The financial statements for Jackson Enterprises (income statement, statement of owner’s equity, and balance sheet) are shown. Jackson Enterprises Income Statement For Year Ended December 31, 20-- Revenue from sales: Sales $170,000 Less: Sales returns and allowances 10,000 Net sales $160,000 Cost of goods sold: Merchandise inventory, January 1, 20-- $6,800 Estimated returns inventory, January 1, 20-- 1,200 $8,000 Purchases $92,930 Less: Purchases returns and allowances $1,782 Purchases discounts 1,802 3,584 Net purchases $89,346 Add: Freight-in 945 Cost of goods purchased 90,291 Goods available for sale $98,291 Less: Merchandise inventory, Dec. 31, 20-- $9,320 Estimated returns inventory, Dec. 31, 20-- 1,180 10,500 Cost of goods sold 87,791 Gross profit $72,209 Operating expenses: Wages expense $37,860 Advertising expense 1,228 Supplies expense 374 Phone expense 2,170 Utilities expense 10,794 Insurance expense 946 Depreciation expense—building 4,004 Depreciation expense—equipment 3,648 Miscellaneous expense 508 Total operating expenses 61,532 Income from operations $10,677 Other revenues: Interest revenue $1,720 Other expenses: Interest expense 814 906 Net income $11,583 Jackson Enterprises Statement of Owner's Equity For Year Ended December 31, 20-- J. B. Gray, capital, January 1, 20-- $84,287 Net income for the year $11,583 Less: Withdrawals for the year 9,000 Increase in capital 2,583 J. B. Gray, capital, December 31, 20-- 86,870 Jackson Enterprises Balance Sheet December 31, 20-- Assets Current assets: Cash $20,900 Accounts receivable 18,870 Merchandise inventory 9,320 Estimated returns inventory 1,180 10,500 Supplies 1,300 Prepaid insurance 950 Total current assets $52,520 Property, plant, and equipment: Building $90,000 Less: Accumulated depreciation-building 29,000 $61,000 Equipment $34,500 Less: Accumulated depreciation-equipment 7,400 27,100 Total property, plant, and equipment 88,100 Total assets $140,620 Liabilities Current liabilities: Accounts payable $11,550 Customer refunds payable 1,550 Wages payable 400 Sales tax payable 1,300 Mortgage payable (current portion) 880 Total current liabilities $15,680 Long-term liabilities: Mortgage payable $38,950 Less: Current portion 880 38,070 Total liabilities $53,750 Owner's Equity J. B. Gray, capital 86,870 Total liabilities and owner's equity $140,620 Compute the following financial ratios. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $22,100. Round answers to one decimal place. Jackson Enterprises December 31, 20-- Working capital $ Current ratio to 1 Quick ratio to 1 Return on owner's equity % Accounts receivable turnover Average number of days required to collect receivables days Inventory turnover Average number of days required to sell inventory days

The financial statements for Jackson Enterprises (income statement, statement of owner’s equity, and balance sheet) are shown. Jackson Enterprises Income Statement For Year Ended December 31, 20-- Revenue from sales: Sales $170,000 Less: Sales returns and allowances 10,000 Net sales $160,000 Cost of goods sold: Merchandise inventory, January 1, 20-- $6,800 Estimated returns inventory, January 1, 20-- 1,200 $8,000 Purchases $92,930 Less: Purchases returns and allowances $1,782 Purchases discounts 1,802 3,584 Net purchases $89,346 Add: Freight-in 945 Cost of goods purchased 90,291 Goods available for sale $98,291 Less: Merchandise inventory, Dec. 31, 20-- $9,320 Estimated returns inventory, Dec. 31, 20-- 1,180 10,500 Cost of goods sold 87,791 Gross profit $72,209 Operating expenses: Wages expense $37,860 Advertising expense 1,228 Supplies expense 374 Phone expense 2,170 Utilities expense 10,794 Insurance expense 946 Depreciation expense—building 4,004 Depreciation expense—equipment 3,648 Miscellaneous expense 508 Total operating expenses 61,532 Income from operations $10,677 Other revenues: Interest revenue $1,720 Other expenses: Interest expense 814 906 Net income $11,583 Jackson Enterprises Statement of Owner's Equity For Year Ended December 31, 20-- J. B. Gray, capital, January 1, 20-- $84,287 Net income for the year $11,583 Less: Withdrawals for the year 9,000 Increase in capital 2,583 J. B. Gray, capital, December 31, 20-- 86,870 Jackson Enterprises Balance Sheet December 31, 20-- Assets Current assets: Cash $20,900 Accounts receivable 18,870 Merchandise inventory 9,320 Estimated returns inventory 1,180 10,500 Supplies 1,300 Prepaid insurance 950 Total current assets $52,520 Property, plant, and equipment: Building $90,000 Less: Accumulated depreciation-building 29,000 $61,000 Equipment $34,500 Less: Accumulated depreciation-equipment 7,400 27,100 Total property, plant, and equipment 88,100 Total assets $140,620 Liabilities Current liabilities: Accounts payable $11,550 Customer refunds payable 1,550 Wages payable 400 Sales tax payable 1,300 Mortgage payable (current portion) 880 Total current liabilities $15,680 Long-term liabilities: Mortgage payable $38,950 Less: Current portion 880 38,070 Total liabilities $53,750 Owner's Equity J. B. Gray, capital 86,870 Total liabilities and owner's equity $140,620 Compute the following financial ratios. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $22,100. Round answers to one decimal place. Jackson Enterprises December 31, 20-- Working capital $ Current ratio to 1 Quick ratio to 1 Return on owner's equity % Accounts receivable turnover Average number of days required to collect receivables days Inventory turnover Average number of days required to sell inventory days

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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Question

Financial Ratios

The financial statements for Jackson Enterprises (income statement, statement of owner’s equity, and balance sheet) are shown.

Jackson Enterprises Income Statement For Year Ended December 31, 20--
Revenue from sales:
Sales			$170,000
Less: Sales returns and allowances			10,000
Net sales				$160,000
Cost of goods sold:
Merchandise inventory, January 1, 20--		$6,800
Estimated returns inventory, January 1, 20--		1,200	$8,000
Purchases		$92,930
Less: Purchases returns and allowances	$1,782
Purchases discounts	1,802	3,584
Net purchases		$89,346
Add: Freight-in		945
Cost of goods purchased			90,291
Goods available for sale			$98,291
Less: Merchandise inventory, Dec. 31, 20--		$9,320
Estimated returns inventory, Dec. 31, 20--		1,180	10,500
Cost of goods sold				87,791
Gross profit				$72,209
Operating expenses:
Wages expense			$37,860
Advertising expense			1,228
Supplies expense			374
Phone expense			2,170
Utilities expense			10,794
Insurance expense			946
Depreciation expense—building			4,004
Depreciation expense—equipment			3,648
Miscellaneous expense			508
Total operating expenses				61,532
Income from operations				$10,677
Other revenues:
Interest revenue			$1,720
Other expenses:
Interest expense			814	906
Net income				$11,583

Jackson Enterprises Statement of Owner's Equity For Year Ended December 31, 20--
J. B. Gray, capital, January 1, 20--		$84,287
Net income for the year	$11,583
Less: Withdrawals for the year	9,000
Increase in capital		2,583
J. B. Gray, capital, December 31, 20--		86,870

Jackson Enterprises Balance Sheet December 31, 20--
Assets
Current assets:
Cash		$20,900
Accounts receivable		18,870
Merchandise inventory	9,320
Estimated returns inventory	1,180	10,500
Supplies		1,300
Prepaid insurance		950
Total current assets			$52,520
Property, plant, and equipment:
Building	$90,000
Less: Accumulated depreciation-building	29,000	$61,000
Equipment	$34,500
Less: Accumulated depreciation-equipment	7,400	27,100
Total property, plant, and equipment			88,100
Total assets			$140,620
Liabilities
Current liabilities:
Accounts payable	$11,550
Customer refunds payable	1,550
Wages payable	400
Sales tax payable	1,300
Mortgage payable (current portion)	880
Total current liabilities		$15,680
Long-term liabilities:
Mortgage payable	$38,950
Less: Current portion	880	38,070
Total liabilities			$53,750
Owner's Equity
J. B. Gray, capital			86,870
Total liabilities and owner's equity			$140,620

Compute the following financial ratios. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $22,100.

Round answers to one decimal place.


Jackson Enterprises
December 31, 20--
Working capital	$
Current ratio		to 1
Quick ratio		to 1
Return on owner's equity	%
Accounts receivable turnover
Average number of days required to collect receivables	days
Inventory turnover
Average number of days required to sell inventory	days

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