**Rundle Company Financial Statements****Balance Sheets (As of December 31)**| | Year 4 | Year 3 ||---|---|---|| **Assets** | | || Current assets | | || Cash | $22,000 | $18,000 || Marketable securities | $21,200 | $7,200 || Accounts receivable (net) | $53,000 | $45,000 || Inventories | $138,000 | $145,000 || Prepaid items | $27,000 | $12,000 || **Total current assets** | $261,200 | $227,200 || Investments | $27,000 | $20,000 || Plant (net) | $270,000 | $255,000 || Land | $30,000 | $26,000 || **Total assets** | $588,200 | $528,200 || **Liabilities and Stockholders’ Equity** | | || Current liabilities | | || Notes payable | $31,800 | $13,500 || Accounts payable | $133,800 | $120,000 || Salaries payable | $21,000 | $15,000 || **Total current liabilities** | $186,600 | $148,500 || Noncurrent liabilities | | || Bonds payable | $100,000 | $100,000 || Other | $27,000 | $22,000 || **Total noncurrent liabilities** | $127,000 | $122,000 || **Total liabilities** | $313,600 | $270,500 || Stockholders’ equity | | || Preferred stock (par value $10, 4% cumulative, non-participating; 7,000 shares authorized and issued) | $70,000 | $70,000 || Common stock (no par; 50,000 shares authorized; 10,000 shares issued) | $70,000 | $70,000 || Retained earnings | $134,600 | $117,700 || **Total stockholders’ equity** | $274,600 | $257,700 || **Total liabilities and stockholders’ equity** | $588,200 | $528,200 |---**Statements of Income and Retained Earnings (For the Years Ended December 31)**| **Financial Ratios Calculation for Year 4 and Year 3**To assess the financial performance of a company, the following ratios need to be calculated for both Year 4 and Year 3. Ensure that you adhere to the rounding instructions provided for each ratio.a. **Working Capital** - Formula: Current Assets - Current Liabilitiesb. **Current Ratio** - Formula: Current Assets / Current Liabilities - Round to 2 decimal places.c. **Quick Ratio** - Formula: (Current Assets - Inventory) / Current Liabilities - Round to 2 decimal places.d. **Receivables Turnover** - Formula: Net Credit Sales / Average Accounts Receivable - Beginning receivables at Year 3: $46,000. - Round to 2 decimal places.e. **Average Days to Collect Accounts Receivable** - Formula: 365 days / Receivables Turnover - Round intermediate calculations to 2 decimal places and final result to the nearest whole number.f. **Inventory Turnover** - Formula: Cost of Goods Sold / Average Inventory - Beginning inventory at Year 3: $152,000. - Round to 2 decimal places.g. **Number of Days to Sell Inventory** - Formula: 365 days / Inventory Turnover - Round intermediate calculations to 2 decimal places and final result to the nearest whole number.h. **Debt-to-Assets Ratio** - Formula: Total Debt / Total Assets - Round to 2 decimal places.i. **Debt-to-Equity Ratio** - Formula: Total Debt / Total Equity - Round to 2 decimal places.j. **Number of Times Interest Was Earned** - Formula: EBIT / Interest Expense - Round to 2 decimal places.k. **Plant Assets to Long-Term Debt** - Formula: Net Plant Assets / Long-Term Debt - Round to 2 decimal places.l. **Net Margin** - Formula: Net Income / Net Sales - Round to 2 decimal places.m. **Turnover of Assets** - Formula: Net Sales / Average Total Assets (Year 3: $528,200) - Round to 2 decimal places.n. **Return on Investment (ROI)** - Formula: Net Income / Average Total Assets (

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Financial statements for Rundle Company follow. Assets Current assets Cash Marketable securities Accounts receivable (net) Inventories Prepaid items Total current assets Investments Plant (net) Land Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Notes payable Accounts payable Salaries payable Total current liabilities Noncurrent liabilities Bonds payable Other Total noncurrent liabilities Total liabilities Stockholders' equity Preferred stock, (par value $10, 4% cumulative, non-participating; 7,000 shares authorized and issued) Common stock (no par; 50,000 shares authorized; 10,000 shares issued) Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Revenues Sales (net) Other revenues RUNDLE COMPANY Statements of Income and Retained Earnings For the Years Ended December 31 Total revenues Expenses Cost of goods sold RUNDLE COMPANY Balance Sheets As of December 31 Selling, general, and administrative Interest expense Income tax expense Total expenses Net earnings (net income) Retained earnings, January 1 Less: Preferred stock dividends Common stock dividends Retained earnings, December 31 Year 4 $350,000 10,400 360,400 175,000 67,000 11,600 83,000 336,600 23,800 117,700 2,800 4,100 $134,600 Year 3 $330,000 7,400 337,400 139,000 62,000 10,800 82,000 293,800 43,600 81,000 2,800 4,100 $117,700 Year 4 $ 22,000 21,200 53,000 138,000 27,000 261,200 27,000 270,000 30,000 $588, 200 $ 31,800 133,800 21,000 186,600 100,000 27,000 127,000 313,600 70,000 70,000 134,600 274,600 $588,200 Year 3 $ 18,000 7,200 45,000 146,000 12,000 228,200 20,000 255,000 25,000 $528, 200 $ 13,500 120,000 15,000 148,500 100,000 22,000 122,000 270,500 70,000 70,000 117,700 257,700 $528, 200

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q