ABC Manufacturing Inc.

Income Statement

Year Ended December 31, 20X4

Sale$ 200,000Cost of goods sold$ 120,000Gross Profit$ 80,000Operating Expenses$ 40,000Loss on Sale of equipment$ 2,000$ 42,000Profit from Operations$ 38,000Other expensesInterest Expense$ 2,000Profit before Income Tax$ 36,000Income Tax Expense$ 8,000Profit$ 28,000

ABC Manufacturing Inc. comparative balance sheet at December 31

20X420X3Cash$ 4,500$ 4,300Accounts Receivable$ 72,000$ 6,500Inventory$ 110,000$ 140,000Prepaid Expenses$ 1,550$ 1,020Equipment$ 98,000$ 100,000Accumulated Depreciation - equipment$ (50,000)$ (42,000)Total Assets$ 236,050$ 209,820Account Payable$ 15,330$ 9,900Interest Payable$ 510$ 10Income taxes payable$ 10,800$ 9,500Dividends Payable$ 1,800$ 3,800Long-term Notes Payable$ 50,000$ 65,000Common share$ 130,000$ 120,000Retained Earnings$ 27,610$ 1,610Total Liabilities & Shareholders' Equity$ 236,050$ 209,820

Additional Information:

1. Operating expenses include depreciation expense of $10,000

2. Accounts Payable related to the purchase of inventory

3. Equipment that cost $8,000 was sold at a loss of $2,000

4. New equipment was purchased during the year for $6,000

5. Dividends declared and paid in 20X4 totaled $2,000

6. Common shares were sold for $10,000 cash

7. Interest payable in 20X4 was $500 greater than interest payable in 20X3

The inventory turnover at December 20X4 was:

Equal or below 0.46

None of the other alternatives are correct

Between 0.95 and 1.04

Between 0.47 and 0.94

Equal or above 1.04