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The following financial information is for Wildhorse Company. Assets WILDHORSE COMPANY Balance Sheets December 31 Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable 2022 $71,000 53,000 107,000 239,000 30,000 130,000 263.000 $893,000 $171.000 2021 $67,000 40,000 92,000 168,000 22,000 130,000 185,000 $704,000 $104.000 Liabilities and Stockholders' Equity Notes payable Accounts payable Accrued liabilities Bonds payable, due 2025 Common stock, $10 par Retained earnings 163,000 Total liabilities and stockholders' equity $893.000 WILDHORSE COMPANY Income Statements For the Years Ended December 31 Sales revenue Cost of goods sold Gross proft 2022 $893,000 644.000 249,000 $171,000 $104,000 67,000 41,000 251,000 2021 200,000 $793,000 575.000 218.000 55.000 41.000 172,000 200,000 132.000 $704,000 Sales revenue Cost of goods sold Gross profit Operating expenses Net income WILDHORSE COMPANY Income Statements For the Years Ended December 31 Additional information: 1. 2 3. 4 5 2022 2021 $893,000 $793,000 644,000 249,000 190,000 $59,000 575.000 218.000 161,000 $57,000 Inventory at the beginning of 2021 was $115,000 Accounts receivable (net) at the beginning of 2021 were $89,000 Total assets at the beginning of 2021 were $637,000. No common stock transactions occurred during 2021 or 2022 All sales s

The following financial information is for Wildhorse Company. Assets WILDHORSE COMPANY Balance Sheets December 31 Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable 2022 $71,000 53,000 107,000 239,000 30,000 130,000 263.000 $893,000 $171.000 2021 $67,000 40,000 92,000 168,000 22,000 130,000 185,000 $704,000 $104.000 Liabilities and Stockholders' Equity Notes payable Accounts payable Accrued liabilities Bonds payable, due 2025 Common stock, $10 par Retained earnings 163,000 Total liabilities and stockholders' equity $893.000 WILDHORSE COMPANY Income Statements For the Years Ended December 31 Sales revenue Cost of goods sold Gross proft 2022 $893,000 644.000 249,000 $171,000 $104,000 67,000 41,000 251,000 2021 200,000 $793,000 575.000 218.000 55.000 41.000 172,000 200,000 132.000 $704,000 Sales revenue Cost of goods sold Gross profit Operating expenses Net income WILDHORSE COMPANY Income Statements For the Years Ended December 31 Additional information: 1. 2 3. 4 5 2022 2021 $893,000 $793,000 644,000 249,000 190,000 $59,000 575.000 218.000 161,000 $57,000 Inventory at the beginning of 2021 was $115,000 Accounts receivable (net) at the beginning of 2021 were $89,000 Total assets at the beginning of 2021 were $637,000. No common stock transactions occurred during 2021 or 2022 All sales s

FINANCIAL ACCOUNTING
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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(b) Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as December 31, 2022, and (2) as of December 31, 2023, after giving effect to the situation. (Round Debt to assets ratio to 0 decimal place eg. 15 and round all other answers to 1 decimal place, e.g. 15.5. Round % change to 0 decimal places, for eg. 1% and if % change is a decrease show the numbers as negative, e.g. -1% or (1%).) 2. 3. Situation 20,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $55,000. All of the notes payable were paid in 2023. All other liabilities remained at their December 31, 2022 levels. Total assets on December 31, 2023, were $890,000. The market price of common stock was $9 and $12 on December 31, 2022 and 2023, respectively. Return on common stockholders' equity Debt to assets ratio Price earnings ratio 2022 times 2023 times Ratio Return on common stockholders' equity Debt to assets ratio Price-earnings ratio % Change
Transcribed Image Text:(b) Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as December 31, 2022, and (2) as of December 31, 2023, after giving effect to the situation. (Round Debt to assets ratio to 0 decimal place eg. 15 and round all other answers to 1 decimal place, e.g. 15.5. Round % change to 0 decimal places, for eg. 1% and if % change is a decrease show the numbers as negative, e.g. -1% or (1%).) 2. 3. Situation 20,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $55,000. All of the notes payable were paid in 2023. All other liabilities remained at their December 31, 2022 levels. Total assets on December 31, 2023, were $890,000. The market price of common stock was $9 and $12 on December 31, 2022 and 2023, respectively. Return on common stockholders' equity Debt to assets ratio Price earnings ratio 2022 times 2023 times Ratio Return on common stockholders' equity Debt to assets ratio Price-earnings ratio % Change
The following financial information is for Wildhorse Company. Assets Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land WILDHORSE COMPANY Balance Sheets December 31 Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable 2022 $71,000 53,000 107,000 239,000 30,000 130,000 263,000 $893,000 2021 $67,000 40,000 92,000 168,000 22,000 130,000 185,000 $704,000 $171,000 $104,000 Liabilities and Stockholders' Equity Notes payable Accounts payable Accrued liabilities WILDHORSE COMPANY Income Statements For the Years Ended December 31 Bonds payable, due 2025 Common stock, $10 par Retained earnings Total liabilities and stockholders equity $893,000 Sales revenue Cost of goods sold Gross profit 2022 $893,000 644,000 $171,000 $104,000 249,000 67,000 41,000 251,000 200,000 163,000 2021 $793,000 575,000 218,000 55,000 41,000 172,000 200,000 132.000 $704,000 Sales revenue Cost of goods sold Gross profit Operating expenses Net income WILDHORSE COMPANY Income Statements For the Years Ended December 31 Additional information: 1. 2. 3. 5. 2022 $893,000 644,000 249,000 190,000 $59,000 2021 Inventory at the beginning of 2021 was $115.000. Accounts receivable (net) at the beginning of 2021 were $89,000. Total assets at the beginning of 2021 were $637,000. 4. No common stock transactions occurred during 2021 or 2022. All sales were on account. $793,000 575,000 218,000 161.000 $57,000
Transcribed Image Text:The following financial information is for Wildhorse Company. Assets Cash Debt investments (short-term) Accounts receivable Inventory Prepaid expenses Land WILDHORSE COMPANY Balance Sheets December 31 Building and equipment (net) Total assets Liabilities and Stockholders' Equity Notes payable 2022 $71,000 53,000 107,000 239,000 30,000 130,000 263,000 $893,000 2021 $67,000 40,000 92,000 168,000 22,000 130,000 185,000 $704,000 $171,000 $104,000 Liabilities and Stockholders' Equity Notes payable Accounts payable Accrued liabilities WILDHORSE COMPANY Income Statements For the Years Ended December 31 Bonds payable, due 2025 Common stock, $10 par Retained earnings Total liabilities and stockholders equity $893,000 Sales revenue Cost of goods sold Gross profit 2022 $893,000 644,000 $171,000 $104,000 249,000 67,000 41,000 251,000 200,000 163,000 2021 $793,000 575,000 218,000 55,000 41,000 172,000 200,000 132.000 $704,000 Sales revenue Cost of goods sold Gross profit Operating expenses Net income WILDHORSE COMPANY Income Statements For the Years Ended December 31 Additional information: 1. 2. 3. 5. 2022 $893,000 644,000 249,000 190,000 $59,000 2021 Inventory at the beginning of 2021 was $115.000. Accounts receivable (net) at the beginning of 2021 were $89,000. Total assets at the beginning of 2021 were $637,000. 4. No common stock transactions occurred during 2021 or 2022. All sales were on account. $793,000 575,000 218,000 161.000 $57,000
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