In: Accounting
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. | $ |
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