Exercise 13-19

Presented below is information related to Cullumber Inc.

CULLUMBER INC. BALANCE SHEET DECEMBER 31, 2017
Cash				$45,100		Notes payable (short-term)		$49,900
Receivables		$109,500				Accounts payable		31,900
Less: Allowance		15,100		94,400		Accrued liabilities		5,100
Inventory				170,000		Common stock (par $5)		259,600
Prepaid insurance				8,000		Retained earnings		141,500
Land				20,000
Equipment (net)				150,500
				$488,000				$488,000

CULLUMBER INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue					$1,396,900
Cost of goods sold
Inventory, Jan. 1, 2017		$201,700
Purchases		783,300
Cost of goods available for sale		985,000
Inventory, Dec. 31, 2017		(170,000	)
Cost of goods sold					815,000
Gross profit on sales					581,900
Operating expenses					168,700
Net income					$413,200

(Part B: no effect/ weaken/ improve)

Compute the following ratios or relationships of Cullumber Inc. Assume that the ending account balances are representative unless the information provided indicates differently. ( 45.87%) (1) Current ratio (2) Inventory turnover (3) Accounts receivable turnover (4) Earnings per share (5) Profit margin on sales (6) Return on assets on December 31, 2017 times times times Indicate for each of the following transactions whether the transaction would improve, weaken, or have no effect on the current ratio of Cullumber Inc. at December 31, 2017. (1) Write off an uncollectible account receivable, $2,200. (2) Purchase additional capital stock for cash. (3) Pay $40,000 on notes payable (short-term) (4) Collect $23,000 on accounts receivable. (5) Buy equipment on account. (6) Give an existing creditor a short-term note in settlement of account. Click if you would like to Show Work for this question: Open Show Work