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Category Prior Year Current Year Accounts payable ??? ??? Accounts receivable 320,715 397,400 Accruals 40,500 33,750...

Category Prior Year Current Year
Accounts payable ??? ???
Accounts receivable 320,715 397,400
Accruals 40,500 33,750
Additional paid in capital 500,000 541,650
Cash 17,500 47,500
Common Stock 94,000 105,000
COGS 328,500 430,836.00
Current portion long-term debt 33,750 35,000
Depreciation expense 54,000 55,125.00
Interest expense 40,500 42,404.00
Inventories 279,000 288,000
Long-term debt 339,829.00 400,384.00
Net fixed assets 946,535 999,000
Notes payable 148,500 162,000
Operating expenses (excl. depr.) 126,000 162,228.00
Retained earnings 306,000 342,000
Sales 639,000 847,534.00
Taxes 24,750 47,130.00

what is the current year's account payable balance?

what is the current year's return on assets (ROA)?

what is the current year's return on equity (ROE)?

what is the current year's entry for long-term debt on a common-sized balance sheet?

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Expert Solution

Answer to Finance Question

Current year’s account payable

Account payable is the current portion of long term debts which is $35000 since there is no records of separate account payable. Also, notes payable are not considered in account payable since these are guaranteed instruments issued by the company.

Current year’s Return on Asset

Return on Asset the ration that reflects the performance of the asset of the company. It shows how effective assets are used. This calculated by dividing Net Income by Total assets. For this ratio, net income means- Income after tax and depreciation and also excluding any other operating expenses but adding any income other than income from direct operations. Hence, in the given financial statement, we calculate the Net income as shown below

Net Income = Retained Earning-(Taxes+Operating Expenses+Interest Expenses+Depreciation expenses)

Net Income = $342000-(47130+162228+42404+55125)

Net Income = $35113

Total assets are calculated by addition current and fixed assets and any other intangible asset. From the given data, we will calculate the Total asset as shown below

Total Asset = Account Receivable+Accruals+Cash+Common Stock+COGS+Inventories+Net Fixed Assets

Total Asset = 397400+ 33750+ 47500+105000+430836+288000+999000

Total Assets=$2267736

Hence, ROA= Net income/Total Assets

                    = 35113/2267736

                    = 1.55%

Answer: The current year’s ROA is 1.55%

Answer to Calculation of ROE ( Return on equity)

This ration gives us the clear picture of profit ratio on total equity of shareholders. For this purpose, Net income means- Income after Tax and depreciation. In the given data, we calculate the Net income for ROE as shown below

Net Income = Retained Earning – ( Taxed and Depreciation expenses)

                   = 342000-(47130+55125)

                  = 342000-102255

                 = 239745

Shareholder’s equity is capital i.e.

Hence the ration is = Total assets-total liabilities

                         = 226736-1481034

                        = 786702

Thus, the ROE = 239745/786702= 28.28%

Note :In the above calculation, total liabilities are sum of long term debt, additional capital, notes payable and retained earning

Answer to long term debts entry

This year’s long term debts increased by an amount of 60555 (17.82%) and current liability must have been decreased comparing last yar.

jeff jeffy answered 4 months ago
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