Required: Compute the missing amounts on the company's financial statements. (Hint: What's the difference between the acid-test ratio and the current ratio?) (Do not round intermediate calculations.)

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 50E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...
Question
100%
The following information is available about the company:
a. All sales during the year were on account.
b. There was no change in the number of shares of common stock outstanding during the year.
c. The interest expense on the income statement relates to the bonds payable; the amount of
bonds outstanding did not change during the year.
d. Selected balances at the beginning of the current year were:
$ 260,000
$ 370,000
$5,040,000
Accounts receivable
Inventory
Total assets
e. Selected financial ratios computed from the statements below for the current year are:
$ 4.62
Earnings per share
Debt-to-equity ratio
Accounts receivable turnover
0.950
20.0
Current ratio
2.40
Return on total assets
8%
Times interest earned ratio
8.0
Acid-test ratio
1.11
Inventory turnover
8.0
Transcribed Image Text:The following information is available about the company: a. All sales during the year were on account. b. There was no change in the number of shares of common stock outstanding during the year. c. The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year. d. Selected balances at the beginning of the current year were: $ 260,000 $ 370,000 $5,040,000 Accounts receivable Inventory Total assets e. Selected financial ratios computed from the statements below for the current year are: $ 4.62 Earnings per share Debt-to-equity ratio Accounts receivable turnover 0.950 20.0 Current ratio 2.40 Return on total assets 8% Times interest earned ratio 8.0 Acid-test ratio 1.11 Inventory turnover 8.0
Required:
Compute the missing amounts on the company's financial statements. (Hint: What's the difference
between the acid-test ratio and the current ratio?) (Do not round intermediate calculations.)
Pepper Industries
Income Statement
For the Year Ended March 31
Sales
$
4,000,000
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Interest expense
55,000
Net income before taxes
Income taxes (40%)
Net income
Pepper Industries
Balance Sheet
March 31
Current assets:
Cash
Accounts receivable, net
Inventory
Total current assets
Plant and equipment, net
Total assets
Liabilities:
Current liabilities
$
210,000
Bonds payable, 10%
Total liabilities
Stockholders' equity:
Common stock, $2.90 par value
Retained earnings
Total stockholders' equity
Total liabilities and stockholders equity
Transcribed Image Text:Required: Compute the missing amounts on the company's financial statements. (Hint: What's the difference between the acid-test ratio and the current ratio?) (Do not round intermediate calculations.) Pepper Industries Income Statement For the Year Ended March 31 Sales $ 4,000,000 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense 55,000 Net income before taxes Income taxes (40%) Net income Pepper Industries Balance Sheet March 31 Current assets: Cash Accounts receivable, net Inventory Total current assets Plant and equipment, net Total assets Liabilities: Current liabilities $ 210,000 Bonds payable, 10% Total liabilities Stockholders' equity: Common stock, $2.90 par value Retained earnings Total stockholders' equity Total liabilities and stockholders equity
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