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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Requirement 1. Compute
Current
Working
Debt-to-
these ratios:
Ratio
Capital
Cash Ratio
Debt Ratio Equity Ratio
Round ratios to two
decimal places or
format as percentages or
Accounts
Days Sales
Inventory Days Sales in
Inventory
Gross Profit Receivable
Percentage
currency as appropriate.
in
Turnover
Turnover Receivables
2019 Total Assets =
Rate of
Rate of
Asset
Return on
Stockholders'| Earnings
Equity
Return on
Turnover
Total Assets
Ratio
Per Share
2019 SHE =
Price/
*Current Stock Price is
Earnings
Dividend
$10.00 per share
Ratio*
Dividend Yield
Рayout
Dividend per share=
Requirement 2. Based on
the ratios computed above,
analyze the company's
ability to pay its debts (both
current and long term).
Refer to at least 3 specific
ratios in your analysis.
Requirement 3: Based on
the ratios computed above,
analyze the company's
management of inventory.
Refer to at least 2 specific
ratios in your analysis.
Requirement 4: Based on
the ratios computed above,
analyze the company's
management of receivables.
Refer to at least 2 specific
ratios in your analysis.

Transcribed Image Text:Solar Solutions began operations on January 1, 2015, and is now in its sixth year of operations. It is a retail sales company with a large amount of online sales.
The adjusted trial balance as of December 31, 2020 appears below, along with prior year balance sheet data and some additional transaction data for 2020.
SOLAR SOLUTIONS
Adjusted Trial Balance
12/31/2020
2020
2019
Account Title
Adjusted Trial Balance
Post-Closing Trial Balance
$ 125,600
Debit
Credit
Debit
Credit
35,000
Cash
122,200
125,600
6,000
Accounts Receivable
55,000
35,000
15,600
47,000
21,000
Prepaid Insurance
5,000
6,000
Inventory
46,000
15,600
Office Equipment
Machinery & Tools
Accumulated Depreciation
Accounts Payable
Salaries Payable
|Sales Tax Payable
Note Payable-Long Term
Common Stock, $10 par
Retained Earnings
63,000
47,000
(16,000)
59,000
21,000
$ 234,200
$
21,000
16,000
11,200
16,800
2,600
2,700
2,000
4,000
31,000
22,100
240,000
160,000
28,600
28,600
Dividends
10,000
Sales Revenue
Cost of Goods Sold
235,000
127,600
Rent Expense
Salaries Expense
Insurance Expense
Advertising Expense
Depreciation Expense
Interest Expense
20,000
36,000
11,800
6,000
5,000
1,800
Income Tax Expense
3,000
$
571,400 $
571,400 $
250,200
250,200
Transaction Data for 2020 (Note, these transactions were included in the trial balance numbers above.)
Cash paid for purchase of office equipment
Cash paid for purchase of tools
Acquisition of Machinery with Notes Payable-Long-term
Payment on Long Term Debt
Cash payment of dividends
6,000
10,000
38,000
?
10,000
Cash receipt from issuance of 10,000 shares of common stock
80,000
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