The following income statement and balance sheets for The Athletic Attic are provided. THE ATHLETIC ATTIC Income Statement For the year ended December 31, 2021 Net sales $8,840,000 Cost of goods sold 5,420,000 Gross profit 3,420,000 Expenses: Operating expenses $1,570,000 Depreciation expense 204,000 Interest expense 44,000 Income tax expense 354,000 Total expenses 2,172,000 Net income $1,248,000 THE ATHLETIC ATTIC Balance Sheets December 31 2021 2020 Assets Current assets: Cash $158,000 $208,000 Accounts receivable 760,000 780,000 Inventory 1,375,000 1,045,000 Supplies 104,000 79,000 Long-term assets: Equipment 1,120,000 1,120,000 Less: Accumulated depreciation (408,000) (204,000) Total assets $3,109,000 $3,028,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $109,000 $85,000 Interest payable 0 4,400 Income tax payable 37,000 30,400 Long-term liabilities: Notes payable 540,000 540,000 Stockholders' equity: Common stock 640,000 640,000 Retained earnings 1,783,000 1,728,200 Total liabilities and stockholders’ equity $3,109,000 $3,028,000 Required: Assuming that all sales were on account, calculate the following risk ratios for 2021. (Use 365 days a year. Round your intermediate and final answers to 1 decimal place.) Risk Ratios 1. Receivables turnover ratio times 2. Average collection period days 3. Inventory turnover ratio times 4. Average days in inventory days 5. Current ratio to 1 6. Acid-test ratio to 1 7. Debt to equity ratio % 8. Times interest earned ratio times

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter1: Introduction To Business Activities And Overview Of Financial Statements And The Reporting Process

Section: Chapter Questions

Problem 23E

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The following income statement and balance sheets for The Athletic Attic are provided.

THE ATHLETIC ATTIC
Income Statement
For the year ended December 31, 2021
Net sales		$8,840,000
Cost of goods sold		5,420,000
Gross profit		3,420,000
Expenses:
Operating expenses	$1,570,000
Depreciation expense	204,000
Interest expense	44,000
Income tax expense	354,000
Total expenses		2,172,000
Net income		$1,248,000

THE ATHLETIC ATTIC
Balance Sheets
December 31
	2021	2020
Assets
Current assets:
Cash	$158,000	$208,000
Accounts receivable	760,000	780,000
Inventory	1,375,000	1,045,000
Supplies	104,000	79,000
Long-term assets:
Equipment	1,120,000	1,120,000
Less: Accumulated depreciation	(408,000)	(204,000)
Total assets	$3,109,000	$3,028,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$109,000	$85,000
Interest payable	0	4,400
Income tax payable	37,000	30,400
Long-term liabilities:
Notes payable	540,000	540,000
Stockholders' equity:
Common stock	640,000	640,000
Retained earnings	1,783,000	1,728,200
Total liabilities and stockholders’ equity	$3,109,000	$3,028,000

Required:
Assuming that all sales were on account, calculate the following risk ratios for 2021. (Use 365 days a year. Round your intermediate and final answers to 1 decimal place.)

Risk Ratios
1.	Receivables turnover ratio	times
2.	Average collection period	days
3.	Inventory turnover ratio	times
4.	Average days in inventory	days
5.	Current ratio	to 1
6.	Acid-test ratio	to 1
7.	Debt to equity ratio	%
8.	Times interest earned ratio	times

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