hort-term debt 2,100,000 Long-term debt 2,420,000 Current assets 3,900,000 A company buys furniture for euro 100,000 incl. VAT (25%). The equipment is financed with a long-term loans in the bank. What accounting effects does the purchase of the inventory have? Use the balance equation.
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Short-term debt 2,100,000
Long-term debt 2,420,000
Current assets 3,900,000
A company buys furniture for euro 100,000 incl. VAT (25%). The equipment is financed with a long-term loans in the bank. What accounting effects does the purchase of the inventory have? Use the balance equation.
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- Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of goods sold 660.0 Gross profit 135.0 Selling expenses 73.5 EBITDA 61.5 Depreciation expenses 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expenses 4.5 Earnings before taxes (EBT) 45.0 Taxes (40%) 18.0 Net income 27.0 a. Calculate the ratios you think would be useful in this analysis. b. Construct a DuPont equation, and compare the companys ratios to the industry average ratios. c. Do the balance-sheet accounts or the income statement figures seem to be primarily responsible for the low profits? d. Which specific accounts seem to be most out of line relative to other firms in the industry? e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?Bad Debt Expense: Percentage of Credit Sales Method The Glass House, a glass and china store, sells nearly half its merchandise on credit. During the past 4 years, the following data were developed for credit sales and losses from uncollectible accounts: Required: 1. Calculate the loss rate for each year from 2016 through 2018. ( Note: Round answers to three decimal places.) 2. Determine whether there appears to be a significant change in the loss rate over time. 3. CONCEPTUAL CONNECTION If credit sales for 2020 are $400,000, determine what loss rate you would recommend to estimate bad debts. ( Note: Round answers to three decimal places.) 4. Using the rate you recommend, record bad debt expense for 2020. 5. CONCEPTUAL CONNECTION Assume that the increase in The Glass Houses sales in 2020 was largely due to granting credit to customers who would have been denied credit in previous years. How would this change your answer to Requirement 4? Describe a legitimate business reason why The Glass House would adopt more lenient credit terms. 6. CONCEPTUAL CONNECTION Using the data from 2016 through 2019, estimate the increase in income from operations in total for those 4 years assuming (a) the average gross margin is 25% and (b) 50% of the sales would have been lost if no credit was granted.Accounts payable $466,000Notes payable $250,000Current liabilities $716,000Long-term debt $1,166,000Common equity $4,883,000Total liabilities and equity $6,765,000 a. What percentage of the firm's assets does the firm finance using debt (liabilities)? b. If Campbell were to purchase a new warehouse for $1.1 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? Question content area bottom Part 1 a. What percentage of the firm's assets does the firm finance using debt (liabilities)? The fraction of the firm's assets that the firm finances using debt is 27.827.8%. (Round to one decimal place.) Part 2 b. If Campbell were to purchase a new warehouse for $1.1 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? The new debt ratio will be enter your response here%. (Round to one decimal place.)
- Accounts payable $509,000Notes payable $244,000Current liabilities $753,000Long-term debt $1,246,000Common equity $4,751,000Total liabilities and equity $6,750,000 What percentage of the firm's assets does the firm finance using debt (liabilities)? b. If Campbell were to purchase a new warehouse for $1.4 million and finance it entirely with long-term debt, what would be the firm's new debt ratio?Q3 Libscomb Technologies' annual sales are $5,006,817 and all sales are made on credit, it purchases $3,651,781 of materials each year (and this is its cost of goods sold). Libscomb also has $584,459 of inventory, $487,048 of accounts receivable, and $437,665 of accounts payable. Assume a 365 day year. What is Libscomb’s Receivables Turnover?Q4 Libscomb Technologies' annual sales are $6,743,847 and all sales are made on credit, it purchases $3,304,291 of materials each year (and this is its cost of goods sold). Libscomb also has $535,216 of inventory, $1,475,000 of accounts receivable, and $1,400,000 of accounts payable. Assume a 365 day year. What is Libscomb’s Receivables Period (in days)?
- a. Beauty of the Sea purchased inventory from a large supplier. The supplier offered a credit term of 3/10, n/30. Indicate whether this debt is an example of account payable, long-term or short-term debt. b. Adoptions and More drew on 8 annual notes totaling $250,000 to be paid upon completion of the office it is building. The company intends to pay $75,000 next year. What is that portion considered?Account PQR Corporation purchased inventory worth $20,000 on credit. The terms of the credit are 2/10, net 30. If the company pays within the discount period, calculate the amount of cash payment and the amount of discount received.Show Solutions: 1. XYZ Corporation borrowed $100,000 for six months from the bank. The rate is prime plus 2 percent.The prime rate was 8.5 percent at the beginning of the loan and changed to 9 percent after two months.This was the only change. How much interest must XYZ corporation pay?a. $2,476 b. $5,417 c. $18,212 d. $21,500 2. On September 1, Hydra purchased $13,300 of inventory items on credit with the terms 1/15, net 30,FOB destination. Freight charges were $280. Payment for the purchase was made on September 18.Assuming Hydra uses the perpetual inventory system and the net method of accounting for purchasediscounts, what amount is recorded as inventory from this purchase?a. $13,167 b. $13,447 c. $13,580 d. $13,300.
- 3) The trial balance of Pina Colada Ltd. at December 31, 2020, follows: Debits Credits Cash $235,000 Sales revenue $9,035,000 FV-NI investments (at fair value) 213,000 Cost of goods sold 4,900,000 Bond investment at amortized cost 479,000 FV—OCI investments (fair value $465,000) 415,000 Notes payable (due in six months) 106,000 Accounts payable 795,000 Selling expenses 2,560,000 Investment income or loss* 14,000 Land 370,000 Buildings 2,240,000 Dividends payable 46,000 Income tax payable 112,000 Accounts receivable 655,000 Accumulated depreciation—buildings 322,000 Allowance for doubtful accounts 42,000 Administrative expenses 930,000 Interest expense 381,000 Inventory 877,000 Gain on disposal of…Q2 Libscomb Technologies' annual sales are $5,433,041 and all sales are made on credit, it purchases $3,986,576 of materials each year (and this is its cost of goods sold). Libscomb also has $581,228 of inventory, $530,966 of accounts receivable, and $416,773 of accounts payable. Assume a 365 day year. What is Libscomb’s Inventory Period (in days)?Lily Corp. Corp. sells on term 2/20, net 40. Total credit sale for the year are P180,000. 40% pays on the 20th day and take discounts while the rest pay on the due date. What is the average amount of accounts receivable? (Use 360-day year) a. 16,000 b. 36,667 c. 26,667 d. 12,000
