Financial statements for McDonald Carpeting Company for the year ended December 31, 20-- are shown. McDonald Carpeting Co. Income Statement For Year Ended December 31, 20-- Revenue from sales: Sales $122,800 Less sales returns and allowances 1,100 Net sales $121,700 Cost of goods sold: Merchandise inventory, January 1, 20-- $18,000
Financial statements for McDonald Carpeting Company for the year ended December 31, 20-- are shown. McDonald Carpeting Co. Income Statement For Year Ended December 31, 20-- Revenue from sales: Sales $122,800 Less sales returns and allowances 1,100 Net sales $121,700 Cost of goods sold: Merchandise inventory, January 1, 20-- $18,000
Intermediate Accounting: Reporting And Analysis
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inancial Ratios
Financial statements for McDonald Carpeting Company for the year ended December 31, 20-- are shown.
McDonald Carpeting Co. Income Statement For Year Ended December 31, 20-- |
||||
---|---|---|---|---|
Revenue from sales: | ||||
Sales | $122,800 | |||
Less sales returns and allowances | 1,100 | |||
Net sales | $121,700 | |||
Cost of goods sold: | ||||
Merchandise inventory, January 1, 20-- | $18,000 | |||
Estimated returns inventory, January 1, 20-- | 1,300 | $19,300 | ||
Purchases | $62,800 | |||
Less: Purchases returns and allowances | $2,800 | |||
Purchases discounts | 1,944 | 4,744 | ||
Net purchases | $58,056 | |||
Add freight-in | 944 | |||
Cost of goods purchased | 59,000 | |||
Goods available for sale | $78,300 | |||
Less: Merchandise inventory, December 31, 20-- | $16,000 | |||
Estimated returns inventory, December 31, 20-- | 700 | 16,700 | ||
Cost of goods sold | 61,600 | |||
Gross profit | $60,100 | |||
Operating expenses: | ||||
Wages expense | $18,000 | |||
Advertising expense | 980 | |||
Supplies expense | 320 | |||
Phone expense | 1,200 | |||
Utilities expense | 8,000 | |||
Insurance expense | 800 | |||
|
3,500 | |||
Depreciation expense—equipment | 2,500 | |||
Miscellaneous expense | 200 | |||
Total operating expenses | 35,500 | |||
Income from operations | $24,600 | |||
Other revenues: | ||||
Interest revenue | $2,800 | |||
Other expenses: | ||||
Interest expense | 2,100 | 700 | ||
Net income | $25,300 |
McDonald Carpeting Co. Statement of Owner's Equity For Year Ended December 31, 20-- |
||
---|---|---|
C. S. McDonald, capital, January 1, 20-- | $52,000 | |
Net income for the year | $25,300 | |
Less withdrawals for the year | 10,400 | |
Increase in capital | 14,900 | |
C. S. McDonald, capital, December 31, 20-- | $66,900 |
McDonald Carpeting Co. Balance Sheet December 31, 20-- |
|||
---|---|---|---|
Assets | |||
Current assets: | |||
Cash | $10,400 | ||
|
8,900 | ||
Merchandise inventory | $16,000 | ||
Estimated returns inventory | 700 | 16,700 | |
Supplies | 1,200 | ||
Prepaid insurance | 700 | ||
Total current assets | $37,900 | ||
Property, plant, and equipment: | |||
Building | $60,000 | ||
Less accumulated depreciation—building | 18,000 | $42,000 | |
Equipment | $22,000 | ||
Less accumulated depreciation—equipment | 6,200 | 15,800 | |
Total property, plant, and equipment | 57,800 | ||
Total assets | $95,700 | ||
Liabilities | |||
Current liabilities: | |||
Accounts payable | $7,500 | ||
Customer refunds payable | 900 | ||
Wages payable | 300 | ||
Sales tax payable | 1,000 | ||
Mortgage payable | 600 | ||
Total current liabilities | $10,300 | ||
Long-term liabilities: | |||
Mortgage payable | $19,100 | ||
Less current portion | 600 | 18,500 | |
Total liabilities | $28,800 | ||
Owner's Equity | |||
C. S. McDonald, capital | 66,900 | ||
Total liabilities and owner's equity | $95,700 |
All sales are credit sales. The balance of Accounts Receivable on January 1, 20--, was $6,800.
Required:
Compute the financial ratios.
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