Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 2, Problem 2.18P
Problem 2.18
LO 2. 3, 4
Understanding and analyzing financial statement relationships-merchandising organization Gary’s TV had the following accounts and amounts in its financial statements on December 31, 2016. Assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year then ended.
| Interest expense | $ 9,000 |
| Paid-in capital | 20.000 |
| Accumulated depreciation | 6,000 |
| Notes payable (long-term) | 70,000 |
| Rent expense | 13,000 |
| Merchandise inventory | 210,000 |
| Accounts receivable | 43,000 |
| Depreciation expense | 3,000 |
| Land | 32,000 |
| 225,000 | |
| Cash | 36,000 |
| Cost of goods sold | 440,000 |
| Equipment | 13,000 |
| Income tax expense | 60,000 |
Accounts payable
23,000
Sales revenue
620.000
Required:
- Calculate the difference between current assets and current liabilities for Gary’s TV at December 31, 2016.
- Calculate the total assets at December 31, 2016.
- Calculate the earnings from operations (operating income) for the year ended December 31, 2016.
- Calculate the net income (or loss) for the year ended December 31, 2016.
- What was the average income tax rate for Gary’s TV for 2016?
- If $64,000 of dividends had been declared and paid during the year, what was the January 1, 2016, balance of retained earnings?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A
PROBLEM NO. 10
A portion of the SPARK COMPANY's statement of financial position appears as follows:
December 31, 2017
December 31, 2016
Assets:
Cash
Notes receivable
Inventory
-000000000--
Llabilities:
P100,000
25,000 5
199,875
75,000
Spark Company pays for all operating expenses with cash and purchases all inventory on credit
During 2017, cash totaling P471,700 was paid on accounts payable. Operating expenses for 2017
totaled P220,000. All sales are cash sales. The inventory was restocked by purchasing 1,500
units per month and valued by using periodic FIFO. The unit cost of inventory was P32.60 during
January 2017 and increased P0.10 per month dunng the year. Spark selis only one product. All
sales are made for P50 per unit. The ending inventory for 2016 was valued at P32.50 per unit
Accounts payable
P353,300
0
?
QUESTION 7
Relevant account balances for Martinez Corporation are:
12/31/17
1/01/17
Accounts receivable
$18,000
$14,000
Inventory
24,000
26,000
Prepaid insurance
1,500
2,100
Accounts payable
25,000
26,000
Income information for 2017_______
_________
_________
Revenue
$120,000
Cost of goods sold
$60,000
Insurance expense
6,000
Operating expenses
18,000
Depreciation
10,000
94,000
Net income
$ 26,000
How much cash was paid to suppliers for inventory during 2017?
$2,000
$59,000
$63,000
$61,000
None of these choices is correct.
PROBLEM NO. 10
A portion of the SPARK COMPANY's statement of financial position appears as follows:
December 31, 2017
December 31, 2016
Assets:
Cash
Notes receivable
Inventory
Liabilities:
Accounts payable
75,000
Spark Company pays for all operating expenses with cash and purchases all inventory on cred
During 2017, cash totaling P471,700 was paid on accounts payable. Operating expenses for 20
totaled P220,000. All sales are cash sales. The inventory was restocked by purchasing 1,5
units per month and valued by using periodic FIFO. The unit cost of inventory was P32.60 dur
January 2017 and increased P0.10 per month during the year. Spark selis only one product.
sales are made for P50 per unit. The ending invertory for 2016 was valued at P32.50 per uni
3
Based on the preceding information, compute the following:
46. Number of units sold during 2017
A. 7,066
B. 18,400
47. Accounts payable balance at December 31, 2017
A. P190,100
B. P50,000
48. Inventory quantity on December 31, 2017
A.…
Chapter 2 Solutions
Accounting: What the Numbers Mean
Ch. 2 - Prob. 2.1MECh. 2 - Prob. 2.2MECh. 2 - Prob. 2.3MECh. 2 - Prob. 2.4MECh. 2 - Mini-Exercise 2.5 LO 2. 4 Identify accounts by...Ch. 2 - Mini-Exercise 2.6 LO 2. 4 Identify accounts by...Ch. 2 - Prob. 2.7ECh. 2 - Exercise 2.8 LO 2. 4 Identify accounts by category...Ch. 2 - Exercise 2.9 LQ 2 , 3 Understanding financial...Ch. 2 - Exercise 2.10 LO 2 , 3 Understanding financial...
Ch. 2 - Prob. 2.11ECh. 2 - Exercise 2.12 LQ 2. 3 Calculate retained earnings...Ch. 2 - Prob. 2.13ECh. 2 - Prob. 2.14ECh. 2 - Prob. 2.15PCh. 2 - Prob. 2.16PCh. 2 - Problem 2.17 LO 2, 3, 4 Understanding and...Ch. 2 - Problem 2.18 LO 2. 3, 4 Understanding and...Ch. 2 - Problem 2.19 LO 2, 3, 4 Prepare an income...Ch. 2 - Prob. 2.20PCh. 2 - Problem 2.21
LO 2, 3
Transaction...Ch. 2 - Prob. 2.22PCh. 2 - Problem 2.23 LO 2, 3, 5 Complete the balance sheet...Ch. 2 - Prob. 2.24PCh. 2 - Prob. 2.25PCh. 2 - Prob. 2.26PCh. 2 - Case 2.27 LO 2, 4, 6, 7 Prepare a personal balance...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- FINANCIAL RATIOS Use the work sheet and financial statements prepared in Problem 15-8A. All sales are credit sales. The Accounts Receivable balance on January 1,20--, was 3,800. REQUIRED Prepare the following financial ratios: (a) Working capital (b) Current ratio (c) Quick ratio (d) Return on owners equity (e) Accounts receivable turnover and average number of days required to collect receivables (f) Inventory turnover and average number of days required to sell inventoryarrow_forwardFINANCIAL RATIOS Use the work sheet and financial statements prepared in Problem 15-8B. All sales are credit sales. The Accounts Receivable balance on January 1 was 38,200. REQUIRED Prepare the following financial ratios: (a)Working capital (b)Current ratio (c)Quick ratio (d)Return on owners equity (e)Accounts receivable turnover and the average number of days required to collect receivables (f)Inventory turnover and the average number of days required to sell inventoryarrow_forwardFINANCIAL RATIOS Use the spreadsheet and financial statements prepared in Problem 15-8A. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was 10,200. REQUIRED Prepare the following financial ratios: (a) Current ratio (b) Quick ratio (c) Working capital (d) Return on owners equity (e) Accounts receivable turnover and average number of days required to collect receivables (f) Inventory turnover and average number of days required to sell inventoryarrow_forward
- Exercise in Calculating Activity Ratios United Instruments, Inc. Selected Financial Statement Statistics as of Dec. 31, 2017 (amounts in millions): Accounts receivable Inventory PP&E, net $ 544 337 1,526 2,707 Total assets Accounts payable 272 Sales 2,690 Calculate the following ratios and comment: Accounts receivable turnover and Days receivables: Inventory turnover and Days inventory: Accounts payable turnover and Days payables: Cash cycle: Fixed assets turnover and Days fixed assets: Total assets turnover and Days total assets:arrow_forwardQuestion Content Area The following information pertains to Tanzi Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $41,912 Accounts receivable (net) 29,707 Inventory 28,654 Property, plant and equipment 293,074 Total Assets $393,347 Liabilities and Stockholders' Equity Current liabilities $58,253 Long-term liabilities 97,633 Stockholders' equity-common 237,461 Total Liabilities and stockholders' equity $393,347 Income Statement Sales $80,900 Cost of goods sold 36,405 Gross margin $44,495 Operating expenses 25,209 Net income $19,286 Number of shares of common stock 6,546 Market price of common stock $35 What is the current ratio for this company? Round your answer to two decimal places. Select the correct answer. 1.23 2.22 0.72 1.72arrow_forwardSimon Company's year-end balance sheets follow. At December 31 2017 2016 2015 Assets $ 30,510 $ 36,391 $ 88,428 113,450 10,126 285,160 37,915 51,586 54,939 4,428 241,932 Cash Accounts receivable, net Merchandise inventory 64,322 84,996 9,648 259,534 Prepaid expenses Plant assets, net Total assets $ 527,674 $ 454,891 $ 390,800 Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings $ 132,705 $ 76,877 $ 50,554 102,179 162,500 130,290 105,671 162,500 109,843 84,639 162,500 93,107 $ 527,674 $ 454,891 $ 390,800 Total liabilities and equity 1. Compute the current ratio for the year ended 2017, 2016, and 2015. 2. Compute the acid-test ratio for the year ended 2017, 2016, and 2015. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the current ratio for the years ended December 31, 2017, 2016, and 2015. Current Ratio Choose Numerator: | Choose Denominator:…arrow_forward
- 1. Use ratios to analyze a company's liquidity and solvency. Calculate Select Ratios - Excel FILE НОМE INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In Calibri 11 A A % Alignment Number Conditional Format as Formatting - Table - Paste I Cell Cells Styles - Clipboard Font Styles B36 fx A B C D 1 Condensed financial statements for Games Galore are summarized below: 2 3 Balance Sheet 2016 2015 185,000 $ 80,000 4 Cash $ 143,000 59,000 134,000 5 Accounts Receivable, Net 6 Inventory 104,000 7 Prepaid Insurance 11,900 5,880 Total Current Assets 380,900 341,880 9 Property and Equipment, Net 514,500 407,000 10 Total Assets $ 895,400 $ 748,880 11 12 Current Liabilities 2$ 85,300 $ 96,800 13 Long-term Liabilities 284,000 224,000 Total Liabilities 369,300 299,000 320,800 299,000 14 15 Contributed Capital 16 Retained Earnings Total Stockholders' Equity 227,100 129,080 428,080 17 526,100 18 Total Liabilities and Stockholders' Equity $ 895,400 $ 748,880 19 20 Income Statement $ 3,031,000…arrow_forward5. You are given ratios and amounts for X company for 2016 Current ratio 2.7 Quick ratio 1.17 Inventory turnover 3.4 Accounts receivable turnover 6.5 Cost of goods sold 2015 P 197 200 Credit sales for 1998 260 000 Accounts receivable, Jan. 1, 2015 38 200 Merchandise Inventory Jan. 1, 2015 62 000 X Company Schedule of Current Assets And Current Liabilities Dec. 31, 1998 Current Assets: Cash P5 000 Accounts Receivable 2) 3) Merchandise Inventory 7 200 Prepaid Insurance Total Current Assets 1) Current Liabilities: Accounts Payable 4) Accrued Payables 5 000 Total Current Liabilities 40 000 REQUIRED: Supply the missing amount in this schedule. Do your calculation in the numerical order indicated in this schedule.arrow_forwardQuestion 1 The following are financial statements of Crane Company. Crane CompanyIncome StatementFor the Year Ended December 31, 2022 Net sales $2,192,500 Cost of goods sold 1,010,500 Selling and administrative expenses 900,500 Interest expense 78,000 Income tax expense 62,500 Net income $ 141,000 Crane CompanyBalance SheetDecember 31, 2022 Assets Current assets Cash $ 55,100 Debt investments 89,000 Accounts receivable (net) 168,400 Inventory 236,500 Total current assets 549,000 Plant assets (net) 572,500 Total assets $ 1,121,500 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 152,000 Income taxes payable 31,000 Total current liabilities 183,000 Bonds payable 220,740 Total liabilities 403,740 Stockholders’ equity Common stock 345,000 Retained earnings 372,760…arrow_forward
- US Kiumel, finamclal Accounting, Se Hele I Syotem Aenouncements CALLAT Briel Exercise 8-11 he 20117 financial staternents of 3M Company report net sales of $25.3 billion. Accounts receivable (net) are $3.00 billion at the beginning of the year and $3.24 billion at the cde Compute 3M Company's receivable turnover. (Round answer to 1 decimal place, e.g. 12.5.) Accounts receivable turnover ratio times SHOW LIST OF ACCOUNTS LINK TO TEXT INTERACTIVE TUTORIAL Compute 3M Company's average collection period for accounts receivable in days. (Round answer to 1 decimal place, e.g. 12.5. Use 365 days for calculation.) Average collection period days Click if you would like to Show Work for this question: Open Show Work SHOW LIST OF ACCOUNTS LINK TO TEXT INTERACTIVE TUTORIAL Question Attempts: 0 of 3 usecarrow_forwardIllustration 6.1 Extracts from the books of JK Ltd. shows the following balances for the month of June 2016 N'000 Sales ledger balances - 1 June 2016 4,702 Purchases ledger balances - 1 June 2016 2,757 Sales journal balances - 30 June 2016 37,437 Purchases joumal balances - 30 June 2016 40,800 Returns Inwards 910 Returns Outwards 749 Receipts from Customers - Cash 38,529 Discount allowed 1,345 Payments to Suppliers 35,415 Discounts received 746 Irecoverable debts written off 115 Sales ledger set off 209 Purchases ledger set off 110 On 30 June 2016, it was discovered that a supplier was paid twice in error for N157. The amount was refunded on that date. You are required to Prepare the sales and purchases ledger balances at 1 July 2016. (Adapted from ATS ICAN)arrow_forwardPART 2 Ivanhoe Automotive’s balance sheet at the end of its most recent fiscal year shows the following information: Ivanhoe AutomotiveBalance Sheet as of March 31, 2017 Assets: Liabilities and Equity: Cash and marketable sec. $40,000 Accounts payable and accruals $168,000 Accounts receivable 158,000 Notes payable 27,000 Inventory 232,000 Total current assets $430,000 Total current liabilities $195,000 Long-term debt 172,000 Total liabilities $367,000 Net plant and equipment 780,000 Common stock 317,000 Goodwill and other assets 92,000 Retained earnings 618,000 Total assets $1,302,000 Total liabilities and equity $1,302,000 In addition, it was reported that the firm had a net income of $159,000 on net sales of $4,200,000.Excel Template(Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values.…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27 (New in Account...AccountingISBN:9781305666160Author:James A. Heintz, Robert W. ParryPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
College Accounting, Chapters 1-27 (New in Account...
Accounting
ISBN:9781305666160
Author:James A. Heintz, Robert W. Parry
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
IAS 29 Financial Reporting in Hyperinflationary Economies: Summary 2021; Author: Silvia of CPDbox;https://www.youtube.com/watch?v=55luVuTYLY8;License: Standard Youtube License