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n which years do each company have acceptable cash ratios? What has to be done in the other years when they are not acceptable?

n which years do each company have acceptable cash ratios? What has to be done in the other years when they are not acceptable?

FINANCIAL ACCOUNTING
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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In which years do each company have acceptable cash ratios? What has to be done in the other years when they are not acceptable?

Income Statement Dec. 31, 2022 Company A Company B P850,000 550,000 Sales P1,350,000 895,000 Less: Cost of Goods Sold Purchases consisting 60% of COGS for both companies Gross Profit 300,000 455,000 Less: Expenses Utilities Expense 55,000 90,000 Salaries Expense 70,000 115,000 Advertising Expense Insurance Expense 1,000 2,000 1,000 2,000 Depreciation Expense Taxable Income 83,000 90,000 85,000 161,000 Income Tax (30%) 27,000 63,000 48,300 Net Income 112,700
Transcribed Image Text:Income Statement Dec. 31, 2022 Company A Company B P850,000 550,000 Sales P1,350,000 895,000 Less: Cost of Goods Sold Purchases consisting 60% of COGS for both companies Gross Profit 300,000 455,000 Less: Expenses Utilities Expense 55,000 90,000 Salaries Expense 70,000 115,000 Advertising Expense Insurance Expense 1,000 2,000 1,000 2,000 Depreciation Expense Taxable Income 83,000 90,000 85,000 161,000 Income Tax (30%) 27,000 63,000 48,300 Net Income 112,700
Statement of Financial Position Company A Company B Current Assets 2021 (Beg) 2022 (End) 2021 (Beg) 2022 (End) P115,000 101,000 Cash P42,000 P58,000 P75,000 Marketable Securities 36,000 45,000 25,000 75,000 32,000 85,000 55,000 125,000 200,000 24,000 24,000 95,000 150,000 Accounts Receivable Inventory Prepaid Insurance Prepaid Advertising Noncurrent Assets (all in book value) 12,000 11,000 11,000 22,000 22,000 12,000 Furniture and Fixtures 240,000 192,000 500,000 450,000 Delivery Van 245,000 210,000 350,000 315,000 Current Liabilities Notes Payable Accounts Payable 35,000 32,000 120,000 100,000 54,000 60,000 140,000 125,000 Noncurrent Liabilities Bonds Payable Shareholders' Equity 220,000 180,000 550,000 520,000 Common Stock 295,000 295,000 350,000 350,000 Retained Earnings 90,000 100,000 163,000 175,000
Transcribed Image Text:Statement of Financial Position Company A Company B Current Assets 2021 (Beg) 2022 (End) 2021 (Beg) 2022 (End) P115,000 101,000 Cash P42,000 P58,000 P75,000 Marketable Securities 36,000 45,000 25,000 75,000 32,000 85,000 55,000 125,000 200,000 24,000 24,000 95,000 150,000 Accounts Receivable Inventory Prepaid Insurance Prepaid Advertising Noncurrent Assets (all in book value) 12,000 11,000 11,000 22,000 22,000 12,000 Furniture and Fixtures 240,000 192,000 500,000 450,000 Delivery Van 245,000 210,000 350,000 315,000 Current Liabilities Notes Payable Accounts Payable 35,000 32,000 120,000 100,000 54,000 60,000 140,000 125,000 Noncurrent Liabilities Bonds Payable Shareholders' Equity 220,000 180,000 550,000 520,000 Common Stock 295,000 295,000 350,000 350,000 Retained Earnings 90,000 100,000 163,000 175,000
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