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Q: Suggest Venus which company is better to invest, by comparing the operating, investing, and financing activities of both company (6 Marks)

Illustrate and compare every business activity in a maximum of 100 words with a conclusion of your findings containing 150 words

Q: under two compancies information is given rise and Rays company i need which company is better to invest, by comparing the operating, investing, and financing activities of both companies.

Rays Information:

Net income for the year amounted to $604,000. Net sales are $1,100,000, dividends revenue are $10,000, interest revenue is $9,000, Cost of

goods sold are $292,000, operating expenses are 320,000 including depreciation expense of $60,000, interest expense is $119,000 and tax

expense is $136,000.

Purchased $600,000 in plant assets, paying $460,000 cash and issuing a long term note payable for the $140,000 balance. Plant asset sold for

$413,000 with a book value of $311,000.

Moreover Market securities account shows debit entries of $365,000 representing the cost of securities purchased. It also shows a credit

entry of $234,000 representing the cost of securities sold.

Furthermore, Notes Receivable accounts shows $417,000 in debt entries represent cash loaned by Rays Corporation to borrower during the

year and $615,000 in credit entry represents collections of notes receivable.

During the year, Rays Corporation borrowed $819,000 cash by issuing short term notes payable to banks. Also, the company repaid $917,000

in principle amount due on these loans. The company issued 6,000 shares of $20 par value capital stock for cash at a price of $117 per share.

Market securities costing $370,000 were sold for $466,000 resulting in non operating gain.

Rise Additional Information:

Net income for the year amounted to $450,000. Net sales are $1,100,000, dividends revenue are $10,000, interest revenue is $9,000, Cost of

goods sold are $392,000, operating expenses are 220,000 including depreciation expense of $60,000, interest expense is $41,000 and

tax expense is $41,000.

Purchased $600,000 in plant assets, paying $460,000 cash and issuing a long term note payable for the $140,000 balance. Plant asset sold for

$413,000 with a book value of $311,000.

Moreover Market securities account shows debit entries of $365,000 representing the cost of securities purchased. It also shows a credit

entry of $234,000 representing the cost of securities sold.

Furthermore, Notes Receivable accounts shows $417,000 in debt entries represent cash loaned by Rise Corporation to borrower during the

year and $915,000 in credit entry represents collections of notes receivable.

During the year, Rise Corporation borrowed $776,000 cash by issuing short term notes payable to banks. Also, the company repaid $917,000

in principle amount due on these loans. The company issued 3,000 shares of $40 par value capital stock for cash at a price of $58 per share.

Market securities costing $476,000 were sold for $399,000 resulting in non operating loss.

RAYS CORPORATION COMPARITIVE BALANCE SHEETS DECEMBER 31, 2019 AND 2018 Assets 2019 2018 Current Assets: Cash and Cash Equivalent $ 986,000 $437,000 Marketable Securities 463,000 853,000 Notes Receivable 211,000 330,000 Accounts Receivable 571,000 353,000 Accrued Interest Receivable 533,000 633,000 Inventory 773,000 463,000 Prepaid Expenses 64,000 117,000 Total Current Assets $3,601,000 $3,186,000 Non Current Assets: Plant and Equipment 829,000 600,000 (net of accumulated depreciation) Total Assets $4,430,000 $3,786,000 RAYS CORPORATION COMPARITIVE BALANCE SHEETS DECEMBER 31, 2019 AND 2018 Liabilities and Stockholders Equity 2019 2018 Current liabilities: Notes Payable (Short Term) $819,000 $ 717,000 Accounts Payable 456,000 337,000 Interest Payable 257,000 334,000 Income Taxes Payable 223,000 165,000 Other Accrued Expenses payable 165,000 233,000 Total Current Liabilities $1,920,000 $1,786,000 Non Current Liabilities: Notes Payable (Long term) 140,000 0 Bonds Payable 900,000 800,000 Total Liabilities $2,960,000 $2,586,000 Stockholders Equity: Capital Stock $520,000 $400,000 Additional Paid-in-Capital 150,000 100,000 Retained Earnings 800,000 700,000 Total Stockholders Equity $1,470,000 $1,200,000 Total Liabilities and Stockholders Equity $4,430,000 $3,786,000 RISE CORPORATION COMPARITIVE BALANCE SHEETS DECEMBER 31, 2019 AND 2018 Assets 2019 2018 Current Assets: Cash and Cash Equivalent $ 521,000 $500,000 Marketable Securities 213,000 859,000 Notes Receivable 420,000 301,000 Accounts Receivable 671,000 303,000 Accrued Interest Receivable 633,000 543,000 Inventory 510,000 563,000 Prepaid Expenses 114,000 117,000 Total Current Assets $3,082,000 $3,186,000 Non Current Assets: Plant and Equipment 829,000 600,000 (net of accumulated depreciation) Total Assets $3,911,000 $3,786,000 RISE CORPORATION COMPARITIVE BALANCE SHEETS DECEMBER 31, 2019 AND 2018 Liabilities and Stockholders Equity 2019 2018 Current liabilities: Notes Payable (Short Term) $776,000 $241,000 Accounts Payable 377,000 473,000 Interest Payable 339,000 499,000 Income Taxes Payable 233,000 198,000 Other Accrued Expenses payable 195,000 375,000 Total Current Liabilities $1,920,000 $1,786,000 Non Current Liabilities: Notes Payable (Long term) 140,000 0 Bonds Payable 900,000 800,000 Total Liabilities $2,960,000 $2,586,000 Stockholders Equity: Capital Stock $420,000 $300,000 Additional Paid-in-Capital 120,000 100,000 Retained Earnings 411,000 800,000 Total Stockholders Equity $951,000 $1,200,000 Total Liabilities and Stockholders Equity $3,911,000 $3,786,000

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