VIRTUAL GAMING SYSTEMS Income Statements For the years ended December 31 2022 2021 $3,560,000 2,490,000 1,070,000 $3,086,000 1,960,000 1,126,000 Net sales Cost of goods sold Gross profit Expenses: Operating expenses Depreciation expense Loss on sale of land 965,000 40,000 868,000 32,000 9,000 Interest expense Income tax expense Total expenses Net income 23,000 9,000 20,000 58,000 987,000 $ 139,000 1,037,000 $ 33,000 VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2022 2021 2020 Assets Current assets: $ 216,000 $196,000 $154,000 91,000 115,000 13,000 Cash Accounts receivable Inventory Prepaid rent Long-term assets: Investment in bonds 90,000 140,000 15,000 70,000 145,000 7,200 115,000 220,000 280,000 (84,000) $1,072,000 $946,000 $794,200 115,000 310,000 310,000 250,000 220,000 (52,000) Land Equipment Less: Accumulated depreciation Total assets |(124,000) Liabilities and Stockholders' Equity Current liabilities: $ 161,000 $ 76,000 $ 91,000 8,000 20,000 Accounts payable Interest payable Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock Retained earnings Total liabilities and stockholders' equity 12,000 13,000 4,000 15,000 450,000 295,000 235,000 310,000 126,000 $1,072,000 $946,000 $794,200 310,000 237,000 310,000 139,200

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

Income statement and balance sheet data for Virtual Gaming Systems are provided below.

Required:
1. Calculate the following risk ratios for 2021 and 2022:
a. Receivables turnover ratio. c. Current ratio. b. Inventory turnover ratio. d. Debt to equity ratio.
2. Calculate the following profitability ratios for 2021 and 2022:
a. Gross profit ratio. c. Profit margin. b. Return on assets. d. Asset turnover.
3. Based on the ratios calculated, determine whether overall risk and profitability improved from 2021 to 2022.

VIRTUAL GAMING SYSTEMS
Income Statements
For the years ended December 31
2022
2021
$3,560,000
2,490,000
1,070,000
$3,086,000
1,960,000
1,126,000
Net sales
Cost of goods sold
Gross profit
Expenses:
Operating expenses
Depreciation expense
Loss on sale of land
965,000
40,000
868,000
32,000
9,000
Interest expense
Income tax expense
Total expenses
Net income
23,000
9,000
20,000
58,000
987,000
$ 139,000
1,037,000
$ 33,000
VIRTUAL GAMING SYSTEMS
Balance Sheets
December 31
2022
2021
2020
Assets
Current assets:
$ 216,000 $196,000 $154,000
91,000
115,000
13,000
Cash
Accounts receivable
Inventory
Prepaid rent
Long-term assets:
Investment in bonds
90,000
140,000
15,000
70,000
145,000
7,200
115,000
220,000
280,000
(84,000)
$1,072,000 $946,000 $794,200
115,000
310,000
310,000
250,000
220,000
(52,000)
Land
Equipment
Less: Accumulated depreciation
Total assets
|(124,000)
Liabilities and Stockholders' Equity
Current liabilities:
$ 161,000 $ 76,000 $ 91,000
8,000
20,000
Accounts payable
Interest payable
Income tax payable
Long-term liabilities:
Notes payable
Stockholders' equity:
Common stock
Retained earnings
Total liabilities and stockholders' equity
12,000
13,000
4,000
15,000
450,000
295,000
235,000
310,000
126,000
$1,072,000 $946,000 $794,200
310,000
237,000
310,000
139,200

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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