Assets: Cash and marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Fixed assets Balance Sheet 2,800,000 Less: accum. depr.(1,087,500) Net fixed assets Total assets Liabilities: Accounts payable Notes payable Accrued taxes Total current liabilities Long-term debt Owner's equity Total liabilities and owner's equity 2) Debt ratio. Income Statement $400,000 Net sales (all credit) 1,415,000 Less: Cost of goods sold Selling and administrative 1,847,500 expense 24,000 Depreciation expense 3,686,500 Interest expense Earnings before taxes Income taxes 1.712.500 Net income $5,399,000 $600,000 875,000 92,000 $1,567,000 900,000 2,932,000 $5,399,000 Based on the information in the above table, calculate the following ratios. 1) Current ratio. $6,375,000 (4,375,000) (1,000,000) (135,000) (100,000) $765,000 (306,000) $459,000

Assets: Cash and marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Fixed assets Balance Sheet 2,800,000 Less: accum. depr.(1,087,500) Net fixed assets Total assets Liabilities: Accounts payable Notes payable Accrued taxes Total current liabilities Long-term debt Owner's equity Total liabilities and owner's equity 2) Debt ratio. Income Statement $400,000 Net sales (all credit) 1,415,000 Less: Cost of goods sold Selling and administrative 1,847,500 expense 24,000 Depreciation expense 3,686,500 Interest expense Earnings before taxes Income taxes 1.712.500 Net income $5,399,000 $600,000 875,000 92,000 $1,567,000 900,000 2,932,000 $5,399,000 Based on the information in the above table, calculate the following ratios. 1) Current ratio. $6,375,000 (4,375,000) (1,000,000) (135,000) (100,000) $765,000 (306,000) $459,000

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Description: Assets:Cash and marketable securitiesAccounts receivableInventoriesPrepaid expensesTotal current assetsFixed assetsBalance Sheet2,800,000Less: accum. depr.(1,087,500)Net fixed assetsTotal assetsLiabilities:Accounts payableNotes payableAccrued taxesT

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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Concept explainers

Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is

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Question

Assets:
Cash and marketable securities
Accounts receivable
Inventories
Prepaid expenses
Total current assets
Fixed assets
Balance Sheet
2,800,000
Less: accum. depr.(1,087,500)
Net fixed assets
Total assets
Liabilities:
Accounts payable
Notes payable
Accrued taxes
Total current liabilities
Long-term debt
Owner's equity
Total liabilities and owner's
equity
2) Debt ratio.
Income Statement
$400,000 Net sales (all credit)
1,415,000 Less: Cost of goods sold
Selling and administrative
1,847,500 expense
24,000 Depreciation expense
3,686,500 Interest expense
Earnings before taxes
Income taxes
1.712.500 Net income
$5,399,000
$600,000
875,000
92,000
$1,567,000
900,000
2,932,000
$5,399,000
Based on the information in the above table, calculate the following ratios.
1) Current ratio.
$6,375,000
(4,375,000)
(1,000,000)
(135,000)
(100,000)
$765,000
(306,000)
$459,000

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