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Balance Sheet as of December 31, 2018 2018 $ 125,000 $ 375,000 550,000 $ 1,050,000 2,750,000 (1,200,000) $1,550,000 $2,600,000 Assets Cash Accounts receivable Inventory Total current assets Grossfixed assets Accumulated depreciation Net fixed assets TOTAL ASSETS Debt (Liabilities) and Equity $ 150,000 150,000 $ 300,000 Accounts payable Short-term notes Total current liabilities Long-tem debt Total debt 600,000 $ 900,000 $ 900,000 800,000 $1,700,000 $ 2,600,000 Common stock Retained earnings Total owners' equity TOTAL DEBT AND EQUITY Income Statement for the Year ending December 31, 2018 $1,450,000 (850,000) $ 600,000 (240,000) $ 360,000 (64,000) $ 296,000 (118,000) $ 178.000 Sales Cost of goods sold Gross profits Operating expenses Operating profits Interest expense Profits beforetaxes Тахes Net profits Industry Norms Current ratio 3.25 Retum on assets 15.0% Operating profit margin 20.0% Total asset turnover 0.75 Debt ratio 0.20 Retum on equity 9.0%

Balance Sheet as of December 31, 2018 2018 $ 125,000 $ 375,000 550,000 $ 1,050,000 2,750,000 (1,200,000) $1,550,000 $2,600,000 Assets Cash Accounts receivable Inventory Total current assets Grossfixed assets Accumulated depreciation Net fixed assets TOTAL ASSETS Debt (Liabilities) and Equity $ 150,000 150,000 $ 300,000 Accounts payable Short-term notes Total current liabilities Long-tem debt Total debt 600,000 $ 900,000 $ 900,000 800,000 $1,700,000 $ 2,600,000 Common stock Retained earnings Total owners' equity TOTAL DEBT AND EQUITY Income Statement for the Year ending December 31, 2018 $1,450,000 (850,000) $ 600,000 (240,000) $ 360,000 (64,000) $ 296,000 (118,000) $ 178.000 Sales Cost of goods sold Gross profits Operating expenses Operating profits Interest expense Profits beforetaxes Тахes Net profits Industry Norms Current ratio 3.25 Retum on assets 15.0% Operating profit margin 20.0% Total asset turnover 0.75 Debt ratio 0.20 Retum on equity 9.0%

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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How does the owner finance the business in terms of debt and equity?

Balance Sheet as of December 31, 2018 2018 $ 125,000 $ 375,000 550,000 $ 1,050,000 2,750,000 (1,200,000) $1,550,000 $2,600,000 Assets Cash Accounts receivable Inventory Total current assets Grossfixed assets Accumulated depreciation Net fixed assets TOTAL ASSETS Debt (Liabilities) and Equity $ 150,000 150,000 $ 300,000 Accounts payable Short-term notes Total current liabilities Long-tem debt Total debt 600,000 $ 900,000 $ 900,000 800,000 $1,700,000 $ 2,600,000 Common stock Retained earnings Total owners' equity TOTAL DEBT AND EQUITY Income Statement for the Year ending December 31, 2018 $1,450,000 (850,000) $ 600,000 (240,000) $ 360,000 (64,000) $ 296,000 (118,000) $ 178.000 Sales Cost of goods sold Gross profits Operating expenses Operating profits Interest expense Profits beforetaxes Тахes Net profits Industry Norms Current ratio 3.25 Retum on assets 15.0% Operating profit margin 20.0% Total asset turnover 0.75 Debt ratio 0.20 Retum on equity 9.0%
Transcribed Image Text:Balance Sheet as of December 31, 2018 2018 $ 125,000 $ 375,000 550,000 $ 1,050,000 2,750,000 (1,200,000) $1,550,000 $2,600,000 Assets Cash Accounts receivable Inventory Total current assets Grossfixed assets Accumulated depreciation Net fixed assets TOTAL ASSETS Debt (Liabilities) and Equity $ 150,000 150,000 $ 300,000 Accounts payable Short-term notes Total current liabilities Long-tem debt Total debt 600,000 $ 900,000 $ 900,000 800,000 $1,700,000 $ 2,600,000 Common stock Retained earnings Total owners' equity TOTAL DEBT AND EQUITY Income Statement for the Year ending December 31, 2018 $1,450,000 (850,000) $ 600,000 (240,000) $ 360,000 (64,000) $ 296,000 (118,000) $ 178.000 Sales Cost of goods sold Gross profits Operating expenses Operating profits Interest expense Profits beforetaxes Тахes Net profits Industry Norms Current ratio 3.25 Retum on assets 15.0% Operating profit margin 20.0% Total asset turnover 0.75 Debt ratio 0.20 Retum on equity 9.0%
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