Financial Ratios The financial statements for Jackson Enterprises (income statement, statement of owner’s equity, and balance sheet) are shown. Jackson Enterprises Income Statement For Year Ended December 31, 20-- Revenue from sales: Sales $170,000 Less: Sales returns and allowances 10,000 Net sales $160,000 Cost of goods sold: Merchandise inventory, January 1, 20-- $7,700 Estimated returns inventory, January 1, 20-- 1,300 $9,000 Purchases $92,900 Less: Purchases returns and allowances $1,862 Purchases discounts 1,828 3,690 Net purchases $89,210 Add: Freight-in 961 Cost of goods purchased 90,171 Goods available for sale $99,171 Less: Merchandise inventory, Dec. 31, 20-- $8,300 Estimated returns inventory, Dec. 31, 20-- 1,200 9,500 Cost of goods sold 89,671 Gross profit $70,329 Operating expenses: Wages expense $37,600 Advertising expense 1,246 Supplies expense 394 Phone expense 2,152 Utilities expense 11,400 Insurance expense 878 Depreciation expense—building 3,668 Depreciation expense—equipment 3,768 Miscellaneous expense 534 Total operating expenses 61,640 Income from operations $8,689 Other revenues: Interest revenue $1,956 Other expenses: Interest expense 932 1,024 Net income $9,713 Jackson Enterprises Statement of Owner's Equity For Year Ended December 31, 20-- J. B. Gray, capital, January 1, 20-- $85,247 Net income for the year $9,713 Less: Withdrawals for the year 8,000 Increase in capital 1,713 J. B. Gray, capital, December 31, 20-- 86,960 Jackson Enterprises Balance Sheet December 31, 20-- Assets Current assets: Cash $21,300 Accounts receivable 18,870 Merchandise inventory 8,300 Estimated returns inventory 1,200 9,500 Supplies 1,400 Prepaid insurance 900 Total current assets $51,970 Property, plant, and equipment: Building $89,500 Less: Accumulated depreciation-building 27,500 $62,000 Equipment $34,000 Less: Accumulated depreciation-equipment 7,300 26,700 Total property, plant, and equipment 88,700 Total assets $140,670 Liabilities Current liabilities: Accounts payable $11,350 Customer refunds payable 1,450 Wages payable 400 Sales tax payable 1,100 Mortgage payable (current portion) 850 Total current liabilities $15,150 Long-term liabilities: Mortgage payable $39,410 Less: Current portion 850 38,560 Total liabilities $53,710 Owner's Equity J. B. Gray, capital 86,960 Total liabilities and owner's equity $140,670 Compute the following financial ratios. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $21,200. Round answers to one decimal place. Jackson Enterprises December 31, 20-- Working capital ____ Current ratio ____ to 1 Quick ratio ____ to 1 Return on owner's equity ____ % Accounts receivable turnover ____ Average number of days required to collect receivables ____ days Inventory turnover ____ Average number of days required to sell inventory ____ days

Financial Ratios The financial statements for Jackson Enterprises (income statement, statement of owner’s equity, and balance sheet) are shown. Jackson Enterprises Income Statement For Year Ended December 31, 20-- Revenue from sales: Sales $170,000 Less: Sales returns and allowances 10,000 Net sales $160,000 Cost of goods sold: Merchandise inventory, January 1, 20-- $7,700 Estimated returns inventory, January 1, 20-- 1,300 $9,000 Purchases $92,900 Less: Purchases returns and allowances $1,862 Purchases discounts 1,828 3,690 Net purchases $89,210 Add: Freight-in 961 Cost of goods purchased 90,171 Goods available for sale $99,171 Less: Merchandise inventory, Dec. 31, 20-- $8,300 Estimated returns inventory, Dec. 31, 20-- 1,200 9,500 Cost of goods sold 89,671 Gross profit $70,329 Operating expenses: Wages expense $37,600 Advertising expense 1,246 Supplies expense 394 Phone expense 2,152 Utilities expense 11,400 Insurance expense 878 Depreciation expense—building 3,668 Depreciation expense—equipment 3,768 Miscellaneous expense 534 Total operating expenses 61,640 Income from operations $8,689 Other revenues: Interest revenue $1,956 Other expenses: Interest expense 932 1,024 Net income $9,713 Jackson Enterprises Statement of Owner's Equity For Year Ended December 31, 20-- J. B. Gray, capital, January 1, 20-- $85,247 Net income for the year $9,713 Less: Withdrawals for the year 8,000 Increase in capital 1,713 J. B. Gray, capital, December 31, 20-- 86,960 Jackson Enterprises Balance Sheet December 31, 20-- Assets Current assets: Cash $21,300 Accounts receivable 18,870 Merchandise inventory 8,300 Estimated returns inventory 1,200 9,500 Supplies 1,400 Prepaid insurance 900 Total current assets $51,970 Property, plant, and equipment: Building $89,500 Less: Accumulated depreciation-building 27,500 $62,000 Equipment $34,000 Less: Accumulated depreciation-equipment 7,300 26,700 Total property, plant, and equipment 88,700 Total assets $140,670 Liabilities Current liabilities: Accounts payable $11,350 Customer refunds payable 1,450 Wages payable 400 Sales tax payable 1,100 Mortgage payable (current portion) 850 Total current liabilities $15,150 Long-term liabilities: Mortgage payable $39,410 Less: Current portion 850 38,560 Total liabilities $53,710 Owner's Equity J. B. Gray, capital 86,960 Total liabilities and owner's equity $140,670 Compute the following financial ratios. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $21,200. Round answers to one decimal place. Jackson Enterprises December 31, 20-- Working capital Current ratio to 1 Quick ratio to 1 Return on owner's equity % Accounts receivable turnover Average number of days required to collect receivables days Inventory turnover Average number of days required to sell inventory days

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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Financial Ratios

The financial statements for Jackson Enterprises (income statement, statement of owner’s equity, and balance sheet) are shown.

Jackson Enterprises Income Statement For Year Ended December 31, 20--
Revenue from sales:
Sales			$170,000
Less: Sales returns and allowances			10,000
Net sales				$160,000
Cost of goods sold:
Merchandise inventory, January 1, 20--		$7,700
Estimated returns inventory, January 1, 20--		1,300	$9,000
Purchases		$92,900
Less: Purchases returns and allowances	$1,862
Purchases discounts	1,828	3,690
Net purchases		$89,210
Add: Freight-in		961
Cost of goods purchased			90,171
Goods available for sale			$99,171
Less: Merchandise inventory, Dec. 31, 20--		$8,300
Estimated returns inventory, Dec. 31, 20--		1,200	9,500
Cost of goods sold				89,671
Gross profit				$70,329
Operating expenses:
Wages expense			$37,600
Advertising expense			1,246
Supplies expense			394
Phone expense			2,152
Utilities expense			11,400
Insurance expense			878
Depreciation expense—building			3,668
Depreciation expense—equipment			3,768
Miscellaneous expense			534
Total operating expenses				61,640
Income from operations				$8,689
Other revenues:
Interest revenue			$1,956
Other expenses:
Interest expense			932	1,024
Net income				$9,713

Jackson Enterprises Statement of Owner's Equity For Year Ended December 31, 20--
J. B. Gray, capital, January 1, 20--		$85,247
Net income for the year	$9,713
Less: Withdrawals for the year	8,000
Increase in capital		1,713
J. B. Gray, capital, December 31, 20--		86,960

Jackson Enterprises Balance Sheet December 31, 20--
Assets
Current assets:
Cash		$21,300
Accounts receivable		18,870
Merchandise inventory	8,300
Estimated returns inventory	1,200	9,500
Supplies		1,400
Prepaid insurance		900
Total current assets			$51,970
Property, plant, and equipment:
Building	$89,500
Less: Accumulated depreciation-building	27,500	$62,000
Equipment	$34,000
Less: Accumulated depreciation-equipment	7,300	26,700
Total property, plant, and equipment			88,700
Total assets			$140,670
Liabilities
Current liabilities:
Accounts payable	$11,350
Customer refunds payable	1,450
Wages payable	400
Sales tax payable	1,100
Mortgage payable (current portion)	850
Total current liabilities		$15,150
Long-term liabilities:
Mortgage payable	$39,410
Less: Current portion	850	38,560
Total liabilities			$53,710
Owner's Equity
J. B. Gray, capital			86,960
Total liabilities and owner's equity			$140,670

Compute the following financial ratios. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $21,200.

Round answers to one decimal place.

Jackson Enterprises
December 31, 20--
Working capital	____
Current ratio	____	to 1
Quick ratio	____	to 1
Return on owner's equity	____	%
Accounts receivable turnover	____
Average number of days required to collect receivables	____	days
Inventory turnover	____
Average number of days required to sell inventory	____	days

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