Financial ratios computed for Whittaker Inc. include the following: Current ratio 1.7 to 1 Acid-test ratio 1.4 to 1 2.5 to 1 Debt/equity ratio Inventory turnover Accounts receivable turnover 2.5 times 5.9 times Times interest earned 4.85 times Gross profit ratio 40% Return on investment 12.57% Earnings per share $11.95 • All sales during the year were made on account. Cash collections during the year exceeded sales by $18,000, and no uncollectible accounts were written off. • The balance of the accounts receivable account was $46,000 on January 1, 2020. • No common stock was issued during the year. • Dividends declared and paid during the year were $5,324. • The balance of the inventory account was $71,784 on January 1, 2020. • Interest expense on the income statement relates to the 15% bonds payable; $10,000 of these bonds were issued on May 1, 2020; 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.
Financial ratios computed for Whittaker Inc. include the following: Current ratio 1.7 to 1 Acid-test ratio 1.4 to 1 2.5 to 1 Debt/equity ratio Inventory turnover Accounts receivable turnover 2.5 times 5.9 times Times interest earned 4.85 times Gross profit ratio 40% Return on investment 12.57% Earnings per share $11.95 • All sales during the year were made on account. Cash collections during the year exceeded sales by $18,000, and no uncollectible accounts were written off. • The balance of the accounts receivable account was $46,000 on January 1, 2020. • No common stock was issued during the year. • Dividends declared and paid during the year were $5,324. • The balance of the inventory account was $71,784 on January 1, 2020. • Interest expense on the income statement relates to the 15% bonds payable; $10,000 of these bonds were issued on May 1, 2020; 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question

Transcribed Image Text:WHITTAKER INC.
Balance Sheet
December 31, 2020
Current assets:
Cash
Accounts receivable, net
Inventory
Total current assets
$
187,000
Property, plant, and equipment, net
Total assets
Current liabilities
Bonds payable, 15%
68,000
Total liabilities
Stockholders' equity:
Common stock, $4 par value
10,000
Additional paid-in capital
15,000
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity

Transcribed Image Text:Financial ratios computed for Whittaker Inc. include the following:
Current ratio
1.7 to 1
Acid-test ratio
1.4 to 1
Debt/equity ratio
Inventory turnover
Accounts receivable turnover
2.5 to 1
2.5 times
5.9 times
Times interest earned
4.85 times
Gross profit ratio
Return on investment
40%
12.57%
Earnings per share
$11.95
All sales during the year were made on account. Cash collections during the year exceeded sales by $18,000, and no uncollectible
accounts were written off.
The balance of the accounts receivable account was $46,000 on January 1, 2020.
No common stock was issued during the year.
Dividends declared and paid during the year were $5,324.
The balance of the inventory account was $71,784 on January 1, 2020.
Interest expense on the income statement relates to the 15% bonds payable; $10,000 of these bonds were issued on May 1, 2020;
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.
WHITTAKER INC.
Income Statement
For the Year Ended December 31, 2020
Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
Interest expense
Income before taxes
Income taxes (20%)
Net income
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