LOGIC COMPANY Comparative Income Statement For Years Ended December 31, 2017 and 2018 2018 2017 Gross sales $ 22,800 $ 17,850 Sales returns and allowances 900 100 Net sales $ 21,900 $ 17,750 Cost of merchandise (goods) sold 11,050 7,700 Gross profit $ 10,850 $ 10,050 Operating expenses: Depreciation $ 1,080 $ 790 Selling and administrative 5,050 3,900 Research 930 690 Miscellaneous 740 490 Total operating expenses $ 7,800 $ 5,870 Income before interest and taxes $ 3,050 $ 4,180 Interest expense 940 690 Income before taxes $ 2,110 $ 3,490 Provision for taxes 844 1,396 Net income $ 1,266 $ 2,094 LOGIC COMPANY Comparative Balance Sheet December 31, 2017 and 2018 2018 2017 Assets Current assets: Cash $ 11,800 $ 8,600 Accounts receivable 16,100 12,100 Merchandise inventory 8,100 13,600 Prepaid expenses 23,600 9,600 Total current assets $ 59,600 $ 43,900 Plant and equipment: Building (net) $ 14,000 $ 10,600 Land 13,100 8,600 Total plant and equipment $ 27,100 $ 19,200 Total assets $ 86,700 $ 63,100 Liabilities Current liabilities: Accounts payable $ 12,600 $ 6,600 Salaries payable 6,700 4,600 Total current liabilities $ 19,300 $ 11,200 Long-term liabilities: Mortgage note payable 21,600 20,100 Total liabilities $ 40,900 $ 31,300 Stockholders’ Equity Common stock $ 20,600 $ 20,700 Retained earnings 25,200 11,100 Total stockholders’ equity $ 45,800 $ 31,800 Total liabilities and stockholders’ equity $ 86,700 $ 63,100 Calculate the acid test ratio. (Round your answers to the nearest hundredth.)

LOGIC COMPANY Comparative Income Statement For Years Ended December 31, 2017 and 2018 2018 2017 Gross sales $ 22,800 $ 17,850 Sales returns and allowances 900 100 Net sales $ 21,900 $ 17,750 Cost of merchandise (goods) sold 11,050 7,700 Gross profit $ 10,850 $ 10,050 Operating expenses: Depreciation $ 1,080 $ 790 Selling and administrative 5,050 3,900 Research 930 690 Miscellaneous 740 490 Total operating expenses $ 7,800 $ 5,870 Income before interest and taxes $ 3,050 $ 4,180 Interest expense 940 690 Income before taxes $ 2,110 $ 3,490 Provision for taxes 844 1,396 Net income $ 1,266 $ 2,094 LOGIC COMPANY Comparative Balance Sheet December 31, 2017 and 2018 2018 2017 Assets Current assets: Cash $ 11,800 $ 8,600 Accounts receivable 16,100 12,100 Merchandise inventory 8,100 13,600 Prepaid expenses 23,600 9,600 Total current assets $ 59,600 $ 43,900 Plant and equipment: Building (net) $ 14,000 $ 10,600 Land 13,100 8,600 Total plant and equipment $ 27,100 $ 19,200 Total assets $ 86,700 $ 63,100 Liabilities Current liabilities: Accounts payable $ 12,600 $ 6,600 Salaries payable 6,700 4,600 Total current liabilities $ 19,300 $ 11,200 Long-term liabilities: Mortgage note payable 21,600 20,100 Total liabilities $ 40,900 $ 31,300 Stockholders’ Equity Common stock $ 20,600 $ 20,700 Retained earnings 25,200 11,100 Total stockholders’ equity $ 45,800 $ 31,800 Total liabilities and stockholders’ equity $ 86,700 $ 63,100 Calculate the acid test ratio. (Round your answers to the nearest hundredth.)

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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LOGIC COMPANY
Comparative Income Statement
For Years Ended December 31, 2017 and 2018

	2018	2017
Gross sales	$	22,800	$	17,850
Sales returns and allowances		900		100
Net sales	$	21,900	$	17,750
Cost of merchandise (goods) sold		11,050		7,700
Gross profit	$	10,850	$	10,050
Operating expenses:
Depreciation	$	1,080	$	790
Selling and administrative		5,050		3,900
Research		930		690
Miscellaneous		740		490
Total operating expenses	$	7,800	$	5,870
Income before interest and taxes	$	3,050	$	4,180
Interest expense		940		690
Income before taxes	$	2,110	$	3,490
Provision for taxes		844		1,396
Net income	$	1,266	$	2,094

LOGIC COMPANY
Comparative Balance Sheet
December 31, 2017 and 2018

	2018	2017
Assets
Current assets:
Cash	$	11,800	$	8,600
Accounts receivable		16,100		12,100
Merchandise inventory		8,100		13,600
Prepaid expenses		23,600		9,600
Total current assets	$	59,600	$	43,900
Plant and equipment:
Building (net)	$	14,000	$	10,600
Land		13,100		8,600
Total plant and equipment	$	27,100	$	19,200
Total assets	$	86,700	$	63,100
Liabilities
Current liabilities:
Accounts payable	$	12,600	$	6,600
Salaries payable		6,700		4,600
Total current liabilities	$	19,300	$	11,200
Long-term liabilities:
Mortgage note payable		21,600		20,100
Total liabilities	$	40,900	$	31,300
Stockholders’ Equity
Common stock	$	20,600	$	20,700
Retained earnings		25,200		11,100
Total stockholders’ equity	$	45,800	$	31,800
Total liabilities and stockholders’ equity	$	86,700	$	63,100

Calculate the acid test ratio. (Round your answers to the nearest hundredth.)

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