Concept explainers
1.
Concept Introduction:
Accounting has a formula that represents assets is equal to the liabilities plus owner’s equity. Each year owner’s equity is calculated by after reducing and adding the profit or loss of the year. Net Income or profit is calculated by reducing expenses from revenues.
The debt ratio is calculated from debt dividing by the total assets.
The
To Calculate: Prepare a Balance sheet with equity balance.
2.
Concept Introduction:
Accounting has a formula that represents assets is equal to the liabilities plus owner’s equity. Each year owner’s equity is calculated by after reducing and adding the profit or loss of the year. Net Income or profit is calculated by reducing expenses from revenues.
Debt ratio is calculated from debt dividing by the total assets.
To Calculate: Calculate the total income of the company of 2018.
3.
Concept Introduction:
Accounting has a formula that represents assets is equal to the liabilities plus owner’s equity. Each year owner’s equity is calculated by after reducing and adding the profit or loss of the year. Net Income or profit is calculated by reducing expenses from revenues.
The debt ratio is calculated from debt dividing by the total assets.
To Calculate: Debt ratio of the current year of the company.
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Loose Leaf for Financial Accounting: Information for Decisions
- Rising Stars Academy provided the following information on its 2019 Balance Sheet and Statement of Cash Flows: Long-term debt $ 4,400 Interest expense $ 398 Total liabilities 8,382 Net income 559 Total assets 38,775 Interest payments 432 Total equity 29,803 Cash flows from operations 1,015 Operating income 1,223 Income tax expenses 266 Income taxes paid 150 Required: Calculate the following ratios for Rising Stars Academy. Round your answers to three decimal places. a. Debt to equity b. Debt to total assets c. Long-term debt to equity d. Times interest earned (accrual basis) e. Times interest earned (cash basis)arrow_forwardThe current asset section of Guardian Consultant’s balance sheet consists of cash, accounts receivable, and prepaidexpenses. The 2018 balance sheet reported the following: cash, $1,300,000; prepaid expenses, $360,000; longterm assets, $2,400,000; and shareholders’ equity, $2,500,000. The current ratio at the end of the year was 2.0 andthe debt to equity ratio was 1.4.Required:Determine the following 2018 amounts and ratios:1. Current liabilities2. Long-term liabilities3. Accounts receivable4. The acid-test ratioarrow_forwardAs a financial analyst of Bintang Bulan Berhad, you are required to analyse the company's financial performance. The financial statements of the company are as follows: BINTANG BULAN BERHAD STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 (RM) Cash Account Receivable Inventory Prepaid expenses Net buildings and equipment TOTAL ASSETS Depreciation 48,500 Account Payable Notes Payable 64,000 Operating profit Less: Interest Profit before tax Less: Tax PROFIT AFTER TAX 56,000 21,000 2,500,500 Revenue Less: Cost of goods sold Gross profit Less: Selling and administrative expenses Current Ratio Quick Ratio Debt Ratio Time Interest Earned Accruals Long-term debt Bond Preferred share Common share Retained earnings 2,690,000 TOTAL CLAIMS BINTANG BULAN BERHAD STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2022 INDUSTRY AVERAGE RATIOS 2.10 times Average Collection Period 1.30 times Inventory Turnover Net Profit Margin 30 percent 6.5 times Return on Assets 38,000 24,000 20,000…arrow_forward
- Skysong, Inc. had the following transactions involving current assets and current liabilities during February 2019. Feb. 3 Collected accounts receivable of $18,900. 7 Purchased equipment for $36,800 cash. 11 Paid $3,500 for a 1-year insurance policy. 14 Paid accounts payable of $12,400. 18 Declared cash dividends, $8,500. Additional information:As of February 1, 2019, current assets were $135,000 and current liabilities were $35,400.Compute the current ratio as of the beginning of the month and after each transaction. (Round all answers to 2 decimal places, e.g. 1.83 : 1.) Current ratio as of February 1, 2019 enter current ratio :1 Feb. 3 enter the current ratio as of February 3 :1 Feb. 7 enter the current ratio as of February 7 :1 Feb. 11 enter the current ratio as of February 11 :1 Feb. 14 enter the current ratio as of February 14 :1 Feb. 18 enter the current ratio as of February 18 :1arrow_forwardPresented below are accounts of Cutie Company Additional: During the year, the owner made an additional investment of 20,000 and withdrawals of 50,000. Cutie company beginning capital is 617,600 and its net income for the year is 75,000. Instructions: Prepare the Statement of Financial Position in account form and report form and determine the amount of cash. Prepare the supporting notes.arrow_forwardWindsor, Inc. had the following transactions involving current assets and current liabilities during February 2022. Feb. 3 Collected accounts receivable of $17,100. 7 Purchased equipment for $36,200 cash. 11 Paid $5,500 for a 1-year insurance policy. 14 Paid accounts payable of $13,400. 18 Declared cash dividends, $6,400. Additional information:As of February 1, 2022, current assets were $133,940 and current liabilities were $36,200.Compute the current ratio as of the beginning of the month and after each transaction. (Round all answers to 2 decimal places, e.g. 1.83 : 1.) Current ratio as of Feb. 1, 2022 Enter the current ratio :1 3 Enter the current ratio :1 7 Enter the current ratio :1 11 Enter the current ratio :1 14 Enter the current ratio :1 18 Enter the current ratio :1arrow_forward
- During 2018, Campbell Company entered into the following transactions. Purchased equipment for $275,000 cash. Issued common stock to investors for $125,000 cash. Purchased inventory of $68,000 on account. Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to revenues or expenses in the right-hand margin. For retained earnings, use separate columns for revenues, expenses, and dividends if necessary. Assets = Liabilities + Stockholders' Equity Cash+ Inventory + Equipment = Accounts Payable + Common Stock + Retained Earningsarrow_forwardThe financial year for Gamma Limited ends on 30 June 2019. Management has asked you what effect each of the following June transactions will have on net profit before tax, cash flow from operations, cash flow from investing and cash flow from financing for the year ended 30 June 2019: 1 Sent invoices for $40 000 to customers during June for work carried out in June; $19 000 of this had been collected by year-end. 2 Borrowed $300 000 from the bank on 10 June, with principal and interest repayable in six months. Accrued interest at 30 June is $2500. 3 Paid salaries for the month of $80 000, with $5000 in wages owing at year-end. 4 Received $30 000 deposit on a job that will be carried out in July 2019. 5 Paid accounts payable of $35 000 which was outstanding at 31 May 2019. 6 Sold old equipment for $20 000. The equipment originally cost $300 000 with accumulated depreciation at the time of sale of $250 000. 7 Purchased new equipment on 20 June 2019 for $220 000 cash. Depreciation on this…arrow_forwardUse the following information from Dubuque Company's financial statements. From the Dec.31, 2018 balance sheet, changes from prior year: Accounts Receivable $8,600 Inventory 3,400 Prepaid Insurance (2,200) Accounts Payable (4,000) Sales Tax Payable 1,900 From the 2018 Income Statement: Gain From Sale of Investments $12,000 Depreciation Expense 26,500 Net Income 79,300 Prepare the operating activities section of the statement of cash flows (indirect method) for the year 2018. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments. Dubuque Company Partial Statement of Cash Flows (Indirect Method) For the Year Ended December 31, 2018 Operating Activities: Net Income Depreciation Expense Gain From Sale of Investments Accounts Receivable, Inventory %24arrow_forward
- Gojo Company had the following transactions involving current assets and current liabilities during February 2021. Feb 3 Collected accounts receivable of $15,000. 7 Purchased equipment for $23,000 cash. 14 Paid accounts payable of S12,000. 18 Declared cash dividends, $4,000. The dividend will be paid next month. Additional information: As of 1* February 2020, current assets were $120,000 and current liabilities were $40,000. Required: 1) Compute the current ratio as of the beginning of the month. 2) Compute the current ratio after evaluating the effect of each transaction (Consider the effect of each transaction continuously). Did Gojo Company's current ratio improve, deteriorate, or hold steady after each transaction? Show detailed workings to support your answer.arrow_forwardAt December 31, 2021, Robbins Products has cash of $19,000, receivables of $19,000, and inventory of $75,000. The company's equipment totals $188,000. Robbins owes accounts payable of $20,000 and long-term notes payable of $166,000. Common stock is $33,500. Read the requirement. Start with the heading and then complete the assets section of the statement. Finally complete the liabilities and stockholders' equity section of the statement. (Classify the balance sheet by selecting the proper title on all applicable subtotal lines. In the first part complete the assets section of the balance sheet. In the second part complete the liabilities and stockholders' equity section of the balance sheet. If an input field is not used in the table leave the field empty; do not select a label or enter a zero.) Requirement Prepare Robbins's balance sheet at December 2021, complete with its proper heading. Use the accounting equation to compute retained earnings. Print Done - X swerarrow_forwardThe AHAI Company's balance sheet of December 31, 2018 is given below: Accounts payable Notes payable Accrued wages and taxes Long-term debt Common equity Total liabilities & equity Cash Accounts receivable Inventory Net fixed assets Total assets O a. $6 O b. $7 O c. $8 O d. $40 O e. $5 $10 25 40 95 $170 $20 25 15 30 80 $170 Sales during the past year were $1,000, and they are expected to increase to $2,000 during 2019. AHAI's fixed assets were used to 60% of capacity during 2018, but its current assets were at their proper levels. All assets except fixed assets increase at the same rate as sales, and fixed assets would also increase at the same rate if the current excess capacity did not exist. Assume that AHAI's profit margin will remain constant at 4.25 percent and that the company will continue to pay out 40 percent of its earnings as dividends. What amount of additional funds (AFN) will be needed during the next year assuming the company would use up the excess capacity before…arrow_forward
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