Homework Help is Here – Start Your Trial Now!
Business
Accounting
Solar Solutions began operations on January 1, 2015, and is now in its sixth year of operations. It is a retail sales company with a large amount of online sales. The adjusted trial balance as of December 31, 2020 appears below, along with prior year balance sheet data and some additional transaction data for 2020. SOLAR SOLUTIONS Adjusted Trial Balance 12/31/2020 2020 2019 Account Title Adjusted Trial Balance Debit Post-Closing Trial Balance $ 125,600 Credit Debit Credit 35,000 |Cash Accounts Receivable Prepaid Insurance Inventory Office Equipment 122,200 125,600 6,000 55,000 35,000 6,000 15,600 47,000 21,000 5,000 46,000 15,600 63,000 59,000 (16,000) $ 234,200 47,000 Machinery & Tools Accumulated Depreciation Accounts Payable Salaries Payable Sales Tax Payable 21,000 21,000 16,000 16,800 11,200 2,600 2,700 2,000 4,000 Note Payable-Long Term Common Stock, $10 par Retained Earnings Dividends Sales Revenue |Cost of Goods Sold Rent Expense Salaries Expense Insurance Expense Advertising Expense Depreciation Expense Interest Expense 31,000 240,000 28,600 22,100 160,000 28,600 10,000 235,000 127,600 20,000 36,000 11,800 6,000 5,000 1,800 Income Tax Expense 3,000 $ 571,400 $ 571,400 $ 250,200 250,200 Transaction Data for 2020 (Note, these transactions were included in the trial balance numbers above.) 6,000 Cash paid for purchase of office equipment Cash paid for purchase of tools Acquisition of Machinery with Notes Payable-Long-term 10,000 38,000 Payment on Long Term Debt Cash payment of dividends 10,000 Cash receipt from issuance of 10,000 shares of common stock 80,000

Solar Solutions began operations on January 1, 2015, and is now in its sixth year of operations. It is a retail sales company with a large amount of online sales. The adjusted trial balance as of December 31, 2020 appears below, along with prior year balance sheet data and some additional transaction data for 2020. SOLAR SOLUTIONS Adjusted Trial Balance 12/31/2020 2020 2019 Account Title Adjusted Trial Balance Debit Post-Closing Trial Balance $ 125,600 Credit Debit Credit 35,000 |Cash Accounts Receivable Prepaid Insurance Inventory Office Equipment 122,200 125,600 6,000 55,000 35,000 6,000 15,600 47,000 21,000 5,000 46,000 15,600 63,000 59,000 (16,000) $ 234,200 47,000 Machinery & Tools Accumulated Depreciation Accounts Payable Salaries Payable Sales Tax Payable 21,000 21,000 16,000 16,800 11,200 2,600 2,700 2,000 4,000 Note Payable-Long Term Common Stock, $10 par Retained Earnings Dividends Sales Revenue |Cost of Goods Sold Rent Expense Salaries Expense Insurance Expense Advertising Expense Depreciation Expense Interest Expense 31,000 240,000 28,600 22,100 160,000 28,600 10,000 235,000 127,600 20,000 36,000 11,800 6,000 5,000 1,800 Income Tax Expense 3,000 $ 571,400 $ 571,400 $ 250,200 250,200 Transaction Data for 2020 (Note, these transactions were included in the trial balance numbers above.) 6,000 Cash paid for purchase of office equipment Cash paid for purchase of tools Acquisition of Machinery with Notes Payable-Long-term 10,000 38,000 Payment on Long Term Debt Cash payment of dividends 10,000 Cash receipt from issuance of 10,000 shares of common stock 80,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Solar Solutions began operations on January 1, 2015, and is now in its sixth year of operations. It is a retail sales company with a large amount of online sales. The adjusted trial balance as of December 31, 2020 appears below, along with prior year balance sheet data and some additional transaction data for 2020. SOLAR SOLUTIONS Adjusted Trial Balance 12/31/2020 2020 2019 Account Title Adjusted Trial Balance Post-Closing Trial Balance $ 125,600 Debit Credit 35,000 6,000 Debit Credit Cash Accounts Receivable Prepaid Insurance Inventory Office Equipment Machinery & Tools |Accumulated Depreciation Accounts Payable Salaries Payable Sales Tax Payable Note Payable-Long Term Common Stock, $10 par Retained Earnings $ 122,200 125,600 55,000 35,000 15,600 5,000 6,000 47,000 46,000 15,600 21,000 63,000 47,000 (16,000) $ 234,200 59,000 21,000 21,000 16,000 11,200 16,800 2,600 2,700 2,000 31,000 4,000 22,100 240,000 160,000 28,600 28,600 Dividends 10,000 Sales Revenue 235,000 Cost of Goods Sold 127,600 Rent Expense Salaries Expense Insurance Expense Advertising Expense Depreciation Expense Interest Expense Income Tax Expense 20,000 36,000 11,800 6,000 5,000 1,800 3,000 $ 571,400 $ 571,400 $ 250,200 250,200 Transaction Data for 2020 (Note, these transactions were included in the trial balance numbers above.) Cash paid for purchase of office equipment Cash paid for purchase of tools Acquisition of Machinery with Notes Payable-Long-term 6,000 10,000 38,000 Payment on Long Term Debt Cash payment of dividends 10,000 Cash receipt from issuance of 10,000 shares of common stock 80,000
Transcribed Image Text:Solar Solutions began operations on January 1, 2015, and is now in its sixth year of operations. It is a retail sales company with a large amount of online sales. The adjusted trial balance as of December 31, 2020 appears below, along with prior year balance sheet data and some additional transaction data for 2020. SOLAR SOLUTIONS Adjusted Trial Balance 12/31/2020 2020 2019 Account Title Adjusted Trial Balance Post-Closing Trial Balance $ 125,600 Debit Credit 35,000 6,000 Debit Credit Cash Accounts Receivable Prepaid Insurance Inventory Office Equipment Machinery & Tools |Accumulated Depreciation Accounts Payable Salaries Payable Sales Tax Payable Note Payable-Long Term Common Stock, $10 par Retained Earnings $ 122,200 125,600 55,000 35,000 15,600 5,000 6,000 47,000 46,000 15,600 21,000 63,000 47,000 (16,000) $ 234,200 59,000 21,000 21,000 16,000 11,200 16,800 2,600 2,700 2,000 31,000 4,000 22,100 240,000 160,000 28,600 28,600 Dividends 10,000 Sales Revenue 235,000 Cost of Goods Sold 127,600 Rent Expense Salaries Expense Insurance Expense Advertising Expense Depreciation Expense Interest Expense Income Tax Expense 20,000 36,000 11,800 6,000 5,000 1,800 3,000 $ 571,400 $ 571,400 $ 250,200 250,200 Transaction Data for 2020 (Note, these transactions were included in the trial balance numbers above.) Cash paid for purchase of office equipment Cash paid for purchase of tools Acquisition of Machinery with Notes Payable-Long-term 6,000 10,000 38,000 Payment on Long Term Debt Cash payment of dividends 10,000 Cash receipt from issuance of 10,000 shares of common stock 80,000
Requirement 1. Compute Current Debt-to- Working Capital these ratios: Ratio Cash Ratio Debt Ratio Equity Ratio Round ratios to two decimal places or format as percentages or Accounts Days Sales Inventory Days Sales in Inventory currency as appropriate. Gross Profit Receivable in Turnover Percentage Turnover Receivables 2019 Total Assets = Rate of Rate of Asset Return on Return on Turnover Stockholders' Earnings Total Assets Ratio Equity Per Share 2019 SHE = Price/ Earnings Ratio* *Current Stock Price is Dividend $10.00 per share Dividend Yield Payout Dividend per share= Requirement 2. Based on the ratios computed above, analyze the company's ability to pay its debts (both current and long term). Refer to at least 3 specific ratios in your analysis. Requirement 3: Based on the ratios computed above, analyze the company's management of inventory. Refer to at least 2 specific ratios in your analysis. Requirement 4: Based on the ratios computed above, analyze the company's management of receivables. Refer to at least 2 specific ratios in your analysis.
Transcribed Image Text:Requirement 1. Compute Current Debt-to- Working Capital these ratios: Ratio Cash Ratio Debt Ratio Equity Ratio Round ratios to two decimal places or format as percentages or Accounts Days Sales Inventory Days Sales in Inventory currency as appropriate. Gross Profit Receivable in Turnover Percentage Turnover Receivables 2019 Total Assets = Rate of Rate of Asset Return on Return on Turnover Stockholders' Earnings Total Assets Ratio Equity Per Share 2019 SHE = Price/ Earnings Ratio* *Current Stock Price is Dividend $10.00 per share Dividend Yield Payout Dividend per share= Requirement 2. Based on the ratios computed above, analyze the company's ability to pay its debts (both current and long term). Refer to at least 3 specific ratios in your analysis. Requirement 3: Based on the ratios computed above, analyze the company's management of inventory. Refer to at least 2 specific ratios in your analysis. Requirement 4: Based on the ratios computed above, analyze the company's management of receivables. Refer to at least 2 specific ratios in your analysis.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Ratio Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS