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Prepare common-sized financial statements for Leslie Fay for the period 1987-1991. For that same period, compute for Leslie Fay the ratios shown in Exhibit 2. Given these data, which financial statement items do you believe should have been of particular interest to BDO Seidman during that firm's 1991 audit of Leslie Fay? Explain Please show step by step how to prepare the common sized financial statements The Leslie Fay Companies Consolidated Income Statements 1987-1991 (in millions) 1991 1990 1989 1988 1987 Net Sales Cost of Sales $836.6 $858.8 $786.3 $682.7 $582.0 585.1 589.4 536.8 466.3 403.1 Gross Profit 251.5 269.4 249.5 216.4 178.9 Operating Expenses: Selling, Warehouse, General and Administrative 186.3 199.0 183.8 156.2 132.5 Amortization of Intangibles 2.7 2.9 2.6 3.31 3.8 Total Operating Expenses 189.0 201.9 186.4 159.5 136.3 Operating Income 62.5 67.5 63.1 56.9 42.6 Interest Expense 18.3 18.7 19.3 18.2 16.4 Income Before Non-recurring Charges (Credits) 44.2 48.8 43.8 38.7 26.2 Non-recurring Charges (Credits) (5.0) Income Before Taxes on Income 44.2 48.8 43.8 38.7 31.2 Income Taxes 14.8 19.7 18.0 16.4 11.5 Net Income $ 29.4 Net Income per Share $ 1.55 $ 29.1 $ 1.53 $ 25.8 $ 22.3 $ 19.7 $1.35 $ 1.17 $ 1.03

Prepare common-sized financial statements for Leslie Fay for the period 1987-1991. For that same period, compute for Leslie Fay the ratios shown in Exhibit 2. Given these data, which financial statement items do you believe should have been of particular interest to BDO Seidman during that firm's 1991 audit of Leslie Fay? Explain Please show step by step how to prepare the common sized financial statements The Leslie Fay Companies Consolidated Income Statements 1987-1991 (in millions) 1991 1990 1989 1988 1987 Net Sales Cost of Sales $836.6 $858.8 $786.3 $682.7 $582.0 585.1 589.4 536.8 466.3 403.1 Gross Profit 251.5 269.4 249.5 216.4 178.9 Operating Expenses: Selling, Warehouse, General and Administrative 186.3 199.0 183.8 156.2 132.5 Amortization of Intangibles 2.7 2.9 2.6 3.31 3.8 Total Operating Expenses 189.0 201.9 186.4 159.5 136.3 Operating Income 62.5 67.5 63.1 56.9 42.6 Interest Expense 18.3 18.7 19.3 18.2 16.4 Income Before Non-recurring Charges (Credits) 44.2 48.8 43.8 38.7 26.2 Non-recurring Charges (Credits) (5.0) Income Before Taxes on Income 44.2 48.8 43.8 38.7 31.2 Income Taxes 14.8 19.7 18.0 16.4 11.5 Net Income $ 29.4 Net Income per Share $ 1.55 $ 29.1 $ 1.53 $ 25.8 $ 22.3 $ 19.7 $1.35 $ 1.17 $ 1.03

Contemporary Auditing
Contemporary Auditing
11th Edition
ISBN:9781337650380
Author:KNAPP
Publisher:KNAPP
Chapter1: Comprehensive Cases
Section1.5: The Leslie Fay Companies
Problem 1Q
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Prepare common-sized financial statements for Leslie Fay for the period 1987-1991. For that same period, compute for Leslie Fay the ratios shown in Exhibit 2. Given these data, which financial statement items do you believe should have been of particular interest to BDO Seidman during that firm's 1991 audit of Leslie Fay? Explain Please show step by step how to prepare the common sized financial statements The Leslie Fay Companies Consolidated Income Statements 1987-1991 (in millions) 1991 1990 1989 1988 1987 Net Sales Cost of Sales $836.6 $858.8 $786.3 $682.7 $582.0 585.1 589.4 536.8 466.3 403.1 Gross Profit 251.5 269.4 249.5 216.4 178.9 Operating Expenses: Selling, Warehouse, General and Administrative 186.3 199.0 183.8 156.2 132.5 Amortization of Intangibles 2.7 2.9 2.6 3.31 3.8 Total Operating Expenses 189.0 201.9 186.4 159.5 136.3 Operating Income 62.5 67.5 63.1 56.9 42.6 Interest Expense 18.3 18.7 19.3 18.2 16.4 Income Before Non-recurring Charges (Credits) 44.2 48.8 43.8 38.7 26.2 Non-recurring Charges (Credits) (5.0) Income Before Taxes on Income 44.2 48.8 43.8 38.7 31.2 Income Taxes 14.8 19.7 18.0 16.4 11.5 Net Income $ 29.4 Net Income per Share $ 1.55 $ 29.1 $ 1.53 $ 25.8 $ 22.3 $ 19.7 $1.35 $ 1.17 $ 1.03
Transcribed Image Text:Prepare common-sized financial statements for Leslie Fay for the period 1987-1991. For that same period, compute for Leslie Fay the ratios shown in Exhibit 2. Given these data, which financial statement items do you believe should have been of particular interest to BDO Seidman during that firm's 1991 audit of Leslie Fay? Explain Please show step by step how to prepare the common sized financial statements The Leslie Fay Companies Consolidated Income Statements 1987-1991 (in millions) 1991 1990 1989 1988 1987 Net Sales Cost of Sales $836.6 $858.8 $786.3 $682.7 $582.0 585.1 589.4 536.8 466.3 403.1 Gross Profit 251.5 269.4 249.5 216.4 178.9 Operating Expenses: Selling, Warehouse, General and Administrative 186.3 199.0 183.8 156.2 132.5 Amortization of Intangibles 2.7 2.9 2.6 3.31 3.8 Total Operating Expenses 189.0 201.9 186.4 159.5 136.3 Operating Income 62.5 67.5 63.1 56.9 42.6 Interest Expense 18.3 18.7 19.3 18.2 16.4 Income Before Non-recurring Charges (Credits) 44.2 48.8 43.8 38.7 26.2 Non-recurring Charges (Credits) (5.0) Income Before Taxes on Income 44.2 48.8 43.8 38.7 31.2 Income Taxes 14.8 19.7 18.0 16.4 11.5 Net Income $ 29.4 Net Income per Share $ 1.55 $ 29.1 $ 1.53 $ 25.8 $ 22.3 $ 19.7 $1.35 $ 1.17 $ 1.03
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