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The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: $ 6,500 35,000 70,000 3,500 115,000 185,000 Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets $300,000 Liabilities and Stockholders' Equity Liabilities: $ 50,000 80,000 130,000 Current liabilities Bonds payable, 10% Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings Total stockholders' equity 30,000 140,000 170,000 Total liabilities and stockholders' equity $300,000 Castile Products, Inc. Income Statement For the Year Ended December 31 Sales $420,000 292,500 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense 127,500 89,500 38,000 8,000 30,000 9,000 $ 21,000 Net income before taxes Income taxes (30%) Net income Account balances at the beginning of the year were: accounts receivable, $25,000; and inventory, $60,000. All sales were on account.

The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: $ 6,500 35,000 70,000 3,500 115,000 185,000 Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets $300,000 Liabilities and Stockholders' Equity Liabilities: $ 50,000 80,000 130,000 Current liabilities Bonds payable, 10% Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings Total stockholders' equity 30,000 140,000 170,000 Total liabilities and stockholders' equity $300,000 Castile Products, Inc. Income Statement For the Year Ended December 31 Sales $420,000 292,500 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense 127,500 89,500 38,000 8,000 30,000 9,000 $ 21,000 Net income before taxes Income taxes (30%) Net income Account balances at the beginning of the year were: accounts receivable, $25,000; and inventory, $60,000. All sales were on account.

Managerial Accounting: The Cornerstone of Business Decision-Making
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 6MCQ
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Account balances at the beginning of the year were: accounts receivable, $25,000; and inventory, $60,000. All sales were on account. Required: Compute the following financial data and ratios: 1. Working capital. 2. Current ratio. (Round your answer to 1 decimal place.) 3. Acid-test ratio. (Round your answer to 2 decimal places.) 4. Debt-to-equity ratio. (Round your answer to 2 decimal places.) 5. Times interest earned ratio. (Round your answer to 2 decimal places.) 6. Average collection period. (Use 365 days in a year. Round your answer to 1 decimal place.) 7. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.) 8. Operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.) 1. Working capital 2. Current ratio 3. Acid-test ratio 4. Debt-to-equity ratio 5. Times interest earned ratio 6. Average collection period 7. Average sale period 8. Operating cycle days days days
Transcribed Image Text:Account balances at the beginning of the year were: accounts receivable, $25,000; and inventory, $60,000. All sales were on account. Required: Compute the following financial data and ratios: 1. Working capital. 2. Current ratio. (Round your answer to 1 decimal place.) 3. Acid-test ratio. (Round your answer to 2 decimal places.) 4. Debt-to-equity ratio. (Round your answer to 2 decimal places.) 5. Times interest earned ratio. (Round your answer to 2 decimal places.) 6. Average collection period. (Use 365 days in a year. Round your answer to 1 decimal place.) 7. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.) 8. Operating cycle. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.) 1. Working capital 2. Current ratio 3. Acid-test ratio 4. Debt-to-equity ratio 5. Times interest earned ratio 6. Average collection period 7. Average sale period 8. Operating cycle days days days
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: $ 6,500 35,000 70,000 Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets 3,500 115,000 185,000 Property and equipment, net Total assets $300,000 Liabilities and Stockholders' Equity Liabilities: $ 50,000 80,000 Current liabilities Bonds payable, 10% Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings Total stockholders' equity 130,000 30,000 140,000 170,000 Total liabilities and stockholders' equity $300,000 Castile Products, Inc. ncome Statement For the Year Ended December 31 Sales $420,000 292,500 127,500 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense 89,500 38,000 8,000 30,000 Net income before taxes Income taxes (30%) 9,000 $ 21,000 Net income Account balances at the beginning of the year were: accounts receivable, $25,000; and inventory, $60,000. All sales were on account.
Transcribed Image Text:The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: $ 6,500 35,000 70,000 Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets 3,500 115,000 185,000 Property and equipment, net Total assets $300,000 Liabilities and Stockholders' Equity Liabilities: $ 50,000 80,000 Current liabilities Bonds payable, 10% Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings Total stockholders' equity 130,000 30,000 140,000 170,000 Total liabilities and stockholders' equity $300,000 Castile Products, Inc. ncome Statement For the Year Ended December 31 Sales $420,000 292,500 127,500 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense 89,500 38,000 8,000 30,000 Net income before taxes Income taxes (30%) 9,000 $ 21,000 Net income Account balances at the beginning of the year were: accounts receivable, $25,000; and inventory, $60,000. All sales were on account.
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