Question

In: Accounting

An incomplete income statement and an incomplete comparative balance sheet of Deines Corporation are presented below....

An incomplete income statement and an incomplete comparative balance sheet of Deines Corporation are presented below.

Additional information:

1. The accounts receivable turnover for 2017 is 10 times.
2. All sales are on account.
3. The profit margin for 2017 is 14.5%.
4. Return on assets is 22% for 2017.
5. The current ratio on December 31, 2017, is 3.0.
6. The inventory turnover for 2017 is 4.8 times.


Compute the missing information given the ratios above.

DEINES CORPORATION
Income Statement
For the Year Ended December 31, 2017

Net sales $12,870,000
Cost of goods sold
Gross profit
Operating expenses 1,948,050
Income from operations
Other expenses and losses
    Interest expense
Income before income taxes
Income tax expense 655,200
Net income $

DEINES CORPORATION
Balance Sheets
December 31

Assets

2017

2016

Current assets
    Cash $ 526,500 $ 438,750
    Accounts receivable (net) 1,111,500
    Inventory 2,012,400
      Total current assets 3,562,650
Plant assets (net) 5,405,400 4,627,350
Total assets $ $8,190,000

Liabilities and Stockholders’ Equity

Current liabilities $ $965,250
Long-term notes payable 3,276,000
      Total liabilities 4,241,250
Common stock, $1 par 3,510,000 3,510,000
Retained earnings 468,000 438,750
      Total stockholders’ equity 3,978,000 3,948,750
Total liabilities and stockholders’ equity $ $8,190,000

Solutions

Expert Solution

DEINES CORPORATION
Income Statement
For the Year Ended December 31, 2017
Net sales $12,870,000
Cost of goods sold $ 8,143,200 =(1380600+2012400)/2*4.8
Gross profit $ 4,726,800 =12870000-8143200
Operating expenses $ 1,948,050
Income from operations $ 2,778,750 =4726800-1948050
Other expenses and losses
    Interest expense $      257,400 =2778750-2521350
Income before income taxes $ 2,521,350 =1866150+655200
Income tax expense $      655,200
Net income $ 1,866,150 =12870000*14.5%
DEINES CORPORATION
Balance Sheets
Assets 2017 2016
Current assets
    Cash $      526,500 $         438,750
    Accounts receivable (net) $ 1,462,500 $      1,111,500 =12870000/10*2-1111500
    Inventory $ 1,380,600 $      2,012,400 =3369600-526500-1462500
      Total current assets $ 3,369,600 $      3,562,650 =8775000-5405400
Plant assets (net) $ 5,405,400 $      4,627,350
Total assets $ 8,775,000 $     8,190,000 =1866150/22%*2-8190000
Liabilities and Stockholders’ Equity
Current liabilities $ 1,123,200 $         965,250 =3369600/3
Long-term notes payable $ 3,673,800 $      3,276,000 =4797000-1123200
      Total liabilities $ 4,797,000 $      4,241,250 =8775000-3978000
Common stock, $1 par $ 3,510,000 $      3,510,000
Retained earnings $      468,000 $         438,750
      Total stockholders’ equity $ 3,978,000 $      3,948,750
Total liabilities and stockholders’ equity $ 8,775,000 $     8,190,000

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