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In: Accounting

Ayayai Corp. experienced a fire on December 31, 2020, in which its financial records were partially...

Ayayai Corp. experienced a fire on December 31, 2020, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances.

December 31, 2020

December 31, 2019
Cash $ 33,300 $ 19,500
Accounts receivable (net) 82,200 132,100
Inventory 210,500 188,700
Accounts payable 50,800 92,200
Notes payable 32,700 63,300
Common stock, $100 par 408,700 408,700
Retained earnings 117,300 106,600


Additional information:

1. The inventory turnover is 5.1 times.
2. The return on common stockholders’ equity is 19%. The company had no additional paid-in capital.
3. The receivables turnover is 11.7 times.
4. The return on assets is 18%.
5. Total assets at December 31, 2019, were $609,500.

Compute the following for Ayayai Corp.. (Round all answers to 0 decimal places, e.g. 2,150.)

(a) Cost of goods sold for 2020. $
(b) Net credit sales for 2020. $
(c) Net income for 2020. $
(d) Total assets at December 31, 2020. $

Solutions

Expert Solution

Answer:

a) compute cost of goods sold

   Inventory turnover ratio. = Cost of goods sold/ average inventory

  Given inventory turnover ratio = 5.1 times

Average inventory = (210500+188700)/2 =199600

cost of goods sold =199600 × 5.1 times

   = $1017960

​​​​​b) compute net credit sales

   Account receivable turnover = net credit sales/average account receivable

Given account receivable turnover = 11.7 times,

Average aaccount receivable = (82200+132100)/2 =107150

Net credit sales = 107150 × 11.7 times = $1253655

c) compute net income

Return on common stock holder equity = net income/ shareholders fund

Given return on common stock holder equity ratio 19%

Shareholders fund=common stock + retained earnings

= 408700 + 117300 = 526000

NET income = 526000 × 19% =$99940

d) compute total assets

Return on asset = net income/average total assets

Given, return on asset = 18% , net income = $99940

average total assets = $99940/18%= $555222

​​​​given also given previous years assets value = $609500

Average assets = total assets of 2019+ total assets of 2020/2

​​​​$555222 × 2 = $609500+ total assets of 2020

Total assets of 2020 = $1110444 - $609500= $500944

Therefore

   Cost of goods sold = $1017960

   NET credit sales = $1253655

   NET income = $99940

   Total assets of 2020 = $500944

ekkarill92 answered 1 year ago
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