Problem: Module 4 Textbook Problem 6 Learning Objectives: · ● 4-2 Calculate ratios for assessing a company's liquidity 4-3 Calculate ratios for assessing a company's solvency The December 31, Year 4, balance sheet for Gibson Corporation is presented here. These are the only accounts on Gibson's balance sheet. Amounts indicated by question marks (?) can be calculated using the following additional information: Assets Cash GIBSON CORPORATION Balance Sheet As of December 31, Year 4 Accounts receivable (net) Inventory Property, plant, and equipment (net) Liabilities and Stockholders' Equity Accounts payable (trade) Income taxes payable (current) Long-term debt Common stock Retained earnings Additional Information Current ratio (at year end) Total liabilities + Total stockholders' Gross margin percentage $ 35,000 ? ? 295,000 $445,000 $ a. Accounts payable b. Retained earnings c. Inventory ? $ 35,000 ? 301,000 ? ? equity Inventory turnover (Cost of goods sold Ending inventory) Gross margin for Year 4 1.5 to 1.0 60% 30% 10.5 times $324,000 Required a. Compute the balance in trade accounts payable as of December 31, Year 4. b. Compute the balance in retained earnings as of December 31, Year 4. c. Compute the balance in the inventory account as of December 31, Year 4. (Assume that the level of inventory did not change from last year.) (For all requirements, negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
Problem: Module 4 Textbook Problem 6 Learning Objectives: · ● 4-2 Calculate ratios for assessing a company's liquidity 4-3 Calculate ratios for assessing a company's solvency The December 31, Year 4, balance sheet for Gibson Corporation is presented here. These are the only accounts on Gibson's balance sheet. Amounts indicated by question marks (?) can be calculated using the following additional information: Assets Cash GIBSON CORPORATION Balance Sheet As of December 31, Year 4 Accounts receivable (net) Inventory Property, plant, and equipment (net) Liabilities and Stockholders' Equity Accounts payable (trade) Income taxes payable (current) Long-term debt Common stock Retained earnings Additional Information Current ratio (at year end) Total liabilities + Total stockholders' Gross margin percentage $ 35,000 ? ? 295,000 $445,000 $ a. Accounts payable b. Retained earnings c. Inventory ? $ 35,000 ? 301,000 ? ? equity Inventory turnover (Cost of goods sold Ending inventory) Gross margin for Year 4 1.5 to 1.0 60% 30% 10.5 times $324,000 Required a. Compute the balance in trade accounts payable as of December 31, Year 4. b. Compute the balance in retained earnings as of December 31, Year 4. c. Compute the balance in the inventory account as of December 31, Year 4. (Assume that the level of inventory did not change from last year.) (For all requirements, negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem: Module 4 Textbook Problem 6
Learning Objectives:
The December 31, Year 4, balance sheet for Gibson Corporation is presented here. These are the only accounts on
Gibson's balance sheet. Amounts indicated by question marks (?) can be calculated using the following additional
information:
• 4-2 Calculate ratios for assessing a company's liquidity
• 4-3 Calculate ratios for assessing a company's solvency
Assets
Cash
Accounts receivable (net)
Inventory
Property, plant, and equipment (net)
GIBSON CORPORATION
Balance Sheet As of December 31, Year 4
Liabilities and Stockholders' Equity
Accounts payable (trade)
Income taxes payable (current)
Long-term debt
Common stock
Retained earnings.
Additional Information
Current ratio (at year end)
Total liabilities
Gross margin percentage
a.
i
Total stockholders'
$ 35,000
?
?
Accounts payable
Retained earnings
295,000
$445,000
b.
C. Inventory
$
?
$
equity
Inventory turnover (Cost of goods sold Ending inventory)
Gross margin for Year 4
35,000
?
301,000
?
?
Required
a. Compute the balance in trade accounts payable as of December 31, Year 4.
b. Compute the balance in retained earnings as of December 31, Year 4.
c. Compute the balance in the inventory account as of December 31, Year 4. (Assume that the level of inventory did not
change from last year.)
1.5 to 1.0
(For all requirements, negative amounts should be indicated by a minus sign. Do not round intermediate
calculations. Round your answers to the nearest whole dollar amount.)
60%
30%
10.5 times
$324,000
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