Please answer the 3 question below about the MillerCorporation
Miller Corporation ? Year 20X3 During the year, youpaid the amounts owed for Motorcycles at the end of year 20X2 andcollected all the amounts owed by customers for20X2. You purchased 25 more Motorcycles for $6,000 eachand at the same terms as in 20X2. During theyear, you sold 22 Motorcycles for $11,000 each at thesame terms as 20X2. You paid the money owedto suppliers (Accounts Payable) at the beginning of theyear and collected all money due you at the beginning ofthe year (Accounts Receivable). You use theFIFO inventory system. OnJanuary 1, 20X3, you purchased furniture and fixtures for$55,000. You put $15,000 down and financedthe remaining amount at 10%. You will make annualpayments on December 31st for four years that includethe interest accrued to date plus $10,000 on the principal eachyear. You estimate that you will use them for10 years and then they will be worth$5,000. On June 30th, you paid$3,600 for a two?year insurance policy; office expenses of $12,000;$4,500 for advertising in The Post; utilities of $6,000;and Supplies of $1,500. You also paid $26,000 for 13months of rent. You paid your worker $18,000(includes amount owed from prior year) and owed her$2,000 more at the end of theyear. On December 31st, you paidthe first payment on the furniture and fixturesloan. Paid Uncle Mike his interest and paidthe principal balance owed on December31st. This year you declared and paid adividend of $4,000 to your shareholders. On October 1styou issued 30 shares of common stock for$3,000. You paid the 20X2taxes. The 20X3 taxes will be paid in20X4. The tax rate is21%. Prepare the Journal Entries(including the closing entry), T?accounts, and all four FinancialStatements (in goodform). Miller Corporation ? Year20X4 During the year, you bought 31 more Motorcycles for$6,500 each and sold 29 for $12,000 each, same terms aslast year. You paid the money owed to suppliers(Accounts Payable) at the beginning of the year andcollected all money due you at the beginning of the year (AccountsReceivable). On January 1st, youpurchased a delivery truck for $41,000. You made a downpayment of $10,000 and financed the balance at7%. You will make four equal payments that includeinterest @ 7%. You make the first payment onDecember 31st of this year. You estimate the truck willlast about 6 years and then be worth$5,000.
You paid your worker $17,000 (includes amount owed from prior year)and owed her $2,000 more at
One part of financial analysis is analyzing the same companyover many years using a trend analysis. Using the information youprepared for Assignment #3 (the Accounting Cycle Problem) forMiller Corp., answer the following questions:
Assignment 3 Answer below:
Miller Corporation has shown good financial performance year onyear basis. In third year of operations, the company has generatednet income $28,835 and gross profit is $114,000. The revenue of thecompany is $242,000 during third year of operations. The grossprofit margin of the company is 47.10% and net profit margin is11.92%. The revenue of the company is growing year on year basis,but the net profit margin and gross margin have slightly reduced inthird year. The company should try to improve its gross profitmargin and net profit margin to grow at speedy rate.
The company has generated $40,656 from operations which has beenutilized for investing and financing activities. The net changes incash flows have slightly reduced which shows that the company hasutilized its cash balance $10,944 to pay finance obligations duringthe third year of operations. The total assets of the company are$345,732 as on year 20X3 and the assets partly financed fromliability and equity i.e. $152,165 from liability and $193,567 fromequity. It shows that the majority assets are financed from equityand the company has reduced its debt obligations during theyear.
During fourth year of operations, the revenue, gross profit andnet profit of the company are $348,000, $162,000 and $56,114respectively. The gross margin of the company is 46.55% and netprofit margin is 16.12%. The gross margin I fourth year isequivalent to third year of operations and the net profit margin othe company has increase in comparison to third operations and thenet profit margin of the company has increased in comparison tothird year. It shows that the company has improved itsprofitability and has utilized its resources more effectively andefficiently. The company has generated $64,060 from operations andthe amount has been utilized for investing activities. Further thetotal asset base of the company has also increased, and thefinancial position and financial performance of the company hasimproved year on year basis which is a healthy indicator for thecompany.
1. How is Miller’s liquidity trending from one year to thenext?
2. How is Miller’s solvency trending from one year to thenext?
3. How has Miller’s asset base changed over time? Will this allowthe company to meet consumer demand for their product? Why or whynot?
