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Additional Information a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New machinery is acquired for $65,600 cash. d. Received cash for the sale of machinery that had cost $56,600, yielding a $2,800 gain. e. Prepaid Expenses and Salaries Payable relate to Operating Expenses on the income statement. f. All purchases and sales of inventory are on credit. (2) Compute the company's cash flow on total assets ratio for Year 2. Choose Numerator. Cash flow from operations S 173,110 Cash Flow on Total Assets Ratio 1 Choose Denominator: Average total assets 1 I = = Cash Flow on Total Assets Ratio Cash flow on total assets ratio 0

Additional Information a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New machinery is acquired for $65,600 cash. d. Received cash for the sale of machinery that had cost $56,600, yielding a $2,800 gain. e. Prepaid Expenses and Salaries Payable relate to Operating Expenses on the income statement. f. All purchases and sales of inventory are on credit. (2) Compute the company's cash flow on total assets ratio for Year 2. Choose Numerator. Cash flow from operations S 173,110 Cash Flow on Total Assets Ratio 1 Choose Denominator: Average total assets 1 I = = Cash Flow on Total Assets Ratio Cash flow on total assets ratio 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Additional Information a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New machinery is acquired for $65,600 cash. d. Received cash for the sale of machinery that had cost $56,600, yielding a $2,800 gain. e. Prepaid Expenses and Salaries Payable relate to Operating Expenses on the income statement. f. All purchases and sales of inventory are on credit. (2) Compute the company's cash flow on total assets ratio for Year 2. Choose Numerator: Cash flow from operations $ Cash Flow on Total Assets Ratio 1 Choose Denominator: Average total assets 1 173,110 1 = = = Cash Flow on Total Assets Ratio Cash flow on total assets ratio 0
Transcribed Image Text:Additional Information a. A $30,000 note payable is retired at its $30,000 carrying (book) value in exchange for cash. b. The only changes affecting retained earnings are net income and cash dividends paid. c. New machinery is acquired for $65,600 cash. d. Received cash for the sale of machinery that had cost $56,600, yielding a $2,800 gain. e. Prepaid Expenses and Salaries Payable relate to Operating Expenses on the income statement. f. All purchases and sales of inventory are on credit. (2) Compute the company's cash flow on total assets ratio for Year 2. Choose Numerator: Cash flow from operations $ Cash Flow on Total Assets Ratio 1 Choose Denominator: Average total assets 1 173,110 1 = = = Cash Flow on Total Assets Ratio Cash flow on total assets ratio 0
Assets Cash Comparative Balance Sheets At December 31 Accounts receivable, net Inventory Prepaid expenses Total current assets Machinery Accumulated depreciation-Machinery Total assets Liabilities Accounts payable Salaries payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, no par value Retained earnings Total liabilities and equity Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Year 2 $ 102,700 77,000 71,800 5,200 Other gains (losses) Gain on sale of machinery Income before taxes Income taxes expense Net income 256,700 132,000 (31,000) $ 357,700 Income Statement For Year Ended December 31, Year 2 $ 33,000 6,800 4,200 44,000 38,000 82,000 236,000 39,700 $ 357,700 Year 1 $ 52,000 59,000 98,500 7,000 216,500 123,000 (13,000) $ 326,500 $ 42,000 16,600 5,400 64,000 68,000 132,000 168,000 26,500 $ 326,500 $718,000 419,000 299,000 75,000 66,600 157,400 2,800 160, 200 44,690 $115,510
Transcribed Image Text:Assets Cash Comparative Balance Sheets At December 31 Accounts receivable, net Inventory Prepaid expenses Total current assets Machinery Accumulated depreciation-Machinery Total assets Liabilities Accounts payable Salaries payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities Equity Common stock, no par value Retained earnings Total liabilities and equity Sales Cost of goods sold Gross profit Operating expenses (excluding depreciation) Depreciation expense Year 2 $ 102,700 77,000 71,800 5,200 Other gains (losses) Gain on sale of machinery Income before taxes Income taxes expense Net income 256,700 132,000 (31,000) $ 357,700 Income Statement For Year Ended December 31, Year 2 $ 33,000 6,800 4,200 44,000 38,000 82,000 236,000 39,700 $ 357,700 Year 1 $ 52,000 59,000 98,500 7,000 216,500 123,000 (13,000) $ 326,500 $ 42,000 16,600 5,400 64,000 68,000 132,000 168,000 26,500 $ 326,500 $718,000 419,000 299,000 75,000 66,600 157,400 2,800 160, 200 44,690 $115,510
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