Question

In: Accounting

The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...

The financial statements for Castile Products, Inc., are given below:

Castile Products, Inc.
Balance Sheet
December 31
  Assets
  Current assets:
     Cash $ 21,000
     Accounts receivable, net 260,000
     Merchandise inventory 330,000
     Prepaid expenses 10,000
  Total current assets 621,000
  Property and equipment, net 900,000
  Total assets $ 1,521,000
  Liabilities and Stockholders' Equity
  Liabilities:
     Current liabilities $ 300,000
     Bonds payable, 10% 360,000
  Total liabilities 660,000
  Stockholders’ equity:
     Common stock, $5 par value $ 150,000
     Retained earnings 711,000
  Total stockholders’ equity 861,000
  Total liabilities and equity $ 1,521,000
Castile Products, Inc.
Income Statement
For the Year Ended December 31
  Sales $ 3,150,000
  Cost of goods sold 1,287,000
  Gross margin 1,863,000
  Selling and administrative expenses 650,000
  Net operating income 1,213,000
  Interest expense 36,000
  Net income before taxes 1,177,000
  Income taxes (30%) 353,100
  Net income $ 823,900

     Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $330,000. All sales were on account.

Required:
Compute the following financial data and ratios:
1.

Working capital.

       

2. Current ratio. (Round your answer to 2 decimal places.)

        

3. Acid-test ratio. (Round your answer to 2 decimal places.)

        

4. Debt-to-equity ratio. (Round your answer to 2 decimal places.)


      

5. Times interest earned ratio. (Round your answer to 2 decimal places.)


       

6. Average collection period. (Use 365 days in a year. Round your answer to 1 decimal place.)


       

7. Average sale period. (Use 365 days in a year. Round your intermediate and final answer to 1 decimal place.)


       

8.

Operating cycle. (Round your intermediate calculations and final answers to 1 decimal place.)


       

Solutions

Expert Solution

  • All working forms part of the answer
  • Answers

Working Capital

A

Total Current Assets

$      621,000.00

B

Total Current Liabilities

$      300,000.00

C = A- B

Working Capital

$      321,000.00

Current Ratio

A

Total Current Assets

$      621,000.00

B

Total Current Liabilities

$      300,000.00

C = A/B

Current Ratio

2.07

Acid Test Ratio

A

Total Current Assets

$      621,000.00

B

     Merchandise inventory

$      330,000.00

C

     Prepaid expenses

$        10,000.00

D = A - B - C

Total Quick Assets

$      281,000.00

E

Total Current Liabilities

$      300,000.00

F = D/E

Acid Test Ratio

0.94

Debt to Equity Ratio

A

Total Liabilities

$      660,000.00

B

Total Stockholder's Equity

$      861,000.00

C = A/B

Debt - to - Equity Ratio

0.77

Times Interest Earned

A

Income before Interest & Income tax expenses [or Net Operating Income]

$ 1,213,000.00

B

Interest expenses

$        36,000.00

C = A/B

Times interest earned ratio

33.69

Average Collection Period

A

Beginning Accounts receivables

$      190,000.00

B

Ending Accounts receivables

$      260,000.00

C = A+B

Total

$      450,000.00

D = C/2

Average Accounts receivables

$      225,000.00

E

Sales

$ 3,150,000.00

F = E/D

Account receivables Turnover Ratio

14

G

No. Of days

365

H = G/F

Average Collection period

26.1

Average Sales Period

A

Sales

$ 3,150,000.00

B

No. of days

365

C=A/B

Average Sale Period

$             8,630.1

Operating Cycle

A

Beginning Inventory balance

$      330,000.00

B

Ending Inventory Balance

$      330,000.00

C =(A+B)/2

Average Inventory

$      330,000.00

D

Cost of Goods Sold

$ 1,287,000.00

E = D/C

Inventory Turnover Ratio

3.9

F = 365/E

No. of days

93.6

G (calculated as Req '6 above')

Average Collection period

26.1

H = F + G

Operating Cycle

119.7


Related Solutions

The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31   Assets   Current assets:      Cash $ 19,000      Accounts receivable, net 230,000      Merchandise inventory 350,000      Prepaid expenses 11,000   Total current assets 610,000   Property and equipment, net 820,000   Total assets $ 1,430,000   Liabilities and Stockholders' Equity   Liabilities:      Current liabilities $ 260,000      Bonds payable, 11% 380,000   Total liabilities 640,000   Stockholders’ equity:      Common stock, $5 par value $ 200,000      Retained earnings 590,000   Total stockholders’ equity 790,000   Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 21,000 Accounts receivable, net 210,000 Merchandise inventory 350,000 Prepaid expenses 9,000 Total current assets 590,000 Property and equipment, net 860,000 Total assets $ 1,450,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 200,000 Bonds payable, 10% 310,000 Total liabilities 510,000 Stockholders’ equity: Common stock, $10 per value $ 120,000 Retained earnings 820,000 Total stockholders’ equity 940,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31   Assets   Current assets:      Cash $ 19,000      Accounts receivable, net 200,000      Merchandise inventory 330,000      Prepaid expenses 8,000   Total current assets 557,000   Property and equipment, net 880,000   Total assets $ 1,437,000   Liabilities and Stockholders' Equity   Liabilities:      Current liabilities $ 290,000      Bonds payable, 12% 360,000   Total liabilities 650,000   Stockholders’ equity:      Common stock, $5 par value $ 120,000      Retained earnings 667,000   Total stockholders’ equity 787,000   Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 19,000 Accounts receivable, net 190,000 Merchandise inventory 400,000 Prepaid expenses 10,000 Total current assets 619,000 Property and equipment, net 840,000 Total assets $ 1,459,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 260,000 Bonds payable, 12% 360,000 Total liabilities 620,000 Stockholders’ equity: Common stock, $5 per value $ 200,000 Retained earnings 639,000 Total stockholders’ equity 839,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 21,000 Accounts receivable, net 190,000 Merchandise inventory 360,000 Prepaid expenses 7,000 Total current assets 578,000 Property and equipment, net 890,000 Total assets $ 1,468,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 230,000 Bonds payable, 8% 400,000 Total liabilities 630,000 Stockholders’ equity: Common stock, $5 per value $ 160,000 Retained earnings 678,000 Total stockholders’ equity 838,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 20,000 Accounts receivable, net 230,000 Merchandise inventory 340,000 Prepaid expenses 7,000 Total current assets 597,000 Property and equipment, net 820,000 Total assets $ 1,417,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 240,000 Bonds payable, 10% 380,000 Total liabilities 620,000 Stockholders’ equity: Common stock, $5 per value $ 200,000 Retained earnings 597,000 Total stockholders’ equity 797,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 22,000 Accounts receivable, net 220,000 Merchandise inventory 350,000 Prepaid expenses 9,000 Total current assets 601,000 Property and equipment, net 830,000 Total assets $ 1,431,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 240,000 Bonds payable, 9% 330,000 Total liabilities 570,000 Stockholders’ equity: Common stock, $5 par value $ 100,000 Retained earnings 761,000 Total stockholders’ equity 861,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 22,000 Accounts receivable, net 220,000 Merchandise inventory 300,000 Prepaid expenses 9,000 Total current assets 551,000 Property and equipment, net 870,000 Total assets $ 1,421,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 290,000 Bonds payable, 8% 380,000 Total liabilities 670,000 Stockholders’ equity: Common stock, $5 par value $ 140,000 Retained earnings 611,000 Total stockholders’ equity 751,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 23,000 Accounts receivable, net 200,000 Merchandise inventory 370,000 Prepaid expenses 7,000 Total current assets 600,000 Property and equipment, net 840,000 Total assets $ 1,440,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 240,000 Bonds payable, 8% 380,000 Total liabilities 620,000 Stockholders’ equity: Common stock, $5 par value $ 160,000 Retained earnings 660,000 Total stockholders’ equity 820,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 18,000 Accounts receivable, net 250,000 Merchandise inventory 330,000 Prepaid expenses 8,000 Total current assets 606,000 Property and equipment, net 880,000 Total assets $ 1,486,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 260,000 Bonds payable, 8% 340,000 Total liabilities 600,000 Stockholders’ equity: Common stock, $5 per value $ 140,000 Retained earnings 746,000 Total stockholders’ equity 886,000 Total liabilities...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT