Ref. No.			Plan-1
Rocky, Inc.	Prepared by			WL
Analytical Procedures Ratios	Date			1/10/X6
For the Years Ended December 31
EXCEL
	Formula	20X5	20X4	Industry	Relevant F/S	Reasons for unexpected balances:
Current ratio	Current Assets / Current Liabilities			1.3
Days sales in average accounts receivable	numbers provided	37.0	33.2	37.0
Allowance for doubtful accounts/accounts receivable	Allowance for Doubtful Accounts / Trade Receivables			-
Bad debt expenses/net sales	Bad Debt (Expense) / Net Sales			-
Total liabilities to net worth	Total Liabilities / Stockholders' Equity			2.9
Return on total assets	Net Income / Total Assets			9.0%
Return on net worth	Net Income / Stockholders' Equity			29.0%
Return on net sales	Net Income / Net Sales			2.3%
Gross profit/net sales	Gross Profit / Net Sales			24.0%
Selling, operating and admin. expense/net sales	Selling, Operating & Admin Expense / Net Sales			23.9%
Times interest earned	Operating Income / Interest Expense			5.5

2
	Rocky, INC.
	Balance Sheet
	December 31,
												Increase
	Assets		20X5		20X4		(Decrease)
	Current assets
		Cash	$	67,234		0.5%		53,964		0.5%		24.6%
		Trade receivables		10,235,457		74.1%		8,534,524		71.8%		19.9%
		Allowance for doubtful accounts	(104,000)		-0.8%		(96,000)		-0.8%		8.3%
		Receivables-officers		84,670		0.6%		57,643		0.5%		46.9%
		Inventory		1,375,835		10.0%		1,234,589		10.4%		11.4%
		Prepaid expenses		176,456		1.3%		156,900		1.3%		12.5%
		Total current assets	$	11,835,652		85.6%		9,941,620		83.7%		19.1%
	Equipment and leasehold improvements
		Equipment and furniture		1,319,576		9.5%		1,090,634		9.2%		21.0%
		Leasehold improvements		91,230		0.7%		98,900		0.8%		-7.8%
				1,410,806		10.2%		1,189,534		10.0%		18.6%
		Less: accumulated depreciation	(404,560)		-2.9%		(250,987)		-2.1%		61.2%
				1,006,246		7.3%		938,547		7.9%		7.2%
	Intangible assets (net of amort.)		978,000		7.1%		1,000,000		8.4%		-2.2%
			$	13,819,898		100.0%		11,880,167		100.0%		16.3%
	Liabilities and Stockholders' Equity
	Current Liabilities
		Line of credit		8,632,105		62.5%		6,612,550		55.7%		30.5%
		Accounts payable		1,429,033		10.3%		1,349,839		11.4%		5.9%
		Current maturities of capital
		lease obligations		45,675		0.3%		43,200		0.4%		5.7%
		Unearned service revenue		42,300		0.3%				0.0%
		Accrued expenses		203,450		1.5%		178,900		1.5%		13.7%
		Total current liabilities	$	10,352,563		74.9%		8,184,489		68.9%		26.5%
	Capital Lease Obligations		469,355		3.4%		499,900		4.2%		-6.1%
		Less current maturities		(45,675)		-0.3%		(43,200)		-0.4%		5.7%
		Total Liabilities	$	10,776,243		78.0%		8,641,189		72.7%		24.7%
	Stockholders' equity
		Common stock		200,000		1.4%		200,000		1.7%		0.0%
		Additional paid-in capital		423,500		3.1%		423,500		3.6%		0.0%
		Retained earnings		2,430,355		17.6%		2,615,478		22.0%		-7.1%
			$	3,053,855		22.1%		3,238,978		27.3%		-5.7%
			$	13,830,098		100.1%		11,880,167		100.0%		16.4%
	Rocky, INC.
	Statement of Income and Retained Earnings
	For the Years Ended December 31,
												Increase
				20X5				20X4				(Decrease)
	Net sales	$	92,586,051		100.0%		96,459,566		100.0%		-4.0%
	Cost of goods sold		72,134,566		77.9%		74,122,435		76.8%		-2.7%
		Gross profit	$	20,451,485		22.1%		22,337,131		23.2%		-8.4%
	Selling expenses:
		Salaries		2,765,677		3.0%		3,167,889		3.3%		-12.7%
		Payroll benefits and taxes		857,368		0.9%		913,456		0.9%		-6.1%
		Advertising and promotion		1,567,889		1.7%		1,200,786		1.2%		30.6%
		Travel and entertainment		445,600		0.5%		609,788		0.6%		-26.9%
		MIscellaneous		278,656		0.3%		334,890		0.3%		-16.8%
			$	5,915,190		6.4%		6,226,809		6.5%		-5.0%
	Operating and administrative expenses:
		Operating salaries		4,544,860		4.9%		4,878,900		5.1%		-6.8%
		Administrative salaries		3,945,670		4.3%		4,234,234		4.4%		-6.8%
		Payroll benefits and taxes		1,734,565		1.9%		1,812,344		1.9%		-4.3%
		Rent		721,345		0.8%		797,800		0.8%		-9.6%
		Utilities		234,839		0.3%		210,495		0.2%		11.6%
		Insurance		378,677		0.4%		356,890		0.4%		6.1%
		Legal and accounting		485,767		0.5%		457,577		0.5%		6.2%
		Bad debts		256,678		0.3%		234,500		0.2%		9.5%
		Supplies		478,900		0.5%		556,345		0.6%		-13.9%
		Depreciation & Amortization		367,867		0.4%		334,565		0.3%		10.0%
		Software development		345,645		0.4%		289,100		0.3%		19.6%
		Miscellaneous		245,456		0.3%		234,556		0.2%		4.6%
			$	13,740,269		14.8%		14,397,306		14.9%		-4.6%
		Total selling, operating and
		administrative expenses	$	19,655,459		21.2%		20,624,115		21.4%		-4.7%
	Operating income	$	796,026		0.9%		1,713,016		1.8%		-53.5%
		Interest expense		476,899		0.5%		421,344		0.4%		13.2%
	Income before income taxes	$	319,127		0.3%		1,291,672		1.3%		-75.3%
	Income taxes:
		Current		80,100		0.1%		256,765		0.3%		-68.8%
		Deferred		9,150		0.0%		45,632		0.0%		-79.9%
	Net income	$	229,877		0.2%		989,275		1.0%		-76.8%
	Retained earnings, January 1		2,615,478				1,626,203				60.8%
	Less: Dividends		(415,000)				0
	Retained earnings, December 31	$	2,430,355				2,615,478				-7.1%

						Ref. No.	WTB-1
	Rocky, Inc.				Prep'd by	WL
	Working Trial Balance				Date	1/10/X6
	For the Year Ended December 31, 20X5
		20X4	20X5	Adjustments	20X5
Acct. No.	Account Name	Adjusted	Unadjusted	Ref #	Dr.	Cr.	Adjusted
1000.10	Cash-First National Bank	42,754	66,034				66,034
1000.20	Cash-Special Account	9,960	10,150				10,150
1000.30	Cash in register	1,200	1,200				1,200
1000.40	Petty Cash	50	50				50
1050.10	Accounts receivable-trade	8,534,524	10,235,457				10,235,457
1050.40	Accounts receivable-officers	57,643	84,670				84,670
1050.90	Allowance for bad debts	(96,000)	(104,000)				(104,000)
1100.10	Inventories	1,234,589	1,375,835				1,375,835
1300.10	Prepaid expenses	156,900	176,456				176,456
2050.10	Furniture & fixtures	300,980	344,900				344,900
2050.30	Equipment	789,654	974,676				974,676
2050.80	Leasehold improvements	98,900	91,230				91,230
2050.90	Accumulated depreciation	(250,987)	(404,560)				(404,560)
2100.00	Software development cost		178,000				178,000
2200.00	Intangible assets	1,000,000	800,000				800,000
3050.10	Accounts payable-trade	(1,349,839)	(1,429,033)				(1,429,033)
3100.00	Capital lease oblig.-current	(43,200)	(45,675)				(45,675)
3200.10	Accrued liabilities	(178,900)	(203,450)				(203,450)
3300.30	Unearned service revenue		(42,300)				(42,300)
3400.50	Line of credit	(6,612,550)	(8,632,105)				(8,632,105)
4400.10	Capital lease oblig.-noncurr.	(456,700)	(423,680)				(423,680)
5050.10	Capital stock	(200,000)	(200,000)				(200,000)
5100.10	Paid-in capital	(423,500)	(423,500)				(423,500)
5700.10	Retained earnings	(1,626,203)	(2,615,478)				(2,615,478)
5900.00	Dividends		415,000				415,000
	Totals	989,275	229,877				229,877
6000.10	Sales of computers	(44,890,788)	(42,345,675)				(42,345,675)
6010.10	Software licenses	(248,900)	(236,700)				(236,700)
6020.10	Service revenue	(4,567,888)	(4,325,777)				(4,325,777)
6030.10	Consulting revenue	(46,751,990)	(45,677,899)				(45,677,899)
7020.10	Cost of sales-prod. & serv.	74,122,435	72,134,566				72,134,566
7070.10	Salaries-sales	3,167,889	2,765,677				2,765,677
7070.50	Payroll benefits-sales	913,456	857,368				857,368
7075.10	Advertising & promotion	1,200,786	1,567,889				1,567,889
7080.10	Travel & entertainment	609,788	445,600				445,600
7080.30	Miscellaneous exp. -sales	334,890	278,656				278,656
7090.10	Operating salaries	4,878,900	4,544,860				4,544,860
7090.30	Administrative salaries	4,234,234	3,945,670				3,945,670
7090.50	Payroll benefits-admin.	1,812,344	1,734,565				1,734,565
7100.10	Rent	797,800	721,345				721,345
7140.10	Utilities	210,495	234,839				234,839
7200.10	Insurance	356,890	378,677				378,677
7260.30	Legal and accounting	457,577	485,767				485,767
7320.10	Bad debt expense	234,500	256,678				256,678
7410.10	Supplies	556,345	478,900				478,900
7600.10	Depreciation and amort.	334,565	367,867				367,867
7650.10	Software development	289,100	345,645				345,645
7700.10	Miscellaneous exp.-admin.	234,556	245,456				245,456
7800.10	Interest expense	421,344	476,899				476,899
7900.10	Current income taxes	256,765	80,100				80,100
7900.70	Deferred income taxes	45,632	9,150				9,150
9000.00	P & L Summary	989,275					0
	Total Balance Sheet	989,275	229,877				(229,877)
	Total Income Statement	(989,275)	(229,877)				229,877
	Out-of-balance	0	0				0

Directions

Review the Working Trial Balance, Financial Statements, and Ratios tabs in the Working Paper Template, which is linked in the What to Submit section. Complete the required calculations and elements directly in the Working Paper Template.

Specifically, you must address the following rubric criteria:

1. Recalculate the ratios using columns G and K in the Ratios tab.
2. Classify financial statement accounts in column O in the Ratios tab.
3. Provide reasons for unexpected account balances in column Q in the Ratios tab.