Question

In: Accounting

On January 1, Year 1, the general ledger of a company includes the following account balances:...

On January 1, Year 1, the general ledger of a company includes the following account balances:
  

Accounts Debit Credit
Cash $ 59,400
Accounts Receivable 26,400
Allowance for Uncollectible Accounts $ 2,900
Inventory 37,000
Notes Receivable (5%, due in 2 years) 20,400
Land 162,000
Accounts Payable 15,500
Common Stock 227,000
Retained Earnings 59,800
Totals $ 305,200 $ 305,200

  
During January Year 1, the following transactions occur:
  

January 1 Purchase equipment for $20,200. The company estimates a residual value of $2,200 and a six-year service life.
January 4 Pay cash on accounts payable, $10,200.
January 8 Purchase additional inventory on account, $89,900.
January 15 Receive cash on accounts receivable, $22,700.
January 19 Pay cash for salaries, $30,500.
January 28 Pay cash for January utilities, $17,200.
January 30 Sales for January total $227,000. All of these sales are on account. The cost of the units sold is $118,500.


Information for adjusting entries:

  1. Depreciation on the equipment for the month of January is calculated using the straight-line method.
  2. The company estimates future uncollectible accounts. The company determines $3,700 of accounts receivable on January 31 are past due, and 50% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 2% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)
  3. Accrued interest revenue on notes receivable for January.
  4. Unpaid salaries at the end of January are $33,300.
  5. Accrued income taxes at the end of January are $9,700.

rev: 11_22_2018_QC_CS-148298, 06_13_2019_QC_CS-170054

7. Analyze how well the company manages its assets:

Requirement 1:  

a-1. Calculate the return on assets ratio for the month of January.
  

a-2. If the average return on assets for the industry in January is 2%, is the company more or less profitable than other companies in the same industry?


  • More profitable

  • Less profitable



Requirement 2:

b-1. Calculate the profit margin for the month of January.



b-2. If the industry average profit margin is 3%, is the company more or less efficient at converting sales to profit than other companies in the same industry?

  • More efficient

  • Less efficient



Requirement 3:

c-1. Calculate the asset turnover ratio for the month of January.



c-2. If the industry average asset turnover is 0.5 times per month, is the company more or less efficient at producing revenues with its assets than other companies in the same industry?

  • More efficient

  • Less efficient

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

On January 1, Year 1, the general ledger of a company includes the following account balances:...
On January 1, Year 1, the general ledger of a company includes the following account balances: Accounts Debit Credit cash $59,000 accounts receivable $25,600 allowance for uncollectible accounts 2,500 inventory 36,600 notes receivable (5%, due in 2 years) 15,600 land 158,000 Accounts payable 15,100 common stock 223,000 retained earnings 54,200 Totals 294,800 294,800 During January 1 Year 1, the following transactions occur: January 1 Purchase equipment for $19,800. The company estimates a residual value of $1,800 and a six-year service...
On January 1, Year 1, the general ledger of a company includes the following account balances:...
On January 1, Year 1, the general ledger of a company includes the following account balances: Accounts Debit Credit Cash $ 24,400 Accounts Receivable 5,800 Supplies 3,700 Land 56,000 Accounts Payable $ 3,800 Common Stock 71,000 Retained Earnings 15,100 Totals $ 89,900 $ 89,900 During Year 1, the following transactions occur: January 2 Purchase rental space for one year in advance, $7,800 ($650/month). January 9 Purchase additional supplies on account, $4,100. January 13 Provide services to customers on account, $26,100....
On January 1, Year 1, the general ledger of a company includes the following account balances:...
On January 1, Year 1, the general ledger of a company includes the following account balances: Accounts Debit Credit Cash $ 25,300 Accounts Receivable 6,700 Supplies 4,600 Land 65,000 Accounts Payable $ 4,700 Common Stock 80,000 Retained Earnings 16,900 Totals $ 101,600 $ 101,600 During Year 1, the following transactions occur: January 2 Purchase rental space for one year in advance, $10,500 ($875/month). January 9 Purchase additional supplies on account, $5,000. January 13 Provide services to customers on account, $27,000....
On January 1, Year 1, the general ledger of a company includes the following account balances:...
On January 1, Year 1, the general ledger of a company includes the following account balances: Accounts Debit Credit Cash $ 25,800 Accounts Receivable 7,200 Supplies 5,100 Land 70,000 Accounts Payable $ 5,200 Common Stock 85,000 Retained Earnings 17,900 Totals $ 108,100 $ 108,100 During Year 1, the following transactions occur: January 2 Purchase rental space for one year in advance, $12,000 ($1,000/month). January 9 Purchase additional supplies on account, $5,500. January 13 Provide services to customers on account, $27,500....
On January 1, Year 1, the general ledger of a company includes the following account balances:...
On January 1, Year 1, the general ledger of a company includes the following account balances: Accounts Debit Credit Cash $ 24,300 Accounts Receivable 42,500 Allowance for Uncollectible Accounts $ 2,700 Inventory 42,000 Land 79,600 Accounts Payable 29,200 Notes Payable (8%, due in 3 years) 42,000 Common Stock 68,000 Retained Earnings 46,500 Totals $ 188,400 $ 188,400 The $42,000 beginning balance of inventory consists of 420 units, each costing $100. During January Year 1, the company had the following inventory...
On January 1, Year 1, the general ledger of a company includes the following account balances:...
On January 1, Year 1, the general ledger of a company includes the following account balances:    Accounts Debit Credit Cash $ 59,400 Accounts Receivable 26,400 Allowance for Uncollectible Accounts $ 2,900 Inventory 37,000 Notes Receivable (5%, due in 2 years) 20,400 Land 162,000 Accounts Payable 15,500 Common Stock 227,000 Retained Earnings 59,800 Totals $ 305,200 $ 305,200    During January Year 1, the following transactions occur:    January 1 Purchase equipment for $20,200. The company estimates a residual value...
On January 1, Year 1, the general ledger of a company includes the following account balances:...
On January 1, Year 1, the general ledger of a company includes the following account balances: Accounts Debit Credit Cash $ 25,300 Accounts Receivable 6,700 Supplies 4,600 Land 65,000 Accounts Payable $ 4,700 Common Stock 80,000 Retained Earnings 16,900 Totals $ 101,600 $ 101,600 During Year 1, the following transactions occur: January 2 Purchase rental space for one year in advance, $10,500 ($875/month). January 9 Purchase additional supplies on account, $5,000. January 13 Provide services to customers on account, $27,000....
On January 1, 2020, the general ledger of a Company includes the following account balances: Accounts...
On January 1, 2020, the general ledger of a Company includes the following account balances: Accounts Debit Credit Cash $ 84,000 Accounts Receivable 53,000 Allowance for Uncollectible Accounts $ 5,000 Inventory 44,000 Building 84,000 Accumulated Depreciation 24,000 Land 214,000 Accounts Payable 34,000 Notes Payable (8%, due in 3 years) 48,000 Common Stock 114,000 Retained Earnings 254,000 Totals $ 479,000 $ 479,000 The $44,000 beginning balance of inventory consists of 400 units, each costing $110. During January 2020, the following transactions...
On January 1, 2018, the general ledger of a company includes the following account balances: Accounts...
On January 1, 2018, the general ledger of a company includes the following account balances: Accounts Debit Credit Cash $ 71,000 Accounts Receivable 41,000 Allowance for Uncollectible Accounts $ 5,000 Inventory 31,000 Building 71,000 Accumulated Depreciation 11,000 Land 201,000 Accounts Payable 21,000 Notes Payable (9%, due in 3 years) 34,000 Common Stock 101,000 Retained Earnings 243,000 Totals $ 415,000 $ 415,000 The company accounts for all inventory transactions using the perpetual FIFO method. Purchases and sales of inventory are recorded...
On January 1, 2018, the general ledger of a company includes the following account balances: Accounts...
On January 1, 2018, the general ledger of a company includes the following account balances: Accounts Debit Credit Cash $ 90,000 Accounts Receivable 60,000 Allowance for Uncollectible Accounts $ 5,000 Inventory 50,000 Building 90,000 Accumulated Depreciation 30,000 Land 220,000 Accounts Payable 40,000 Notes Payable (8%, due in 3 years) 57,000 Common Stock 120,000 Retained Earnings 258,000 Totals $ 510,000 $ 510,000 The company accounts for all inventory transactions using the perpetual FIFO method. Purchases and sales of inventory are recorded...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT