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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.)

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.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: $ 140,000 $ 260,000 $1,160,000 Accounts receivable Inventory Total assets e. Selected financial ratios computed from the statements below for the current year are: Earnings per share Debt-to-equity ratio Accounts receivable turnover $ 2.64 0.850 16.0 2.40 Current ratio 10% 5.0 Return on total assets Times interest earned ratio Acid-test ratio 1.17 Inventory turnover 8.0
Transcribed Image Text: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: $ 140,000 $ 260,000 $1,160,000 Accounts receivable Inventory Total assets e. Selected financial ratios computed from the statements below for the current year are: Earnings per share Debt-to-equity ratio Accounts receivable turnover $ 2.64 0.850 16.0 2.40 Current ratio 10% 5.0 Return on total assets Times interest earned ratio Acid-test ratio 1.17 Inventory turnover 8.0
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 $ 2,900,000 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense 44,000 Net income before taxes Income taxes (40%) Net income Pepper Industries Balance Sheet March 31 Current assets: Cash Accounts receivable, net Inventory Total current assets Plant and equipment, net Total assets Liabilities: Current liabilities $ 240,000 Bonds payable, 10% Total liabilities Stockholders' equity: Common stock, $3.00 par valu Retained earnings Total stockholders' equity Total liabilities and stockholders equity
Transcribed Image Text: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 $ 2,900,000 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense 44,000 Net income before taxes Income taxes (40%) Net income Pepper Industries Balance Sheet March 31 Current assets: Cash Accounts receivable, net Inventory Total current assets Plant and equipment, net Total assets Liabilities: Current liabilities $ 240,000 Bonds payable, 10% Total liabilities Stockholders' equity: Common stock, $3.00 par valu Retained earnings Total stockholders' equity Total liabilities and stockholders equity
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