Analytical case—complete an income statement and balance sheet usingfinancial ratio data Partially completed financial statements for Whittaker, Inc., follow: WHITTAKER, INC.Income StatementFor the Year Ended December 31, 2014Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?Income from operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Income taxes (20%). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?WHITTAKER, INC.Balance SheetDecember 31, 2014Current assets:Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $171,000Property, plant, and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Bonds payable, 15% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Stockholders’ equity:Common stock, $2 par value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?Total stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Total liabilities and stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?Additional information:• Financial ratios computed from these fi nancial statements include the following:Current ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 to 1Acid-test ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 to 1Debt/equity ratio . . . . . . . . . . . . . . . . . . . . . 2.0 to 1Inventory turnover . . . . . . . . . . . . . . . . . . . .. . . . 4.0 timesAccounts receivable turnover. . . . . . . 6.8 timesTimes interest earned . . . . . . . . . . . . . .. . . . . . . . . . 4.45 timesGross profi t ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 40%Return on investment . . . . . . . . . . . . . . . . . 12%Earnings per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.52• All sales during the year were made on account. Cash collections during the year exceededsales by $14,000, and no uncollectible accounts were written off.• The balance of the accounts receivable account was $57,000 on January 1, 2014.• No common stock was issued during the year.• Dividends declared and paid during the year were $7,600.• The balance of the inventory account was $48,000 on January 1, 2014.• Interest expense on the income statement relates to the 15% bonds payable;$10,000 of these bonds were issued on May 1, 2014; the remaining amount of bonds payablewere outstanding throughout the year. All bonds were issued at face amount. Required:a. Complete the income statement and balance sheet for Whittaker, Inc. Show howeach amount was determined.b. After completing part a, use your answers to recompute each of the financial ratios provided as additional information.
Analytical case—complete an income statement and
financial ratio data Partially completed financial statements for Whittaker, Inc., follow:
WHITTAKER, INC.
Income Statement
For the Year Ended December 31, 2014
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Gross profi t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Income from operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Income taxes (20%). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
WHITTAKER, INC.
Balance Sheet
December 31, 2014
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $171,000
Property, plant, and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Bonds payable, 15% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Stockholders’ equity:
Common stock, $2 par value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Total
Total liabilities and stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Additional information:
• Financial ratios computed from these fi nancial statements include the following:
Current ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 to 1
Acid-test ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 to 1
Debt/equity ratio . . . . . . . . . . . . . . . . . . . . . 2.0 to 1
Inventory turnover . . . . . . . . . . . . . . . . . . . .. . . . 4.0 times
Accounts receivable turnover. . . . . . . 6.8 times
Times interest earned . . . . . . . . . . . . . .. . . . . . . . . . 4.45 times
Gross profi t ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 40%
Earnings per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5.52
• All sales during the year were made on account. Cash collections during the year exceeded
sales by $14,000, and no uncollectible accounts were written off.
• The balance of the accounts receivable account was $57,000 on January 1, 2014.
• No common stock was issued during the year.
• Dividends declared and paid during the year were $7,600.
• The balance of the inventory account was $48,000 on January 1, 2014.
• Interest expense on the income statement relates to the 15% bonds payable;
$10,000 of these bonds were issued on May 1, 2014; the remaining amount of bonds payable
were outstanding throughout the year. All bonds were issued at face amount.
Required:
a. Complete the income statement and balance sheet for Whittaker, Inc. Show howeach amount was determined.
b. After completing part a, use your answers to recompute each of the financial ratios provided as additional information.
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