Financial Ratios The financial statements for Jackson Enterprises (income statement, statement of owner's equity, and balance sheet) are shown. Jackson Enterprises Income Statement For Year Ended December 31, 20-- Revenue from sales: Sales $180,000 Less: Sales returns and allowances 10,000 Net sales $170,000 Cost of goods sold: Merchandise inventory, January 1, 20-- $6,600 Estimated returns inventory, January 1, 20-- 1,400 $8,000 Purchases $92,610 Less: Purchases returns and allowances $1,870 Purchases discounts 1,876 3,746 Net purchases $88,864 Add: Freight-in 941 Cost of goods purchased 89,805 Goods available for sale $97,805 Less: Merchandise inventory, Dec. 31, 20-- $9,320 Estimated returns inventorv. Dec. 31. 20-- 1.180 10.500 $9,320 1,180 10,500 87,305 $82,695 Less: Merchandise inventory, Dec. 31, 20-- Estimated returns inventory, Dec. 31, 20-- Cost of goods sold Gross profit Operating expenses: Wages expense Advertising expense Supplies expense Phone expense Utilities expense $37,748 1,200 378 2,138 11,454 Insurance expense 884 3,726 3,658 536 61,722 Depreciation expense-building Depreciation expense-equipment Miscellaneous expense Total operating expenses Income from operations Other revenues: Interest revenue Other expenses: Interest expense $20,973 $1,784 726 1,058 Net income $22,031 $81,339 Jackson Enterprises Statement of Owner's Equity For Year Ended December 31, 20-- J. B. Gray, capital, January 1, 20-- Net income for the year $22,031 Less: Withdrawals for the year 18,000 Increase in capital J. B. Gray, capital, December 31, 20-- 4,031 85,370 Jackson Enterprises Balance Sheet December 31, 20-- Assets Current assets: Cash Accounts receivable Merchandise inventory Estimated returns inventory Supplies $20,700 18,800 9,320 1,180 10,500 1,400 Prenaid insurance 900 1,400 900 $52,300 $89,000 29,000 $60,000 $33,500 7,200 26,300 86,300 $138,600 Supplies Prepaid insurance Total current assets Property, plant, and equipment: Building Less: Accumulated depreciation-building Equipment Less: Accumulated depreciation equipment Total property, plant, and equipment Total assets Liabilities Current liabilities: Accounts payable Customer refunds payable Wages payable Sales tax payable Mortgage payable (current portion) Total current liabilities Long-term liabilities: Mortgage payable Less: Current portion $10,950 1,550 600 1,100 830 $15,030 $39,030 830 38,200 $39,030 830 38,200 $53,230 Learning Objective 4 Less: Current portion Total liabilities Owner's Equity 3. B. Gray, capital Total liabilities and owner's equity 85,370 $138,600 Compute the following financial ratios. All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $22,100. Round answers to one decimal place. to 1 to 1 Jackson Enterprises December 31, 20-- Working capital Current ratio Quick ratio Return on owner's equity Accounts receivable turnover Average number of days required to collect receivables Inventory turnover Average number of days required to sell inventory % days days
