FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Prior Company’s condensed financial statements provide the following information.
Prior Company Balance Sheet |
|||
Dec. 31, 2020
|
000 |
Dec. 31, 2019
|
|
Cash |
$1,052,000)
|
$1,060,000)
|
|
198,000)
|
80,000)
|
||
Short-term investments |
80,000)
|
40,000)
|
|
Inventory |
440,000)
|
360,000)
|
|
Prepaid expenses |
#1,603,000)
|
#1,607,000)
|
|
Total current assets |
$0,773,000)
|
$0,547,000)
|
|
Property, plant, and equipment (net) |
$1,857,000)
|
$1,853,000)
|
|
Total assets |
$1,630,000)
|
$1,400,000)
|
|
Current liabilities |
240,000)
|
160,000)
|
|
Bonds payable |
400,000)
|
400,000)
|
|
Common stockholders’ equity |
$1,990,000)
|
$1,840,000)
|
|
Total liabilities and stockholders’ equity |
$1,630,000)
|
$1,400,000)
|
00
Income Statement For the Year Ended 2020 |
|
Sales revenue |
$1,640,000)
|
Cost of goods sold |
$ (800,000)
|
Gross profit |
840,000)
|
Selling and administrative expenses |
(440,000)
|
Interest expense |
00.(40,000)
|
Net income |
$ 360,000)
|
Instructions
a. Determine the following for 2020.
1.
2. Acid-test ratio at December 31.
3. Accounts receivable turnover.
4. Inventory turnover.
5. Return on assets.
6. Profit margin on sales.
b. Prepare a brief evaluation of the financial condition of Prior Company and of the adequacy of its profits.
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