Question

In: Accounting

The following information is available about the company: a. All sales during the year were on...

The following information is available about the company:
a. All sales during the year were on account.
b. There was no change in the number of shares of common stock outstanding during the year.
c. The interest expense on the income statement relates to the bonds payable; the amount of
bonds outstanding did not change during the year.
d. Selected balances at the beginning of the current year were:
  Accounts receivable $ 140,000
  Inventory $ 260,000  
  Total assets $ 1,160,000  


e. Selected financial ratios computed from the statements below for the current year are:


  Earnings per share $ 2.64
  Debt-to-equity ratio 0.850
  Accounts receivable turnover 16.0
  Current ratio 2.40
  Return on total assets 10 %
  Times interest earned ratio 5.0
  Acid-test ratio 1.17
  Inventory turnover 8.0


Required:

Compute the missing amounts on the company's financial statements. (Hint: What’s the difference between the acid-test ratio and the current ratio?) (Do not round intermediate calculations.)

Pepper Industries
Income Statement
For the Year Ended March 31
Sales $2,900,000
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Interest expense 44,000
Net income before taxes
Income taxes (40%)
Net income
Pepper Industries
Balance Sheet
March 31
Current assets:
Cash
Accounts receivable, net
Inventory
Total current assets
Plant and equipment, net
Total assets
Liabilities:
Current liabilities $240,000
Bonds payable, 10%
Total liabilities
Stockholders’ equity:
Common stock, $3.00 par value
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders equity

Solutions

Expert Solution

Income Statement
For the Year Ended March 31
Sales $       29,00,000
Cost of goods sold $       22,20,800
Gross margin $          6,79,200
Selling and administrative expenses $          4,59,200
Net operating income $          2,20,000
Interest expense $             44,000
Net income before taxes $          1,76,000
Income taxes (40%) $             70,400
Net income $          1,05,600
Balance Sheet
Mar-31
Current assets:
Cash $             58,300
Accounts receivable, net $          2,22,500
Inventory $          2,95,200
Total current assets $          5,76,000
Plant and equipment, net $          9,04,000
Total assets $       14,80,000
Liabilities:
Current liabilities $          2,40,000
Bonds payable, 10% $          4,40,000
Total liabilities $          6,80,000
Stockholders’ equity:
Common stock, $3 par value $          1,20,000
Retained earnings $          6,80,000
Total stockholders’ equity $          8,00,000
Total liabilities and stockholders equity $       14,80,000

Related Solutions

The following information is available about the company: a. All sales during the year were on...
The following information is available about the company: a. All sales during the year were on account. b. There was no change in the number of shares of common stock outstanding during the year. c. The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year. d. Selected balances at the beginning of the current year were:   Accounts receivable $ 350,000   Inventory $ 460,000     Total assets $ 2,560,000  ...
The following information is available about the company: a. All sales during the year were on...
The following information is available about the company: a. All sales during the year were on account. b. There was no change in the number of shares of common stock outstanding during the year. c. The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year. d. Selected balances at the beginning of the current year were:   Accounts receivable $ 340,000   Inventory $ 450,000     Total assets $ 1,880,000  ...
The following information is available about the company: a. All sales during the year were on...
The following information is available about the company: a. All sales during the year were on account. b. There was no change in the number of shares of common stock outstanding during the year. c. The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year. d. Selected balances at the beginning of the current year were:   Accounts receivable $ 350,000   Inventory $ 460,000     Total assets $ 2,560,000  ...
The following information is available about the company: a. All sales during the year were on...
The following information is available about the company: a. All sales during the year were on account. b. There was no change in the number of shares of common stock outstanding during the year. c. The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year. d. Selected balances at the beginning of the current year were:   Accounts receivable $ 160,000   Inventory $ 280,000     Total assets $ 1,200,000  ...
The following information is available about the company: a. All sales during the year were on...
The following information is available about the company: a. All sales during the year were on account. b. There was no change in the number of shares of common stock outstanding during the year. c. The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year. d. Selected balances at the beginning of the current year were:   Accounts receivable $ 220,000   Inventory $ 330,000     Total assets $ 1,415,000  ...
The following information is available with respect to the purchases and sales of merchandise during the...
The following information is available with respect to the purchases and sales of merchandise during the first part of January 2019: Jan. 1                   opening inventory          3,000 units at $25.00 each          Jan. 10                purchased                         4,500 units at $35.00 each Jan. 12                sold                                    3,500 units Jan. 15                purchased                        1,000 units at $32.50 each Jan. 21                sold                                    1,500 units   Required: Calculate the Cost of Goods Sold and Ending Inventory using FIFO and Moving Weighted Average Cost using the...
The following information is available with respect to the purchases and sales of merchandise during the...
The following information is available with respect to the purchases and sales of merchandise during the first part of January 2019: Jan. 1                   opening inventory          3,000 units at $25.00 each          Jan. 10                purchased                         4,500 units at $35.00 each Jan. 12                sold                                    3,500 units Jan. 15                purchased                        1,000 units at $32.50 each Jan. 21                sold                                    1,500 units   Required: Calculate the Cost of Goods Sold and Ending Inventory using FIFO and Moving Weighted Average Cost using the...
You have the following information about a company. ·       Sales in 2019 were £2000 million. Sales are...
You have the following information about a company. ·       Sales in 2019 were £2000 million. Sales are expected to grow at a rate of 15% in 2020, and afterwards the growth rate will drop to 3%. ·       EBIT margin is expected to stay constant at 15%. ·       The corporate tax rate is 40%. ·       Net working capital each year is expected to stay constant at 10% of next year's sales. ·       To generate sales growth, each year t, capital expenditure net of depreciation (i.e., Capex-...
1.) The following information about the operations of Hancock Company is available. Annual sales $185 million,...
1.) The following information about the operations of Hancock Company is available. Annual sales $185 million, Cost of goods sold $125 million, Average accounts receivable $25 million, Average accounts payable $15 million, Average inventory $30 million and  Cost of capital 12% (a) Find the NPV of its operating cycle. (b) What is the new NPV if Hancock can delay the payments by 2 days and make the collections 2 days earlier? By comparing the answers to (A) and (B), can you...
Classifying Cash Flows The company provided the following information. (a)   Cash sales for the year were...
Classifying Cash Flows The company provided the following information. (a)   Cash sales for the year were $50,000; sales on account totaled $60,000. (b) Cost of goods sold was $55,000. (c)   All inventory is purchased on account. (d) Depreciation on building was $31,000 for the year. (e)   Depreciation on equipment was $2,000. (f)   Cash collections of accounts receivable were $38,000. (g) Cash payments on accounts payable for inventory equaled $39,000. (h)   Rent expense paid in cash was $11,000. (i)   20,000 shares...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT