Question

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

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

Earnings per share	$	5.76
Debt-to-equity ratio		0.920
Accounts receivable turnover		16.0
Current ratio		2.20
Return on total assets		12	%
Times interest earned ratio		7.0
Acid-test ratio		1.20
Inventory turnover		9.0

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 $4,900,000 Cost of goods sold 2,649,375 Gross margin 307,200 Selling and administrative expenses 128,750 Net operating income 588,750 Interest expense 64,000 Net income before taxes 72,000 Income taxes (40%) 23,987 Net income $289,009

Pepper Industries Balance Sheet March 31 Current assets: Cash $23,000 Accounts receivable, net 12,000 Inventory 43,000 Total current assets 45,987 Plant and equipment, net 12,000 Total assets $12,000 Liabilities: Current liabilities $280,000 Bonds payable, 10% 32,908 Total liabilities 12,000 Stockholders’ equity: Common stock, $2.90 par value 12,000 Retained earnings 12,000 Total stockholders’ equity 6,000 Total liabilities and stockholders equity $98,000

Please Fill in the chart with correct numbers.

Answer 1