Solution
Ashish answered on
Sep 25 2020
Part-1
Solution-1.1
Asset turnover ratio = Net Sales / Average Total Assets
Asset turnover ratio (Home Depot-2018) = $100,904/ (($44,529+$42,966)/2)
Asset turnover ratio (Home Depot-2018) = 2.31 times
Asset turnover ratio (Lowes-2018) = $68,619/ (($35,291+$34,408)/2)
Asset turnover ratio (Lowes-2018) = 1.97 times
Solution-1.2
The industry average of Asset turnover ratio is 2.07 times.
Solution-1.3
According to analysis Home Depot doing well because they have higher Assets turnover ratio which tells company using their assets very efficiently.
Reference:
Industry Average
Retrieved From:
https:
csimarket.com/stocks/HD-Efficiency-Comparisons.html
Ga
iel, S. J. (2010). Financial Accounting. Tata McGraw-Hill Education.
Kimuda, D. W. (1986). A Textbook of Financial Accounting. East African Publishers.
Part-2
Answer Sheet:
1. True
2. True
3. False
4. True
5. False
6. True
7. False
8. False
9. True
10. False
11. True
12. False
13. b. Accounts Receivable
14. b. 1-Assets, 2-Liabilities, 3-Owner’s Equity, 4-Revenues, 5-Expenses
15. d. assets and expenses
16. b. a liability with a credit balance
17. c. assets
18. b. Accounts Payable, debit; Cash, credit
19. d. decrease Accounts Payable, decrease Cash
20. d.
Equipment 8,500
Accounts Payable 6,250
Cash 2,250
Part-3
Solution-1-a
Straight Line Method:
Annual Depreciation = (Cost – Residual)/ Useful life
Annual Depreciation = ($120,000 - $15,000) / 5 years
Annual Depreciation = $21,000 each yea
Solution-1-
Units of Production Method:
Rate = ((Cost – Residual)/Total production)
Rate = ($120,000 - $15,000) / 210,000
Rate = $0.50
The depreciation expense for the first 3 years is as follows:
Depreciation (Year 1) = $0.50*80,000 units
Depreciation (Year 1) = $40,000
Depreciation (Year 2) = $0.50*50,000 units
Depreciation (Year 2) = $25,000
Depreciation (Year 3) = $0.50*30,000 units
Depreciation (Year 3) =...