DeVita Company which has been operating for three years

provid
DeVita Company, which has been operating for three years, provides marketing consulting
services worldwide for dot-com companies. You are a financial analyst assigned to report on the
DeVita management team’s effectiveness at managing its assets efficiently. At the start of 2012
(its fourth year), DeVita’s T-account balances were as follows. Dollars are in
thousands..:.Required:1. Using the data from these T-accounts, amounts for the following on
January 1, 2012, wereAssets $_______ = Liabilities $_______ + Stockholders’ Equity $
_______.2. Enter the following 2012 transactions in the T-accounts:a. Received $5,600 cash
from clients on account.b. Provided $56,000 in services to clients who paid $48,000 in cash and
owed the rest on account.c. Received $400 in cash as income on investments.d. Paid $16,000
in wages, $16,000 in travel, $9,600 rent, and $1,600 on accounts payable.e. Received a utility
bill for $800 for 2012 services.f. Paid $480 in dividends to stockholders.g. Received $1,600 in
cash from clients in advance of services DeVita will provide next year.3. Compute ending
balances in the T-accounts to determine amounts for the following on December 31,
2012:Revenues $_______ – Expenses $_______ = Net Income $ _______.Assets $_______ =
Liabilities $_______ + Stockholders’ Equity $ _______.4. Calculate the total asset turnover
ratio for 2012. If the company had an asset turnover ratio in 2011 of 2.00 and in 2010 of 1.80,
what does your computation suggest to you about DeVita Company?What would you say in
your report?View Solution:
DeVita Company which has been operating for three years provid
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