Homework Help is Here – Start Your Trial Now!
Business
Accounting
Natalie and Curtis have comparative balance sheets and income statements for Cookie & Coffee Creations, Inc. They have been told that they can use these financial statements to prepare horizontal and vertical analyses, to calculate financial ratios, to analyze how their business is doing, and to make some decisions they have been considering. Below, you are provided with the balance sheet and income statement of Cookie & Coffee Creations Inc. for its first year of operations; the year ended October 31, 2021. Review the calculations below, and then review the additional case information to calculate the ratios. (REFER TO ATTACHED IMAGE) Review the additional case information below. Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more equipment. The loan would be repaid over a 4-year period. The terms of the loan provide for equal semi-annual installment payments of $2,500 on May 1 and November 1 of each year, plus interest of 5% on the outstanding balance. Dividends on preferred stock were $1,400. Since this is the first year of operations and the beginning balances are zero, use the ending balance as the average balance where appropriate. Complete the tasks listed below. Calculate the following ratios: current ratio, accounts receivable turnover, inventory turnover,

Natalie and Curtis have comparative balance sheets and income statements for Cookie & Coffee Creations, Inc. They have been told that they can use these financial statements to prepare horizontal and vertical analyses, to calculate financial ratios, to analyze how their business is doing, and to make some decisions they have been considering. Below, you are provided with the balance sheet and income statement of Cookie & Coffee Creations Inc. for its first year of operations; the year ended October 31, 2021. Review the calculations below, and then review the additional case information to calculate the ratios. (REFER TO ATTACHED IMAGE) Review the additional case information below. Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more equipment. The loan would be repaid over a 4-year period. The terms of the loan provide for equal semi-annual installment payments of $2,500 on May 1 and November 1 of each year, plus interest of 5% on the outstanding balance. Dividends on preferred stock were $1,400. Since this is the first year of operations and the beginning balances are zero, use the ending balance as the average balance where appropriate. Complete the tasks listed below. Calculate the following ratios: current ratio, accounts receivable turnover, inventory turnover,

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 24CE
See similar textbooks
icon
Related questions
Question
100%

Natalie and Curtis have comparative balance sheets and income statements for Cookie & Coffee Creations, Inc. They have been told that they can use these financial statements to prepare horizontal and vertical analyses, to calculate financial ratios, to analyze how their business is doing, and to make some decisions they have been considering. Below, you are provided with the balance sheet and income statement of Cookie & Coffee Creations Inc. for its first year of operations; the year ended October 31, 2021. Review the calculations below, and then review the additional case information to calculate the ratios.

(REFER TO ATTACHED IMAGE)

Review the additional case information below.
Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more equipment. The loan would be repaid over a 4-year period. The terms of the loan provide for equal semi-annual installment payments of $2,500 on May 1 and November 1 of each year, plus interest of 5% on the outstanding balance. Dividends on preferred stock were $1,400. Since this is the first year of operations and the beginning balances are zero, use the ending balance as the average balance where appropriate.
Complete the tasks listed below.
  1. Calculate the following ratios:
    1. current ratio,
    2. accounts receivable turnover,
    3. inventory turnover,
COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, 2021 Assets Current assets Cash Accounts receivable $32,219 3,250 17,897 6.300 Inventory Prepaid Rent Property, plant, and equipment Équipment Accumulated depreciation-equipment Total assets $59,666 $99,700 (9,850) 89,850 $149.516 Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Dividends payable Salaries and wages payable Interest payable Notes payable current portion Long-term liabilities Notes payable-long-term portion Total liabilities Stockholders' equity Paid-in capital Preferred stock, 2,800 shares issued and outstanding Common stock, 25,930 shares issued, 25,180 outstanding $5,786 18,500 700 2,250 250 4.000 $31,486 6.000 37,486 $14,000 25.930 Retained earnings Total paid-in capital and retained earnings Less: Treasury stock-common (750 shares), at cost Total stockholders' equity Total liabilities and stockholders' equity 39,930 72,600 112,530 500 112.030 $149.516 COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2021 Sales Revenue $462,500 231,250 231,250 Cost of goods sold Gross profit Operating expenses Salaries and wages expense Depreciation expense Other operating expenses Income from operations Other expenses Interest expense Income before income tax $92,500 9,850 35.850 138.200 93,050 550 Income tax expense Net income 92,500 18.500 $74,000
Transcribed Image Text:COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31, 2021 Assets Current assets Cash Accounts receivable $32,219 3,250 17,897 6.300 Inventory Prepaid Rent Property, plant, and equipment Équipment Accumulated depreciation-equipment Total assets $59,666 $99,700 (9,850) 89,850 $149.516 Liabilities and Stockholders' Equity Current liabilities Accounts payable Income taxes payable Dividends payable Salaries and wages payable Interest payable Notes payable current portion Long-term liabilities Notes payable-long-term portion Total liabilities Stockholders' equity Paid-in capital Preferred stock, 2,800 shares issued and outstanding Common stock, 25,930 shares issued, 25,180 outstanding $5,786 18,500 700 2,250 250 4.000 $31,486 6.000 37,486 $14,000 25.930 Retained earnings Total paid-in capital and retained earnings Less: Treasury stock-common (750 shares), at cost Total stockholders' equity Total liabilities and stockholders' equity 39,930 72,600 112,530 500 112.030 $149.516 COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31, 2021 Sales Revenue $462,500 231,250 231,250 Cost of goods sold Gross profit Operating expenses Salaries and wages expense Depreciation expense Other operating expenses Income from operations Other expenses Interest expense Income before income tax $92,500 9,850 35.850 138.200 93,050 550 Income tax expense Net income 92,500 18.500 $74,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Ratio Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS