In: Accounting
Pepper Company provided the incomplete financial statements shown below as well as the following additional information:
Accounts receivable | $ | 330,000 |
Inventory | $ | 440,000 |
Total assets | $ | 1,850,000 |
e. Selected financial ratios computed from the statements below for the current year are:
Earnings per share | $ | 3.72 | |
Debt-to-equity ratio | 0.870 | ||
Accounts receivable turnover | 16.0 | ||
Current ratio | 2.00 | ||
Return on total assets | 10 | % | |
Times interest earned ratio | 5.5 | ||
Acid-test ratio | 1.18 | ||
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 IndustriesIncome StatementFor the Year Ended March 31Sales$4,700,000Cost of goods sold2,902,500Gross margin1,797,500Selling and administrative expenses1,456,500Net operating income341,000Interest expense62,000Net income before taxes279,000Income taxes (40%)83,700Net income$195,300
|
Answer:
Total Assets = Total Liabilities and Stockholders’ Equity
Total Assets = $1,870,000
Total Assets = Current Assets + Fixed Assets
$1,870,000 = $500,000 + Fixed Assets
Fixed Assets = $1,370,000
Fixed Assets = Plant and Equipment, Net
Plant and Equipment, Net = $1,370,000
Earnings per Share = Net Income / Common Stock Outstanding
$3.72 = $195,300 / Common Stock Outstanding
Common Stock Outstanding = 52,500 Shares
Common Stock = Common Stock Outstanding * Par Value
Common Stock = 52,500 * $2.70
Common Stock = $141,750
Total Stockholders’ Equity = Common Stock + Retained
Earnings
$1,000,000 = $141,750 + Retained Earnings
Retained Earnings = $858,250
Note:
Please note that above missing items are calculated by assuming the
above details are correct. But, there is an error in Income Tax
Expense or Tax Rate as on calculating income taxes at the given tax
rate, income taxes are not matching.