答案和详解如下： 11.Selected information from Jenner, Inc.’s financial statements for the year ended December 31 included the following (in $): Cash | $200,000 | Accounts Payable | $300,000 | Accounts Receivable | 300,000 | Deferred Tax Liability | 600,000 | Inventory | 1,500,000 | Long-term Debt | 8,100,000 | Property, Plant & Equip. | 11,000,000 | Common Stock | 2,200,000 | Total Assets | 13,000,000 | Retained Earnings | 1,800,000 | LIFO Reserve at Jan. 1 | 400,000 | Total Liabilities & Equity | $13,000,000 | LIFO Reserve at Dec. 31 | 600,000 |
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| Net Income |
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| (after 40 percent tax rate) | 800,000 |
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Jenner uses the last in, first out (LIFO) inventory cost flow assumption. If Jenner changed from LIFO to first in, first out (FIFO) in 2001, return on total equity would: A) increase from 20.0 to 21.1 percent. B) decrease from 20.0 to 18.3 percent. C) increase from 20.0 to 25.0 percent. D) increase from 20.0 to 23.0 percent. The correct answer was A) Return on total equity (net income / total equity) was ($800,000 / ($2,200,000 + $1,800,000) =) 20 percent. Under FIFO, net income increases by the increase in the LIFO reserve multiplied by (1 – tax rate). FIFO net income for 2001 was ($800,000 + ($600,000 – $400,000) (1 – 0.40) = ) $920,000. Total equity increases by the amount of accumulated FIFO profits that are added to retained earnings which is calculated by multiplying the amount of the ending LIFO reserve by (1 – tax rate) for an increase of (($600,000) * (1 – 0.40) =) $360,000. Total equity is ($2,200,000 + $1,800,000 + $360,000 =) $4,360,000. FIFO return on total equity is ($920,000 / $4,360,000 =) 21.1 percent.
12.Selected information from Leeward Company’s financial statements for the year ended December 31 is as follows (in $): Cash | 3,000,000 | | Accounts Payable | 1,800,000 | Accounts Receivable | 3,400,000 | | Deferred Tax Liability | 1,200,000 | Inventory | 6,300,000 | | Long-term Debt | 12,500,000 | Property, Plant & Eq. | 15,200,000 | | Common Stock | 2,000,000 | Total Assets | 27,900,000 | | Retained Earnings | 10,400,000 | LIFO Reserve Jan. 1 | 1,600,000 | | Total Liab. & Equity | 27,900,000 | LIFO Reserve Dec. 31 | 2,100,000 | | | |
Leeward uses the last in, first out (LIFO) inventory cost flow assumption. The tax rate is 40 percent. Considering the impact of taxes, if Leeward changed from LIFO to first in, first out (FIFO), the total debt-to-total equity ratio will: A) increase from 1.25 to 1.32. B) decrease from 1.25 to 1.16. C) remain unchanged at 1.25. D) decrease from 1.25 to 1.20. The correct answer was D) Total debt to total equity under LIFO is ($1,800,000 + $1,200,000 + $12,500,000) / ($2,000,000 + $10,400,000) =) 1.25. If Leeward uses FIFO, on the asset side, Inventory will increase by the amount of the ending LIFO reserve ($2,100,000). On the liabilities and equity side, Deferred Tax Liability will increase by the ending LIFO reserve times the tax rate ($2,100,000 * 0.4 =) $840,000. Retained Earnings will increase by the ending LIFO reserve times (1 – tax rate), which is (($2,100,000) (1 – 0.4) =) $1,260,000. Leeward’s total debt to total equity ratio under FIFO will be ($1,800,000 + $1,200,000 + $840,000 + $12,500,000) / (($2,000,000 + $10,400,000 + $1,260,000) =) 1.20.
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发表于 2008-4-14 12:00
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