The following information applies to the MO’s Restaurant: ROE 30% Accounts Receivable Turnover 30 times Current Ratio 1.8 to 1 Profit Margin 9% Acid-Test Ratio 1.3 Property and Equipment $1,750,000 Cash and Marketable Securities $55, 000 Total Sales $3,500,000 Assume the following: TA=CA+P&EQ The accounts receivable turnover is based on total sales The balance of balance sheet accounts at the beginning of the year are the same as the end of the year. Required: 1. Total Current Liabilities 2. Total Current Assets 3. Net Income 4. Asset Turnover 5. Total Owner’s Equity 6. Long Term Debt 7. Return on Assets 8. Debt-Equity Ratio 2. Indicate the effects of the transactions listed below on each of the following: CA, WC, and, CR. Indicate increase with “+” decrease with “-“ and no effect with “0” Total Current Assets Working Capital Current Ration 1. A motel writes a check to 1.________ __________ ___________ pay its monthly rent 2. Equipment is sold at more 2.________ __________ ___________ Its book value 3. Beverage are sold on account 3.________ __________ ___________ 4. A cash dividend is declared 4.________ __________ ___________ 5. Accrued taxes is paid 5.________ __________ ___________ 6. Treasury stock is sold for cash 6.________ __________ ___________ 7. A fully depreciated fixed asset 7.________ __________ ___________ Is sold for cash 8. Equipment is purchased with 8.________ __________ ___________ short term notes 9. Utility expenses are paid 9.________ __________ ___________ (They were previously accrued) 10. Depreciation for the mont is $900 10._______ __________ ___________
- The following information applies to the MO’s Restaurant:
ROE 30%
Profit Margin 9%
Acid-Test Ratio 1.3
Property and Equipment $1,750,000
Cash and Marketable Securities $55, 000
Total Sales $3,500,000
Assume the following:
TA=CA+P&EQ
The accounts receivable turnover is based on total sales
The balance of
end of the year.
Required:
1. Total Current Liabilities
2. Total Current Assets
3. Net Income
4. Asset Turnover
5. Total Owner’s Equity
6. Long Term Debt
7. Return on Assets
8. Debt-Equity Ratio
2. Indicate the effects of the transactions listed below on each of the following: CA, WC, and, CR. Indicate increase with “+” decrease with “-“ and no effect with “0”
Total
Current
Assets
1. A motel writes a check to 1.________ __________ ___________
pay its monthly rent
2. Equipment is sold at more 2.________ __________ ___________
Its book value
3. Beverage are sold on account 3.________ __________ ___________
4. A cash dividend is declared 4.________ __________ ___________
5. Accrued taxes is paid 5.________ __________ ___________
6.
7. A fully
Is sold for cash
8. Equipment is purchased with 8.________ __________ ___________
short term notes
9. Utility expenses are paid 9.________ __________ ___________
(They were previously accrued)
10. Depreciation for the mont is $900 10._______ __________ ___________
Solution
Current ratio = current asset / current liabilities .
Working note -.
Accounts receivable turnover = Net sales / Average receivable .
30 = 3500000 / Average receivable.
Average receivable = 3500000 / 30
= 116666.67
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