Compute the following ratio analysiCurrent RatioAcid Test RatioWrite your interpretation after the computation. BARRY'S SUPERSTOREBARRY'S SUPERSTOREComparative Year-End Income StatementsComparative Year-End Balance SheetsPrior YearCurrent YearPrior YearCurrent YearNet Sales$100,000$120,000Assets:Cost of Goods Sold50,00060,000Cash$90,000$110,000Gross Profit50,00060,000Accounts Receivable20,00030,000Inventory35,00040,000Rent Expense5,0005,500Short-Term Investments15,00020,000Total Current Asstes200,000Depreciation ExpenseSalaries Expense2,5003,600160,0003,0005,400Equipment40,00050,000Utility Expense1,5002,500Total Assets$200,000$250,000Operating Income38,00043,000Liabilities:Accounts Payable$ 60,000$ 75,000Interest Expense3,0002,000Unearned Revenue10,00025,000Income Tax Expense5,0006,000Total Current Liabilities70,000100,000Net Income$ 30,000$ 35,000Notes Payable40,00050,000Total Liabilities110,000150,000Stockholder EquityCommon Stock75,00080,000Ending Retained EarningsTotal Stockholder Equity15,00020,00090,000100,000Total Liabilities and Stockholder Equity$200,000$250,000

Current Ratio=current assets/current liability Current Assets=cash+accounts receivable+short term…

Prior Year Current Year Prior Year Current Y $100,000 $120,000 Assets: ods Sold 50,000 60,000 Cash $90,000 $110,00 it 50,000 60,000 Accounts Receivable 20,000 30,00 Inventory 35,000 40,00 nse 5,000 5,500 Short-Term Investments 15,000 20,00 on Expense 2,500 3,600 Total Current Asstes 160,000 200,00 5,400 2,500 3,000 40,000 Equipment Total Assets 50,00 pense ense 1,500 $200,000 $250,00 Income 38,000 43,000 Liabilities: Accounts Payable $ 60,000 $ 75,00 pense x Expense 3,000 2,000 Unearned Revenue 10,000 25,00 5,000 6,000 Total Current Liabilities 70,000 100,00 $ 30,000 $ 35,000 Notes Payable 40,000 50,00 Total Liabilities 110,000 150,00

Prior Year Current Year Prior Year Current Y $100,000 $120,000 Assets: ods Sold 50,000 60,000 Cash $90,000 $110,00 it 50,000 60,000 Accounts Receivable 20,000 30,00 Inventory 35,000 40,00 nse 5,000 5,500 Short-Term Investments 15,000 20,00 on Expense 2,500 3,600 Total Current Asstes 160,000 200,00 5,400 2,500 3,000 40,000 Equipment Total Assets 50,00 pense ense 1,500 $200,000 $250,00 Income 38,000 43,000 Liabilities: Accounts Payable $ 60,000 $ 75,00 pense x Expense 3,000 2,000 Unearned Revenue 10,000 25,00 5,000 6,000 Total Current Liabilities 70,000 100,00 $ 30,000 $ 35,000 Notes Payable 40,000 50,00 Total Liabilities 110,000 150,00

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.9E: Working Backward: Gross Profit Ratio Acmes gross profit ratio increased by 20% over the prior year....

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Working Backward: Gross Profit Ratio Acmes gross profit ratio increased by 20% over the prior year. Net sales and cost of goods sold for the prior year were $120,000 and $90,000, respectively. Cost of goods sold for the current year is $140,000. Required Determine the amount of Acmes sales for the current year.
The following information is available for Cooke Company for the current year: The gross margin is 40% of net sales. What is the cost of goods available for sale? a. 5840,000 b. 960,000 c. 1,200,000 d. 1,220,000
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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?
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Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: 1. Calculate the return on sales. (Note: Round the percent to two decimal places.) 2. CONCEPTUAL CONNECTION Briefly explain the meaning of the return on sales ratio, and comment on whether Juroes return on sales ratio appears appropriate.
Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020. Prepare Hellers partial income statements (through gross profit) for 2019 and 2020. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
The following selected information is taken from the financial statements of Arnn Company for its most recent year of operations: During the year, Arnn had net sales of 2.45 million. The cost of goods sold was 1.3 million. Required: Note: Round all answers to two decimal places. 1. Compute the current ratio. 2. Compute the quick or acid-test ratio. 3. Compute the accounts receivable turnover ratio. 4. Compute the accounts receivable turnover in days. 5. Compute the inventory turnover ratio. 6. Compute the inventory turnover in days.