500 "Loans to shareholders "6250 "6250 "Miscellaneous Expense "12500 "12500 "Notes payable (non-current "312500 "312500 "Other current assets "2500 "2500 "Other non-current assets "18750 "18750...