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Analysis of Liquidity Based on the comparative income statement and balance sheet of Cowan Kitchen Counters, Inc., that follow: Cowan Kitchen Counters, Inc. Comparative Income
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Analysis of Liquidity
Based on the comparative income statement and balance sheet of Cowan Kitchen Counters, Inc., that follow:
Cowan Kitchen Counters, Inc. Comparative Income Statement For Years Ended December 31, 20-2 and 20-1 20-2 20-1 Net Sales (all on account) $2,598,000 $2,165,100 Cost of goods sold 1,874,900 1,620,600 Gross profit $723,100 $544,500 Operating expenses 319,400 215,600 Other expense (interest) 24,200 24,200 Income tax expense 174,700 108,700 Net income $204,800 $196,000
Cowan Kitchen Counters, Inc. Comparative Balance Sheet December 31, 20-2 and 20-1 20-2 20-1 Cash $258,600 $246,000 Government notes 246,200 246,200 Accounts receivable (net) 907,300 798,000 Merchandise inventory 985,200 905,000 Supplies and prepayments 145,000 46,600 Land 106,000 106,000 Building (net) 328,800 387,000 Office equipment (net) 17,900 15,000 Total assets $2,995,000 $2,749,800 Current liabilities (accounts payable) $700,900 $534,000 Bonds payable 220,000 240,000 Total liabilities $920,900 $774,000 Common stock ($10 par, 180,000 shares) $1,800,000 $1,800,000 Retained earnings 274,100 175,800 Total stockholders' equity $2,074,100 $1,975,800 Total liabilities and stockholders' equity $2,995,000 $2,749,800
Compute the following liquidity measures for 20-2 (round all calculations to two decimal places):
a. Quick or acid-test ratio to 1 b. Current ratio to 1 c. Working capital $
Analysis of Liquidity
Based on the comparative income statement and balance sheet of Cowan Kitchen Counters, Inc., that follow:
Cowan Kitchen Counters, Inc. Comparative Income Statement For Years Ended December 31, 20-2 and 20-1 | ||||
---|---|---|---|---|
20-2 | 20-1 | |||
Net Sales (all on account) | $2,598,000 | $2,165,100 | ||
Cost of goods sold | 1,874,900 | 1,620,600 | ||
Gross profit | $723,100 | $544,500 | ||
Operating expenses | 319,400 | 215,600 | ||
Other expense (interest) | 24,200 | 24,200 | ||
Income tax expense | 174,700 | 108,700 | ||
Net income | $204,800 | $196,000 |
Cowan Kitchen Counters, Inc. Comparative Balance Sheet December 31, 20-2 and 20-1 | ||||
---|---|---|---|---|
20-2 | 20-1 | |||
Cash | $258,600 | $246,000 | ||
Government notes | 246,200 | 246,200 | ||
Accounts receivable (net) | 907,300 | 798,000 | ||
Merchandise inventory | 985,200 | 905,000 | ||
Supplies and prepayments | 145,000 | 46,600 | ||
Land | 106,000 | 106,000 | ||
Building (net) | 328,800 | 387,000 | ||
Office equipment (net) | 17,900 | 15,000 | ||
Total assets | $2,995,000 | $2,749,800 | ||
Current liabilities (accounts payable) | $700,900 | $534,000 | ||
Bonds payable | 220,000 | 240,000 | ||
Total liabilities | $920,900 | $774,000 | ||
Common stock ($10 par, 180,000 shares) | $1,800,000 | $1,800,000 | ||
Retained earnings | 274,100 | 175,800 | ||
Total stockholders' equity | $2,074,100 | $1,975,800 | ||
Total liabilities and stockholders' equity | $2,995,000 | $2,749,800 |
Compute the following liquidity measures for 20-2 (round all calculations to two decimal places):
a. Quick or acid-test ratio | to 1 | |
b. Current ratio | to 1 | |
c. Working capital | $ |
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