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Question $1$:

These following items are taken from the general ledger of Drew Corporation on December $31,2027.$

All of the accounts have "normal" balances.

Required:

a$.$ Calculate net income or loss.

b$.$ Calculate the retained earnings balance to be reported on the December $31,2027$ balance sheet.

c$.$ Calculate the debt$-$equity ratio as of December $31,2027.$ Then briefly interpret that ratio: explain

what it means for this company.

Show all calculations; each account and each amount in each calculation must be shown. Use

underlines to set off totals.Question $2$:

Greenstream Insurance Agency prepares monthly financial statements. Presented below is an income

statement for the month of June that is correct on the basis of information included in it$.$

GREENSTREAM INSURANCE AGENCY

Income Statement

For the Month Ended June $30,2024$

Revenues

Service Revenue

$$40,000$

Expenses

Salaries and Wages Expense

Advertising Expense

Rent Expense

Depreciation Expense

Total Expenses

Net Income

$$12,000$

$800$

$4,200$

$2,800$

$19,800$

$$20,200$

Additional Data: When the income statement was prepared, the company accountant neglected to take

into consideration the following information:

i$.$ A utility bill for $$1,200$ was received on the last day of the month for electric and gas service for the

month of June.

ii$.$A company insurance salesman sold a life insurance policy to a client for a premium of $$10,000.$

The agency billed the client for the policy and is entitled to a commission of $20\%.$

iii.Supplies on hand at the beginning of the month were $$2,500.$ The agency purchased additional

supplies during the month for $$1,500$ in cash, and $$1,200$ of supplies remained unused on June

$30.$

iv$.$The agency purchased a new car at the beginning of the month for $$24,000$ cash. The car will

depreciate $$6,000$ per year.

v $.$Salaries owed to employees at the end of the month total $$5,300.$ The salaries will be paid on July $5.$

Required:a$.$ Determine the effect on revenue or expense of each of the five transactions $($i$.-$v$.)$ above. Clearly

state what revenue or expense account would be affected by each transaction and its amount.

b$.$ Then determine the net income or net loss for the month of June after all five of the transactions

are included on the income statement.

Show all calculations.

Question $3$:

The J$.$M$.$ Smucker Company annual reports on Form $10-$K as of and for the years ended April $30,2024$

and April $30,2023$ are posted under Content$/$Exams$.$ Use them for the following questions. Show all

calculations and make sure to indicate if amounts are in thousands or millions of dollars, and what each

calculation means, e$.$g$.,$ percentage.

a$)$ Calculate the gross profit percentages for each of the three most recent fiscal years. Explain what

the percentages mean and whether the trend is positive or negative. Carry each percentage to

four decimal places. For example, if the percentage is of $\frac{57}{102},$ it should be shown as $55\mathrm{.}88\%.$

b$)$ Evaluate profitability by calculating and interpreting return on assets and return on equity for the

fiscal years ended April $30,2024$ and April $30,2023.$ Assume a tax rate of $21\%.$ Interpret the

results by explaining what each ratio tells you about the company's profitability.

c$)$ Evaluate liquidity by calculating and interpreting the current ratio and operating cash flows to

average current liabilities for both fiscal $2024$ and fiscal $2023.$

Required: Show all calculations. Explanations and interpretations must be written in complete

sentences.

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