A Corporation had the following data concerning selected financial data taken from the records listed below. For the year ended December 31 2021 2020 Cash 80,000 640,000 Note and account receivable 400,000 1,200,000 Merchandise Inventory 720,000 1,200,000 Marketable Securities 240,000 80,000 Land and Building (net) 2,720,000 2,880,000 Bond Payable 2,160,000 2,240,000 Account Payable 560,000 880,000 Note Payable Short Term 160,000 320,000 Sales (20% cash, 80% credit) 18,400,000 19,200,000 Cost of Good Sold 8,000,000 11,200,000 Required : Compute the following ratios 1. current ratio as of December 31,2021 2. Quick ratio as of December 31, 2021 3. Account Receivable Turnover ratio for 2021
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
A Corporation had the following data concerning selected financial data taken from the records listed
below.
For the year ended December 31
2021 2020
Cash 80,000 640,000
Note and
Merchandise Inventory 720,000 1,200,000
Marketable Securities 240,000 80,000
Land and Building (net) 2,720,000 2,880,000
Bond Payable 2,160,000 2,240,000
Account Payable 560,000 880,000
Note Payable Short Term 160,000 320,000
Sales (20% cash, 80% credit) 18,400,000 19,200,000
Cost of Good Sold 8,000,000 11,200,000
Required : Compute the following ratios
1.
2. Quick ratio as of December 31, 2021
3. Account Receivable Turnover ratio for 2021
4. Merchandise inventory turn over for 2021
5. The Gross margin for 2020
6. the average age of account Receivable for 2021( use 360 days
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