Question
In: Accounting
Following is the balance sheet of Munoz Company for Year 3: MUNOZ COMPANY Balance sheet Assets...
Following is the balance sheet of Munoz Company for Year
3:
| MUNOZ COMPANY Balance sheet |
|||
| Assets | |||
| Cash | $ | 15,200 | |
| Marketable securities | 7,580 | ||
| Accounts receivable | 13,400 | ||
| Inventory | 11,200 | ||
| Property and equipment | 169,500 | ||
| Accumulated depreciation | (12,200 | ) | |
| Total assets | $ | 204,680 | |
| Liabilities and Stockholders’ Equity | |||
| Accounts payable | $ | 8,690 | |
| Current notes payable | 3,320 | ||
| Mortgage payable | 4,550 | ||
| Bonds payable | 21,240 | ||
| Common stock | 114,400 | ||
| Retained earnings | 52,480 | ||
| Total liabilities and stockholders’ equity | $ | 204,680 | |
The average number of common stock shares outstanding during Year 3
was 860 shares. Net income for the year was $15,000.
Required
Compute each of the following: (Round your answer to 2
decimal places. For percentages, 0.2345 should be entered as
23.45.)
| a | current ratio | _____________ | |
| b | earnings per share | _____________ | per share |
| c | quick (acid- test) ratio | _____________ | |
| d | Return on investment | _____________ | % |
| e | return on equity | _____________ | % |
| f | debt to equity ratio | _____________ | |
Solutions
Expert Solution
| S no. | Ratio | Formula | |
| (a) | Current ratio | Current assets/Current liabilities |
47,380/12,010 =3.95:1 |
| (b) | Earning per share | Net income/Average outstanding shares |
15,000/860 = $17.44 |
| (c) | Acid test ratio | Quick assets/Current liabilities |
36,180/12,010 = 3.01:1 |
| (d) | Return on Investment | Net income/Cost of Investment |
15,000/164,880*100 =9.10 % |
| (e) | Return on equity | Net income/Shareholders' equity |
15,000/166,880*100 = 8.99% |
| (f) | Debt to equity ratio | Total liabilities/Total Equity |
37,800/166,880 = 0.23:1 |
(1)Current assets:
| Cash | $15,200 |
| Marketable securities | 7,580 |
| Account receivable | 13,400 |
| Inventory | 11,200 |
| Total current assets | $47,380 |
(2) Quick assets = Current assets - Inventory
Quick assets = $47,380 - $11,200
Quick assets = $36,180
(3) Shareholders' Equity = Common stock + Retained earning
= $114,400+52,480
= $166,880
(4) Total liabilities = Short term debt+Long term debt
= 8,690+3,320+4,550+21,240
= 37,800
(5)Current liabilities:
| Account payable | $8,690 |
| Current notes payable | 3,320 |
| Total current liabilities | $12,010 |
(6) Investment = Property and Equipment(Net) + Marketable securities
= $157,300 + $7,580
= $164,880
Property and Equipment (Net), (169,500 - 12,200) = $157,300
Marketable securities = $7,580
Note:
- Marketable securities is an investment
- Mortgage payable and bond payable has been considered as long term Liabilities
Thank you :)
ekkarill92 answered 3 years agoRelated Solutions
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