Compute the missing amounts on the company's financial statements. (Hint: What's the difference between the acid-test ratio and the current ratio?) (Do not round intermediate calculations.)
Compute the missing amounts on the company's financial statements. (Hint: What's the difference between the acid-test ratio and the current ratio?) (Do not round intermediate calculations.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter3: Review Of A Company's Accounting System
Section: Chapter Questions
Problem 9RE: For the current year, Vidalia Company reported revenues of 250,000 and expenses of 225,000. At the...
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Question
![The following information is available about the company:
a. All sales during the year were on account.
b. There was no change in the number of shares of common stock outstanding during the year.
c. The interest expense on the income statement relates to the bonds payable; the amount of
bonds outstanding did not change during the year.
d. Selected balances at the beginning of the current year were:
$ 140,000
$ 260,000
$1,160,000
Accounts receivable
Inventory
Total assets
e. Selected financial ratios computed from the statements below for the current year are:
Earnings per share
Debt-to-equity ratio
Accounts receivable turnover
$ 2.64
0.850
16.0
2.40
Current ratio
10%
5.0
Return on total assets
Times interest earned ratio
Acid-test ratio
1.17
Inventory turnover
8.0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F984c8e7b-e2ca-406f-9243-2fa3333ca1eb%2F44826300-8ec2-4a45-afbd-198fb83dac1b%2F1zf1ym_processed.png&w=3840&q=75)
Transcribed Image Text:The following information is available about the company:
a. All sales during the year were on account.
b. There was no change in the number of shares of common stock outstanding during the year.
c. The interest expense on the income statement relates to the bonds payable; the amount of
bonds outstanding did not change during the year.
d. Selected balances at the beginning of the current year were:
$ 140,000
$ 260,000
$1,160,000
Accounts receivable
Inventory
Total assets
e. Selected financial ratios computed from the statements below for the current year are:
Earnings per share
Debt-to-equity ratio
Accounts receivable turnover
$ 2.64
0.850
16.0
2.40
Current ratio
10%
5.0
Return on total assets
Times interest earned ratio
Acid-test ratio
1.17
Inventory turnover
8.0
![Required:
Compute the missing amounts on the company's financial statements. (Hint: What's the difference
between the acid-test ratio and the current ratio?) (Do not round intermediate calculations.)
Pepper Industries
Income Statement
For the Year Ended March 31
Sales
$ 2,900,000
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Interest expense
44,000
Net income before taxes
Income taxes (40%)
Net income
Pepper Industries
Balance Sheet
March 31
Current assets:
Cash
Accounts receivable, net
Inventory
Total current assets
Plant and equipment, net
Total assets
Liabilities:
Current liabilities
$
240,000
Bonds payable, 10%
Total liabilities
Stockholders' equity:
Common stock, $3.00 par valu
Retained earnings
Total stockholders' equity
Total liabilities and stockholders equity](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F984c8e7b-e2ca-406f-9243-2fa3333ca1eb%2F44826300-8ec2-4a45-afbd-198fb83dac1b%2Fvy7ypb_processed.png&w=3840&q=75)
Transcribed Image Text:Required:
Compute the missing amounts on the company's financial statements. (Hint: What's the difference
between the acid-test ratio and the current ratio?) (Do not round intermediate calculations.)
Pepper Industries
Income Statement
For the Year Ended March 31
Sales
$ 2,900,000
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Interest expense
44,000
Net income before taxes
Income taxes (40%)
Net income
Pepper Industries
Balance Sheet
March 31
Current assets:
Cash
Accounts receivable, net
Inventory
Total current assets
Plant and equipment, net
Total assets
Liabilities:
Current liabilities
$
240,000
Bonds payable, 10%
Total liabilities
Stockholders' equity:
Common stock, $3.00 par valu
Retained earnings
Total stockholders' equity
Total liabilities and stockholders equity
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