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Balance Sheets December 31, Year 2 and Year 1 Year 2 Year 1 Assets Current assets: Cash Accounts receivable Inventory Investments $ 217,600 58,000 85,000 3,000 $110,000 82,000 70,000 1,000 Long-term assets: Land Equipment Less: Accumulated depreciation 380,000 690,000 (328,000) $1,105,600 380,000 570,000 (168,000) $1,045,000 Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings $4 89,000 24 5,000 7,000 75,000 11,000 4,000 120,000 240,000 600,000 284,600 $1,105,600 600,000 115,000 Total liabilities and stockholders' equity $1,045,000 Additional information for Year 2: 1. Net income is $169,600. 2. Sales on account are $1,183,000. 3. Cost of goods sold is $953,250. Required:

Balance Sheets December 31, Year 2 and Year 1 Year 2 Year 1 Assets Current assets: Cash Accounts receivable Inventory Investments $ 217,600 58,000 85,000 3,000 $110,000 82,000 70,000 1,000 Long-term assets: Land Equipment Less: Accumulated depreciation 380,000 690,000 (328,000) $1,105,600 380,000 570,000 (168,000) $1,045,000 Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings $4 89,000 24 5,000 7,000 75,000 11,000 4,000 120,000 240,000 600,000 284,600 $1,105,600 600,000 115,000 Total liabilities and stockholders' equity $1,045,000 Additional information for Year 2: 1. Net income is $169,600. 2. Sales on account are $1,183,000. 3. Cost of goods sold is $953,250. Required:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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COMPANY B Balance Sheets December 31, Year 2 and Year 1 Year 2 Year 1 Assets Current assets: Cash Accounts receivable Inventory Investments Long-term assets: Land $ 217,600 58,000 85,000 3,000 $ 110,000 82,000 70,000 1,000 380,000 690,000 (328,000) $1,105,600 380,000 570,000 (168,000) $1,045,000 Equipment Less: Accumulated depreciation Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings $ 89,000 $4 5,000 7,000 75,000 11,000 4,000 120,000 240,000 600,000 284,600 $1,105,600 $1,045,000 600,000 115,000 Total liabilities and stockholders' equity Additional information for Year 2: 1. Net income is $169,600. 2. Sales on account are $1,183,000. 3. Cost of goods sold is $953,250. Required: 1. Calculate the following profitability ratios for Year 2: (Round vour answers to 1 decimal place.)
Transcribed Image Text:COMPANY B Balance Sheets December 31, Year 2 and Year 1 Year 2 Year 1 Assets Current assets: Cash Accounts receivable Inventory Investments Long-term assets: Land $ 217,600 58,000 85,000 3,000 $ 110,000 82,000 70,000 1,000 380,000 690,000 (328,000) $1,105,600 380,000 570,000 (168,000) $1,045,000 Equipment Less: Accumulated depreciation Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings $ 89,000 $4 5,000 7,000 75,000 11,000 4,000 120,000 240,000 600,000 284,600 $1,105,600 $1,045,000 600,000 115,000 Total liabilities and stockholders' equity Additional information for Year 2: 1. Net income is $169,600. 2. Sales on account are $1,183,000. 3. Cost of goods sold is $953,250. Required: 1. Calculate the following profitability ratios for Year 2: (Round vour answers to 1 decimal place.)
Additional information for Year 2: 1. Net income is $169,60O. 2. Sales on account are $1,183,000. 3. Cost of goods sold is $953,250. Required: 1. Calculate the following profitability ratios for Year 2: (Round your answers to 1 decimal place.) Profitability Ratios Gross profit ratio % a. b. Return on assets % c. Profit margin % d. Asset turnover times e. Return on equity % 2. When we compare two companies, can one have a higher return on assets while the other has a higher return on equity? Yes No
Transcribed Image Text:Additional information for Year 2: 1. Net income is $169,60O. 2. Sales on account are $1,183,000. 3. Cost of goods sold is $953,250. Required: 1. Calculate the following profitability ratios for Year 2: (Round your answers to 1 decimal place.) Profitability Ratios Gross profit ratio % a. b. Return on assets % c. Profit margin % d. Asset turnover times e. Return on equity % 2. When we compare two companies, can one have a higher return on assets while the other has a higher return on equity? Yes No
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