Question 4: [Please see attached screenshot and answer all questions]Question 5: [Please see screenshot and answer all questions]VIRTUAL GAMING SYSTEMS [Income Statement for the year ending December 31, 2021Net sales 2,991,000Cost of goods sold 1,941,000Gross profit 1,050,000Expenses:Operating expenses849,000 Depreciation expense22,500 Loss on sale of land7,100 Interest expense10,500 Income tax expense39,000 Total expenses 928,100Net income 121,900 VIRTUAL GAMING SYSTEMS Balance SheetsDecember 31 20212020Current assets:Cash177,000135,000Accounts receivable72,00051,000Inventory96,000126,000Prepaid rent11,1004,920Long-term assets:Investment in bonds96,0000Land201,000231,000Equipment261,000201,000Less: Accum Deprec(55,500)(33,000)Total assets858,600715,920Liabilities and Stockholders' EquityCurrent liabilities: Accounts payable 57,00072,000Interest payable4,2002,100Income tax payable10,50013,100Long-term liabilities: Notes payable276,000216,000Stockholders' equity: Common stock291,000291,000Retained earnings219,900121,720Total liabilities &stockholders’ equity858,600715,920Question 6: Assuming that all sales were on account, calculate the following risk ratios for 2021 using the data in the tables above. (Use 365 days a year & round answers to 1 decimal place)6a: Receivables turnover ratio6b: Average Collection Period6c: Inventory Turnover Ratio6d: Average Days in Inventory:6e: Current Ratio:6f: Acid-test ratio:6g: Debt to Equity Ratio: The following condensed information is reported by Sporting Collectibles.20212020Income Statement InformationSales revenueCost of goods soldNet income$13,912,0008,987,152406,080$9,200,0006,700,000328,000Balance Sheet Information$ 1,680,0002,280,000$ 3,960,000Current assets$1,580,000Long-term assets1,980,000Total assets$3,560,000$ 1,280,0001,420,000880,000Current liabilities$980,0001,420,000880,000280,000Long-term liabilitiesCommon stockRetained earnings380,000Total liabilities and$ 3,960,000$3,560,000stockholders' equityRequired:1. Calculate the following profitability ratios for 2021: (Round your answers to 1 decimal place.)Profitability Ratiosа.Gross profit ratio%b.Return on assets%Profit margin%C.d. Asset turnovertimesReturn on equity%е.2. Determine the amount of dividends paid to shareholders in 2021.The amount of dividends paid The 2021 income statement of Adrian Express reports sales of $22,710,000, cost of goods sold of$13,100,000, and net income of $2,380,00O. Balance sheet information is provided in the following table.ADRIAΝ ΕXPRES SBalance SheetsDecember 31, 2021 and 202020212020AssetsCurrent assets:$ 1,040,0002,025,0002,595,000$1,030,0001,355,0001,925,000CashAccounts receivableInventory5,240,000$10,900,0004,510,000$8,820,000Long-term assetsTotal assetsLiabilities and Stockholders'Equity$ 2,294,0002,706,0002,325,000$1,964,0002,704,0002,155,0001,997,000Current liabilitiesLong-term liabilitiesCommon stockRetained earnings3,575,000Total liabilities and$10,900,000$8,820,000stockholders' equityIndustry averages for the following profitability ratios are as follows:Gross profit ratio45%Return on assets25%Profit margin15%Asset turnover18.5timesReturn on equity35%Required:1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimalplace.)Profitability RatiosGross profit ratio%Return on assets%Profit margin%Asset turnovertimesReturn on equity%2. Do you think the company is more profitable or less profitable than the industry average?More profitableO Less profitable

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VIRTUAL GAMING SYSTEMS [Income Statement for the year ending December 31, 2021 Net sales 2,991,000 Cost of goods sold 1,941,000 Gross profit 1,050,000 Expenses: Operating expenses 849,000 Depreciation expense 22,500 Loss on sale of land 7,100 Interest expense 10,500 Income tax expense 39,000 Total expenses 928,100 Net income 121,900 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2021 2020 Current assets: Cash 177,000 135,000 Accounts receivable 72,000 51,000 Inventory 96,000 126,000 Prepaid rent 11,100 4,920 Long-term assets: Investment in bonds 96,000 0 Land 201,000 231,000 Equipment 261,000 201,000 Less: Accum Deprec (55,500) (33,000) Total assets 858,600 715,920 Liabilities and Stockholders' Equity Current liabilities: Accounts payable 57,000 72,000 Interest payable 4,200 2,100 Income tax payable 10,500 13,100 Long-term liabilities: Notes payable 276,000 216,000 Stockholders' equity: Common stock 291,000 291,000 Retained earnings 219,900 121,720 Total liabilities &stockholders’ equity 858,600 715,920 Question 6: Assuming that all sales were on account, calculate the following risk ratios for 2021 using the data in the tables above. (Use 365 days a year & round answers to 1 decimal place) 6a: Receivables turnover ratio 6b: Average Collection Period 6c: Inventory Turnover Ratio 6d: Average Days in Inventory: 6e: Current Ratio: 6f: Acid-test ratio: 6g: Debt to Equity Ratio:

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 19BEA

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Question 4: [Please see attached screenshot and answer all questions]

Question 5: [Please see screenshot and answer all questions]

VIRTUAL GAMING SYSTEMS [Income Statement for the year ending December 31, 2021
Net sales		2,991,000
Cost of goods sold		1,941,000
Gross profit		1,050,000
Expenses:
Operating expenses	849,000
Depreciation expense	22,500
Loss on sale of land	7,100
Interest expense	10,500
Income tax expense	39,000
Total expenses		928,100
Net income		121,900

VIRTUAL GAMING SYSTEMS Balance Sheets December 31
	2021	2020
Current assets:
Cash	177,000	135,000
Accounts receivable	72,000	51,000
Inventory	96,000	126,000
Prepaid rent	11,100	4,920
Long-term assets:
Investment in bonds	96,000	0
Land	201,000	231,000
Equipment	261,000	201,000
Less: Accum Deprec	(55,500)	(33,000)
Total assets	858,600	715,920
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	57,000	72,000
Interest payable	4,200	2,100
Income tax payable	10,500	13,100
Long-term liabilities:
Notes payable	276,000	216,000
Stockholders' equity:
Common stock	291,000	291,000
Retained earnings	219,900	121,720
Total liabilities &stockholders’ equity	858,600	715,920

Question 6: Assuming that all sales were on account, calculate the following risk ratios for 2021 using the data in the tables above. (Use 365 days a year & round answers to 1 decimal place)

6a: Receivables turnover ratio
6b: Average Collection Period
6c: Inventory Turnover Ratio
6d: Average Days in Inventory:
6e: Current Ratio:
6f: Acid-test ratio:
6g: Debt to Equity Ratio:

The following condensed information is reported by Sporting Collectibles.
2021
2020
Income Statement Information
Sales revenue
Cost of goods sold
Net income
$13,912,000
8,987,152
406,080
$9,200,000
6,700,000
328,000
Balance Sheet Information
$ 1,680,000
2,280,000
$ 3,960,000
Current assets
$1,580,000
Long-term assets
1,980,000
Total assets
$3,560,000
$ 1,280,000
1,420,000
880,000
Current liabilities
$
980,000
1,420,000
880,000
280,000
Long-term liabilities
Common stock
Retained earnings
380,000
Total liabilities and
$ 3,960,000
$3,560,000
stockholders' equity
Required:
1. Calculate the following profitability ratios for 2021: (Round your answers to 1 decimal place.)
Profitability Ratios
а.
Gross profit ratio
%
b.
Return on assets
%
Profit margin
%
C.
d. Asset turnover
times
Return on equity
%
е.
2. Determine the amount of dividends paid to shareholders in 2021.
The amount of dividends paid

The 2021 income statement of Adrian Express reports sales of $22,710,000, cost of goods sold of
$13,100,000, and net income of $2,380,00O. Balance sheet information is provided in the following table.
ADRIAΝ ΕXPRES S
Balance Sheets
December 31, 2021 and 2020
2021
2020
Assets
Current assets:
$ 1,040,000
2,025,000
2,595,000
$1,030,000
1,355,000
1,925,000
Cash
Accounts receivable
Inventory
5,240,000
$10,900,000
4,510,000
$8,820,000
Long-term assets
Total assets
Liabilities and Stockholders'
Equity
$ 2,294,000
2,706,000
2,325,000
$1,964,000
2,704,000
2,155,000
1,997,000
Current liabilities
Long-term liabilities
Common stock
Retained earnings
3,575,000
Total liabilities and
$10,900,000
$8,820,000
stockholders' equity
Industry averages for the following profitability ratios are as follows:
Gross profit ratio
45%
Return on assets
25%
Profit margin
15%
Asset turnover
18.5times
Return on equity
35%
Required:
1. Calculate the five profitability ratios listed above for Adrian Express. (Round your answers to 1 decimal
place.)
Profitability Ratios
Gross profit ratio
%
Return on assets
%
Profit margin
%
Asset turnover
times
Return on equity
%
2. Do you think the company is more profitable or less profitable than the industry average?
More profitable
O Less profitable

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