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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

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
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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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
Transcribed Image Text: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
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