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The following ratios have been computed for Pina Colada Company for 2010.
Profit margin 20% (net profit/revenue)
Times interest earned 15 times (income before interest expense and income taxes/interest expense)
Receivables turnover 5 times (net credit sales/average net receivables)
Acid-test ratio 1.60 : 1 (marketable net cash + securities + receivables/current liabilities)
Debt to total assets ratio 26% (total debts/total assets)
Pina Colada Company’s 2010 financial statements with missing information follow:
PINA COLADA COMPANY
Comparative
December 31,
Assets 2010 2009
Cash P 25,000 P 35,000
Short-term Investments 15,000 15,000
Inventory ? (8) 50,000
Property, plant, and equipment (net) 200,000 150,000
Total assets P ? (9) P310,000
Liabilities and
Accounts payable P ? (7) P 25,000
Short-term notes payable 35,000 30,000
Bonds payable ? (10) 20,000
Common stock 200,000 200,000
Total liabilities and stockholders' equity P ? (11) P310,000
PINA COLADA COMPANY
Income Statement
For the Year Ended December 31, 2009
Net sales P250,000
Cost of goods sold 125,000
Gross profit 125,000
Expenses:
Administrative expenses 15,000
Selling expenses 10,000
Interest expense 5,000
Total expenses ________ (4)
Income before income taxes ________ (2)
Income tax expense ________ (3)
Net income ________ (1)
Use the above ratios and information from the Bea Cortes Company financial statements to fill in the missing information on the financial statements. Follow the sequence indicated. Show computations that support your answers.
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