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Prepare an income statement and a balance sheet from the following scrambled list of items. What is the firm’s net working capital and debt ratio? Sales …………………………………………….. $550,000 Accumulated depreciation ……………………….. 190,000 Cash ……………………………………………………… ? Cost of goods sold ……………………………….. 320,000 Accounts receivable ……………………………….. 73,000 Depreciation expense ………………………………. 38,000 Accounts payable ………………………………….. 65,000 Interest expense ……………………………………. 26,000 Short-term notes payable …………………………… 29,000 Income taxes ……………………………………….. 59,850 Inventories …………………………………………. 47,000 Marketing, general, and administrative expenses … 45,000 Gross fixed assets ……………………………….. 648,000 Long-term debt ………………………………….. 360,000 Common stock ………………………………….. 120,000 Other assets ………………………………………. 15,000 Retained earnings ……………………………….. 138,500

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Answer:

**Income Statement:

- Sales: $550,000

- Cost of goods sold: $320,000

- Depreciation expense: $38,000

- Interest expense: $26,000

- Income taxes: $59,850

- Marketing, general, and administrative expenses: $45,000

**Balance Sheet:

Assets:

- Cash: Unknown

- Accounts receivable: $73,000

- Inventories: $47,000

- Gross fixed assets: $648,000

- Accumulated depreciation: $190,000

- Other assets: $15,000

Liabilities:

- Accounts payable: $65,000

- Short-term notes payable: $29,000

- Long-term debt: $360,000

Equity:

- Common stock: $120,000

- Retained earnings: $138,500

Step-by-step explanation:

To prepare an income statement and balance sheet, we need to organize the given items into the respective categories.

To calculate the net income, we need to subtract the cost of goods sold, depreciation expense, interest expense, income taxes, and marketing, general, and administrative expenses from sales.

Net income = Sales - Cost of goods sold - Depreciation expense - Interest expense - Income taxes - Marketing, general, and administrative expenses

Net income = $550,000 - $320,000 - $38,000 - $26,000 - $59,850 - $45,000

Net income = $61,150

To calculate the missing value of cash, we need to calculate the total assets by adding the known values:

Total assets = Cash + Accounts receivable + Inventories + Gross fixed assets - Accumulated depreciation + Other assets

$Unknown + $73,000 + $47,000 + $648,000 - $190,000 + $15,000 = $Total assets

To calculate the total liabilities and equity, we need to add the known values:

Total liabilities and equity = Accounts payable + Short-term notes payable + Long-term debt + Common stock + Retained earnings

$65,000 + $29,000 + $360,000 + $120,000 + $138,500 = $Total liabilities and equity

The net working capital can be calculated by subtracting the current liabilities from the current assets. In this case, the current assets are the sum of cash, accounts receivable, and inventories. The current liabilities are the sum of accounts payable and short-term notes payable.

Net working capital = (Cash + Accounts receivable + Inventories) - (Accounts payable + Short-term notes payable)

Net working capital = ($Unknown + $73,000 + $47,000) - ($65,000 + $29,000)

Net working capital = $Unknown + $73,000 + $47,000 - $65,000 - $29,000

The debt ratio can be calculated by dividing the total liabilities by the total assets.

Debt ratio = Total liabilities / Total assets

Debt ratio = ($65,000 + $29,000 + $360,000) / $Total assets

Please provide the missing value of cash in order to calculate the net working capital and debt ratio.

User Joycee
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