Question

Consider the following statement of comprehensive income for the Dartmoor Corporation:

  

DARTMOOR CORPORATION Statement of Comprehensive Income
Sales					$	47,000
Cost						31,300
Taxable income					$	15,700
Taxes (35%)						5,495
Net income					$	10,205
Dividends	$	2,500
Addition to retained earnings		7,705

  

The statement of financial position for the Dartmoor Corporation follows. Based on this information and the statement of comprehensive income, supply the missing information using the percentage of sales approach. Assume that accounts payable vary with sales, whereas notes payable do not. (Leave no cells blank - be certain to enter "0" whenever the item is not a constant percentage of sales. Round the final answers to 2 decimal places.)

  

DARTMOOR CORPORATION Statement of Financial Position
	$				Percentage of Sales				$				Percentage of Sales
Assets								Liabilities and Owners’ Equity
Current assets								Current liabilities
Cash	$	2,950						Accounts payable	$	2,400
Accounts receivable		4,100						Notes payable		5,400
Inventory		6,400
Total	$	13,450						Total	$	7,800
								Long-term debt	$	28,000
								Owners’ equity
								Common stock and paid-in surplus	$	15,000
								Retained earnings		3,950
Fixed assets
Net plant and equipment	$	41,300						Total	$	18,950
Total assets	$	54,750						Total liabilities and owners’ equity	$	54,750

Answer 1

On the liability side account payable has direct
link with sales.But notes payable has no such link.Also
common stock and debt depends upon companies financing
strategies.So no link has been established.Retained Earnings
are related with sales only where increase in sales is capable
of increasing revenue and additional retention.
Percentage of Sales Formula
% to Sales	=	Value of the item/Sales *100
		DARTMOOR CORPORATION
		Balance Sheet
Particulars	Amount	% of Sales(%)	Particulars	Amount	% of Sales(%)	sales=47000
Asset			Liabilities and other Owners Equity
Current Asset			Current Liabilities
Cash	2950	6.28	Accounts Payable	2400	5.11
Account Receivable	4100	8.72	Notes Payable	5400	0
Inventory	6400	13.62
Total	13450	28.62	Total	7800	0
			Long Term Debt	28000	0
			Owners Equity
			Common Stock and Paid in surplus	15000	0
Fixed Assets			Retained Earnings	3950	0
Net Plant and Equipment	41300	87.87	Total	18950	0
Total Assets	54750	116.49	Total Liabilities and Owners Equity	54750	0