1)

A) Value of truck at the time of purchase: $14,000 + $4,800 = $18,800.00 B) Value of the items purchased at auction at the time of purchase: Market value of all items purchased: $200 + $600 +$2,400 = $3,200.00 Paint trays and roller covers (Supplies) : $2,400*($200/$3,200) = $150.00 Storage Cabinets (Office Furniture) : $2,400*($600/$3,200) = $450.00 Ladders and Scaffolding (Equipment) : $2,400*($2,400/$3,200) = $1,800.00 C) Value of three-year license at the time of purchase: $1,500 D) Book Value of Truck: Cost of Truck: $12,000 Less depreciation at the time of purchase: $7,000.00 <----- = ($12,000 - $800)*(5/8 Book Value: $5,000.00

2) A) Depreciation of Truck: ($18,800-$800)/4 years = $4,500.00 B) Depreciation of items purchased at auction: Paint Trays and Roller Covers (Supplies) : Storage Cabinets (Office Furniture) : $450/9 years = Ladders and Scaffolding (Equipment) : $1,800/4 years = C) Three Year License: ($1,500/ 3 years)*(11/12) = $458.33 D) Sale of Truck: Depreciation: ($11,200/8 years)*(8/12) = $ 933.33 Loss on Sale of Truck: $5,000 - $4,800 = $ (200.00)

Total Expense for year of $150 $50.00 $450.00

3) Assets Three Year License Property, Plant, & Equipment Truck Office Furniture Equipment Less: Accumulated Depreciation Property, Plant, & Equipment, Net

$1,041.67 <-----$1,500 - $458.33 $ 18,800.00 $ 450.00 $1,800.00 $ 21,050.00 -$5,000.00 <----=$4,500 + $50 + $450 $16,050.00

---- = ($12,000 - $800)*(5/8)

otal Expense for year of $150.00

----$1,500 - $458.33

1) A) The $20,000 reserch and development costs are conisdered as expenses not as assets. They would be on the Income Statement as an expense B) This would be on the Balance Sheet as folllows : Assets Patent Account : $ 8,000.00 <---- $10,000 -($10,000/5 Years) C) 2008 Amortization : $10,000/ 5 Years = $ 2,000.00 2009 Amortization : $10,000 - $2,000 (from 2008) + $8,000 (Infringement suit) = Years

$ 16,000.00 4 $ 4,000.00

1) A) Times Interest Earned = (Net Income + Income Tax Expense + Interest Expesnse)/(Interest Expense) ($72,000 + $48,000 + $20,000)/$20,000 $140,000/$20,000 7 (7 to 1) B) Return on Total Assets= (Net Income + Interest Expense, Net of Tax)/Average Total Assets Tax rate = Income Taxes/Income before taxes = $48,000/$120,000 = 40% ($72,000 + (@20,000*(1-40%)))/(($540,000 + $510,000)/2) $84,000/$525,000 16.00% C) Return on common Stockholders Equity= (Net Income - Preferred Dividends)/ Average Common Stockholders Equity $72,000/(($260,000 + $ 217,00)2) $72,000/$238,500 30.19% D) Debt - Equity Ratio (@ December 31, 2008) = Total Liabilities/ Total Stockholders Equity $280,000/$260,000 1.08 (1.08 to 1) E) Current Ratio ( @ December 31, 2008) = Current Assets / Current Liabilities $144,000/$120,000 1.2 (1.2 to 1) F) Quick (acid - test) Ratio (@ December 21, 2008) = (Cash + Marketable Securities + Short Term Receivables)/Current Liabilities ($26,000 +$0 + $48000)/$120,000 0.62 .62 to 1 G) Accounts Receivable Turnover Ratio (Assume that all purchases are on credit)= Net Credit Sales / Average Accounts Receivable $800,000/(($48,000+$50,000)/2) 16.33 Times H) Number of Days Sales' in Receivables= Number of Days in Period/Accounts Receivable Turnover Ratio 360 days/ 1.63 times 22.05 22 Days I) Inventory Turnoer Ratio (Assume that all purchases are on credit) = Cost of Goods Sold / Average Inventory $540,000/(($65,000 + $62,000)/2) 8.50 Times J) Number of days' sales in inventory =

Number of Days in Period / Inventory Turnover Ratio 360 Days / 8.5 Times 42.33 42 Days K) Number of Days in Cash Operating Cycle = Days' Sales in Inventory + Days' Sales in Receivables 42 days + 22 Days 64 Days

2)

Using all the previous financial ratios and computations I can roughly see the the overall financial health of CBB En Times Interest Earned Ratio we can see that our earnings are 7 times the interest expense, showing that the com is at 16%. This shows that CBB is generating a decent return. The Return on Commo Stockholders Equity is is at 30 leveraging of the stockholders capital. Debt to Equity Ratio is at 1.08 to 1. This tells us that CBB Enterprises as ver good liquidity in the company. The Quick Ratio of .62 to 1 shows that the company may be a little slower then pr Ratio we can see that CBB Enterprises are collecting there Accounts Receivable roughly 16 times a period. The customers payments within 22 days, which is quite fast. Inventory Turnover Ratio shows that they are selling the This information shows that al the inventory is eing turned over quickly. Lastly the Number of Days in Cash Opera inventory to the sale and payment receiv From the Current ratio, Quick ratio, Accounts Receivable Turnover ratio, Number of days sales in Receivables, Inve Cash Operating Cycle I can see the liquidity of the company. From the previous information we can see that the companies in the industry and to its previous years information. From the Times Interest Earned and Debt to Eq fully understand the Solvency I would want to calculate a few more Ratios. One of those Ratios that would help analyze the profitablity of CBB Enterprises we use the Return on Total Assets and Return on Common Stockho profitably. Overall this company is doing financialy well. In order to fully analyze them we would have to compare previous years to see if we are getting bette

terest Expense)

20,000 = 40%

kholders Equity

urrent Liabilities

ll financial health of CBB Enterprises. Each Ratio or computation tells its own information. Starting with the nse, showing that the company has no problems in paying off its interest payments. Return on Total assets ckholders Equity is is at 30.19% and tells us that CBB is nearly doubling the return of stockholders due to its that CBB Enterprises as very little more Debt then its Equity. The Current Ratio of 1.2 1 shows that there is y be a little slower then prefered when it comes to paying its creditors. From Accounts Receivable Turover hly 16 times a period. The Number of Days Sales in Receivables shows that the company is collecting its ws that they are selling their inventory 8.5 times a period. Number of Days sales in inventory is at 42 days. ber of Days in Cash Operating Cycle is at 64 days and shows us the length of time from the purchase of the e sale and payment received for it. ys sales in Receivables, Inventory Turnover ratio, Number of days sales in Inventory, and number of Days in mation we can see that the company is fairly liquid but would have to compare this information to other est Earned and Debt to Equity ratios we can measure the solvency of CBB Enterprises. Overall in order to ose Ratios that would help in this situation would be Cash flow from Operations to Expeditures ratio. To eturn on Common Stockholders Equity Ratios. This two ratios shows us that CBB Enterprises is operating we would have to compare its information with other companies in the industry and also compare it to its see if we are getting better or worse.