LOGIC COMPANY Comparative Income Statement For Years Ended December 31, 2022 and 2023 2023 2022 Gross sales $ 19,000 $ 15,000 Sales returns and allowances 1,000 100 Net sales $ 18,000 $ 14,900 Cost of merchandise (goods) sold 12,000 9,000 Gross profit $ 6,000 $ 5,900 Operating expenses: Depreciation $ 700 $ 600 Selling and administrative 2,200 2,000 Research 550 500 Miscellaneous 360 300 Total operating expenses $ 3,810 $ 3,400 Income before interest and taxes $ 2,190 $ 2,500 Interest expense 560 500 Income before taxes $ 1,630 $ 2,000 Provision for taxes 640 800 Net income $ 990 $ 1,200 LOGIC COMPANY Comparative Balance Sheet December 31, 2022 and 2023 2023 2022 Assets Current assets: Cash $ 12,000 $ 9,000 Accounts receivable 16,500 12,500 Merchandise inventory 8,500 14,000 Prepaid expenses 24,000 10,000 Total current assets $ 61,000 $ 45,500 Plant and equipment: Building (net) $ 14,500 $ 11,000 Land 13,500 9,000 Total plant and equipment $ 28,000 $ 20,000 Total assets $ 89,000 $ 65,500 Liabilities Current liabilities: Accounts payable $ 13,000 $ 7,000 Salaries payable 7,000 5,000 Total current liabilities $ 20,000 $ 12,000 Long-term liabilities: Mortgage note payable 22,000 20,500 Total liabilities $ 42,000 $ 32,500 Stockholders’ Equity Common stock $ 21,000 $ 21,000 Retained earnings 26,000 12,000 Total stockholders’ equity $ 47,000 $ 33,000 Total liabilities and stockholders’ equity $ 89,000 $ 65,500 Calculate the asset turnover ratio. Note: Enter your response as a decimal rounded to 2 places.

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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	2023	2022
LOGIC COMPANY
Comparative Income Statement
For Years Ended December 31, 2022 and 2023
Gross sales	$ 19,000	$ 15,000
Sales returns and allowances	1,000	100
Net sales	$ 18,000	$ 14,900
Cost of merchandise (goods) sold	12,000	9,000
Gross profit	$ 6,000	$ 5,900
Operating expenses:
Depreciation	$ 700	$ 600
Selling and administrative	2,200	2,000
Research	550	500
Miscellaneous	360	300
Total operating expenses	$ 3,810	$ 3,400
Income before interest and taxes	$ 2,190	$ 2,500
Interest expense	560	500
Income before taxes	$ 1,630	$ 2,000
Provision for taxes	640	800
Net income	$ 990	$ 1,200

	2023	2022
LOGIC COMPANY
Comparative Balance Sheet
December 31, 2022 and 2023
Assets
Current assets:
Cash	$ 12,000	$ 9,000
Accounts receivable	16,500	12,500
Merchandise inventory	8,500	14,000
Prepaid expenses	24,000	10,000
Total current assets	$ 61,000	$ 45,500
Plant and equipment:
Building (net)	$ 14,500	$ 11,000
Land	13,500	9,000
Total plant and equipment	$ 28,000	$ 20,000
Total assets	$ 89,000	$ 65,500
Liabilities
Current liabilities:
Accounts payable	$ 13,000	$ 7,000
Salaries payable	7,000	5,000
Total current liabilities	$ 20,000	$ 12,000
Long-term liabilities:
Mortgage note payable	22,000	20,500
Total liabilities	$ 42,000	$ 32,500
Stockholders’ Equity
Common stock	$ 21,000	$ 21,000
Retained earnings	26,000	12,000
Total stockholders’ equity	$ 47,000	$ 33,000
Total liabilities and stockholders’ equity	$ 89,000	$ 65,500

Calculate the asset turnover ratio.

Note: Enter your response as a decimal rounded to 2 places.

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