44		c)
45
46		Statement of financial position:
47
48			Dec 31 20X9
49		Assets
50		Cash	11600000
51		Account Receivables	9000000
52		Marketable Securities	4000000
53		Prepaid Insurance	400000
54		Inventory	8000000
55		Current Assets	=SUM(D50:D54)
56		Equipment	7000000
57		Less: Accumulated Depreciation - Equipment	-3000000
58		Buildings	22000000
59		Accumulated Depreciation- Buildings	-5000000
60		Land	6000000
61		Net Fixed Assets	=D56+D57+D58+D59+D60
62		Inventstments (Long term)	4000000
63		Total Assets	=D55+D61+D62
64
65		Liabilities and shareholders' equity
66		Account Payable	9000000
67		Salaries Payable	1000000
68		Dividends Payable	500000
69		Interest Payable	800000
70		Current Liabilities	=SUM(D66:D69)
71		Notes Payable (Long Term)	11000000
72		Bonds Payable (Long Term)	14000000
73		Total Liabilities	=SUM(D70:D72)
74		Common Stock	18000000
75		Retained Earnings	=D42
76		Shareholders' equity	=SUM(D74:D75)
77		Total Liabilities and shareholders' equity	=D73+D76
78

38 Problem 2.4 Based on the facts provided in problem 2.3 and on your labeling of the accounts as assets, labilities, permanent equity, or temporary equity, prepare the following financial statements for The Clothing Outlet, Inc a) A multiple-step Income Statement for the year-ended December 31, 20X9, as shown in Exhibit 2.2. Calculate earnings per share for use in this financial statement based on the assumption that there were 500,000 shares of common stock outstanding all year A Statement of Retained Earnings for the year-ended December 31, 20X9, as shown in Exhibit 2.4 A Statement of Financial Position as of December 31, 20X9, as shown in Exhibit 2.1 b) c) Note: Recall that it is important to prepare the financial statements in this order so that net income is determined first for use in the statement of retained earnings, and then the year end (December 31, 20X9) retained earnings balance is determined for use in the statement of financial position Problem 2.5 a) b) c) Based on your answers to problem 2.4, calculate working capital, the current ratio, and the quick (acid test) ratio of The Clothing Outlet, Inc. as of December 31, 20x9 Based on your answers to problem 2.4, calculate the gross profit ratio of The Clothing Outlet, Inc. for the year ended December 31, 20X9 Suppose the industry's gross profit ratio is currently, and had been in past years approximately 45% and that The Clothing Outlet Inc's gross profit ratio had been at approximately industry average in past years. Based on your calculation of the Clothing Outlet Inc.'s gross profit ratio in part (b) for 20X9, what may be occurring? 38 Problem 2.4 Based on the facts provided in problem 2.3 and on your labeling of the accounts as assets, labilities, permanent equity, or temporary equity, prepare the following financial statements for The Clothing Outlet, Inc a) A multiple-step Income Statement for the year-ended December 31, 20X9, as shown in Exhibit 2.2. Calculate earnings per share for use in this financial statement based on the assumption that there were 500,000 shares of common stock outstanding all year A Statement of Retained Earnings for the year-ended December 31, 20X9, as shown in Exhibit 2.4 A Statement of Financial Position as of December 31, 20X9, as shown in Exhibit 2.1 b) c) Note: Recall that it is important to prepare the financial statements in this order so that net income is determined first for use in the statement of retained earnings, and then the year end (December 31, 20X9) retained earnings balance is determined for use in the statement of financial position Problem 2.5 a) b) c) Based on your answers to problem 2.4, calculate working capital, the current ratio, and the quick (acid test) ratio of The Clothing Outlet, Inc. as of December 31, 20x9 Based on your answers to problem 2.4, calculate the gross profit ratio of The Clothing Outlet, Inc. for the year ended December 31, 20X9 Suppose the industry's gross profit ratio is currently, and had been in past years approximately 45% and that The Clothing Outlet Inc's gross profit ratio had been at approximately industry average in past years. Based on your calculation of the Clothing Outlet Inc.'s gross profit ratio in part (b) for 20X9, what may be occurring