Question

1.  Follow Table 8.1 on page 180 to determine a balance sheet for OU Engineering Foundations, using the following data.

• The organization has little debt of $850,000.

• The current balance of accounts payable is $250,000.

• Federal taxes owed are $120,000. State taxes owed are $80,000. City taxes owed are $50,000. Unemployment taxes owed are $25,000. Real property taxes owed are $25,000.

• The board of directors demands to have 90 days cash on hand, which is $250,000.

• Securities held are $320,000.

• Accounts receivable are $230,000.

• The organization has a positive balance with suppliers of $5,000.

• Recent inventory indicates finished goods value to be $700,000; work in progress is $300,000; and raw materials are $50,000.

• The property is valued at $3,100,000.

• Depreciation/depletion of plant and equipment is $2,250,000.

2.  Follow Table 8.2 on page 181 to develop an end of year Income Statement for OU Engineering Foundations, using the following data.

• The organization has retained earnings of $1,500,000 from the previous end of the year.

• Gross sales for the year were $5,000,000 with refunds of $200,000 and refunds of $50,000.

• Interest and income from off-site investments were $150,000.

• Loan payments were $250,000.

• Taxes are as in Problem 1, above.

• The cost of goods sold is $2,500,000.

• Depreciation on equipment is $250,000.

• Sales bonuses and expenses are $150,000.

• Administration costs are $500,000.

• The board of directors voted for a $3.00 per share dividend for the 250,000 shares.

3. For Problems 1 & 2, above, compute all ratios as described in Table 8.3, page 183.

4.  Provide a one sentence comment as to the strengths and/or weakness of the organization with respect to each of the ratios as computed in Problem 3, above.