Question

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 3 years ago
Next > < Previous

Related Solutions

Ayayai Corp.’s balance sheet at December 31, 2021, is presented below. AYAYAI CORP. Balance Sheet December...
Ayayai Corp.’s balance sheet at December 31, 2021, is presented below. AYAYAI CORP. Balance Sheet December 31, 2021 Cash $68,880 Accounts payable $71,680 Accounts receivable 127,400 Common stock ($10 par) 224,000 Allowance for doubtful accounts (4,200 ) Retained earnings 356,720 Supplies 12,320 Land 112,000 Buildings 397,600 Accumulated depreciation—buildings (61,600 ) $652,400 $652,400 During 2022, the following transactions occurred. 1. On January 1, Ayayai issued 3,360 shares of $40 par, 7% preferred stock for $137,760. 2. On January 1, Ayayai also...
Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these...
Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these investments are accounted for under the equity method. Investments Cost Fair Value 1,500 shares of Gordon, Inc., Common $72,500 $68,500 5,000 shares of Wallace Corp., Common 176,300 171,700 400 shares of Martin, Inc., Preferred 63,300 64,800 $312,100 $305,000 All of the securities were purchased in 2020. In 2021, Ayayai completed the following securities transactions. March 1 Sold the 1,500 shares of Gordon, Inc., Common,...
Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these...
Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these investments are accounted for under the equity method. Investments Cost Fair Value 1,500 shares of Gordon, Inc., Common $72,500 $68,500 5,000 shares of Wallace Corp., Common 176,300 171,700 400 shares of Martin, Inc., Preferred 63,300 64,800 $312,100 $305,000 All of the securities were purchased in 2020. In 2021, Ayayai completed the following securities transactions. March 1 Sold the 1,500 shares of Gordon, Inc., Common,...
Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these...
Ayayai Company has the following securities in its portfolio on December 31, 2020. None of these investments are accounted for under the equity method. Investments Cost Fair Value 1,500 shares of Gordon, Inc., Common $76,400 $72,200 5,000 shares of Wallace Corp., Common 184,100 179,300 400 shares of Martin, Inc., Preferred 56,200 57,800 $316,700 $309,300 All of the securities were purchased in 2020. In 2021, Ayayai completed the following securities transactions. March 1 Sold the 1,500 shares of Gordon, Inc., Common,...
Fernandez Corp. invested its excess cash in securities during 2020. As of December 31, 2020, the...
Fernandez Corp. invested its excess cash in securities during 2020. As of December 31, 2020, the securities portfolio consisted of the following common stocks. Security Quantity Cost Fair Value Lindsay Jones, Inc. 1,000 shares $15,000 $21,000 Poley Corp. 2,000 shares 40,000 42,000 Arnold Aircraft 2,000 shares 72,000 60,000 Totals $127,000 $123,000 Correct answer iconYour answer is correct. What should be reported on Fernandez’s December 31, 2020, balance sheet relative to these securities? What should be reported on Fernandez’s 2020 income...
Ayayai House Inc. had the following condensed statement of financial position at December 31, 2019: AYAYAI...
Ayayai House Inc. had the following condensed statement of financial position at December 31, 2019: AYAYAI HOUSE INC. Statement of Financial Position December 31, 2019 Cash $10,850 Current liabilities $15,200 Current assets (non-cash) 34,350 Long–term notes payable 30,850 Bond investment at amortized cost 40,850 Bonds payable 32,150 Plant assets (net) 58,200 Common shares 80,850 Land 38,650 Retained earnings 23,850 $182,900 $182,900 Ayayai House Inc. follows IFRS and chooses to classify dividends paid as financing activities and interest paid as operating...
The following data are taken from the records of Alee Company.    December 31, 2020    December 31,...
The following data are taken from the records of Alee Company.    December 31, 2020    December 31, 2019 Cash $ 15,000 $  8,000 Current assets other than cash   85,000   60,000 Long-term debt investments   10,000   53,000 Plant assets  335,000  215,000 $445,000 $336,000 Accumulated depreciation $ 20,000 $ 40,000 Current liabilities   40,000   22,000 Bonds payable   75,000 –0– Common stock  254,000  254,000 Retained earnings   56,000   20,000 $445,000 $336,000 Additional information: Held-to-maturity debt securities carried at a cost of $43,000 on December 31, 2019, were...
The financial statements of Ayayai Company appear below: AYAYAI COMPANY Comparative Balance Sheet December 31 2022...
The financial statements of Ayayai Company appear below: AYAYAI COMPANY Comparative Balance Sheet December 31 2022 2021 Assets Cash $ 26,000 $ 40,200 Debt investments 17,400 66,700 Accounts receivable (net) 42,700 29,500 Inventory 155,000 178,000 Property, plant and equipment (net) 171,000 153,000        Total assets $412,100 $467,400 Liabilities and stockholders' equity Accounts payable $ 24,800 $ 29,800 Short-term notes payable 33,800 88,200 Bonds payable 72,900 156,300 Common stock 173,600 112,300 Retained earnings 107,000 80,800        Total liabilities and stockholders' equity $412,100 $467,400...
The following balances were taken from the books of Oriole Corp. on December 31, 2020. Interest...
The following balances were taken from the books of Oriole Corp. on December 31, 2020. Interest revenue $87,950 Accumulated depreciation—equipment $41,950 Cash 52,950 Accumulated depreciation—buildings 29,950 Sales revenue 1,381,950 Notes receivable 156,950 Accounts receivable 151,950 Selling expenses 195,950 Prepaid insurance 21,950 Accounts payable 171,950 Sales returns and allowances 151,950 Bonds payable 101,950 Allowance for doubtful accounts 8,950 Administrative and general expenses 98,950 Sales discounts 46,950 Accrued liabilities 33,950 Land 101,950 Interest expense 61,950 Equipment 201,950 Notes payable 101,950 Buildings 141,950...
Ayayai Tool Company’s December 31 year-end financial statements contained the following errors. December 31, 2017 December...
Ayayai Tool Company’s December 31 year-end financial statements contained the following errors. December 31, 2017 December 31, 2018 Ending inventory $10,500 understated $8,200 overstated Depreciation expense $2,400 understated — An insurance premium of $69,000 was prepaid in 2017 covering the years 2017, 2018, and 2019. The entire amount was charged to expense in 2017. In addition, on December 31, 2018, fully depreciated machinery was sold for $16,000 cash, but the entry was not recorded until 2019. There were no other...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT