Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello, Please help, again. This is second time ive posted this question. ill attach images and previous answers as well. Financial Ratios Financial statements for

Hello,

Please help, again. This is second time ive posted this question. ill attach images and previous answers as well.

Financial Ratios

Financial statements for Paulson's Pet Store are shown.

Paulson's Pet Store Income Statement For Year Ended December 31, 20--
Revenue from sales:
Sales $326,030
Less: Sales returns and allowances 5,360
Net sales $320,670
Cost of goods sold:
Merchandise inventory, January 1, 20-- $29,200
Estimated returns inventory, January 1, 20-- 700 $29,900
Purchases $162,650
Less: Purchases returns and allowances $4,080
Less: Purchases discounts 3,200 7,280
Net purchases $155,370
Add freight-in 1,600
Cost of goods purchased 156,970
Goods available for sale $186,870
Less: Merchandise inventory, December 31, 20-- $24,800
Less: Estimated returns inventory, December 31, 20-- 1,200 26,000
Cost of goods sold 160,870
Gross profit $159,800
Operating expenses:
Wages expense $69,500
Advertising expense 1,200
Supplies expense 700
Phone expense 2,736
Utilities expense 2,864
Insurance expense 1,600
Depreciation expense-building 10,000
Depreciation expense-store equipment 1,800
Miscellaneous expense 600
Total operating expenses 91,000
Income from operations $68,800
Other expenses:
Interest expense 640
Net income $68,160

Paulson's Pet Store Statement of Owners Equity For Year Ended December 31, 20--
B. Paulson, capital, January 1, 20-- $484,020
Add additional investments 20,000
Total investment $504,020
Net income for the year $68,160
Less: Withdrawals for the year 4,800
Increase in capital 63,360
B. Paulson, capital, December 31, 20-- $567,380

Paulson's Pet Store Balance Sheet December 31, 20--
Assets
Current assets:
Cash $23,430
Accounts receivable 59,360
Merchandise inventory 24,800
Estimated returns inventory 1,200
Supplies 2,300
Prepaid insurance 1,800
Total current assets $112,890
Property, plant, and equipment:
Land $90,000
Building $350,000
Less: Accumulated depreciation 20,000 330,000
Store Equipment $120,000
Less: Accumulated depreciation 3,600 116,400 536,400
Total assets $649,290
Liabilities
Current liabilities:
Note payable $2,000
Accounts payable 59,560
Customer refunds payable 1,700
Wages payable 1,200
Sales tax payable 3,450
Total current liabilities $67,910
Long-term liabilities:
Note payable $16,000
Less: Current portion 2,000 14,000
Total liabilities $81,910
Owner's Equity
B. Paulson, capital 567,380
Total liabilities and owner's equity $649,290

All sales are credit sales. The Accounts Receivable balance on January 1, 20--, was $10,200.

Required:

Compute the financial ratios. Round answers to one decimal placeimage text in transcribed

previous answers: and they were not correct.

Current Ratio = Current Assets / Current Liabilities Current Ratio = $112,890 / $67,680 Current Ratio = 1.67

Answer of Part b:

Quick Ratio =(Current Assets Merchandise Inventory Estimated Returns Inventory Prepaid Expense) / Current Liabilities Quick Ratio = ($112,890 - $24,900 - $1,100 - $1,800) / $67,680 Quick Ratio = $85,090 / $67,680 Quick Ratio = 1.26:1

Answer of Part c:

Working Capital = Current Assets Current Liabilities Working Capital= $112,890 - $67,680 Working Capital = $45,210

Answer of Part d:

Return on Owners Equity = Net Income / Owners Equity *100 Return on Owners Equity = $67,970 / $568,310 *100 Return on Owners Equity = 11.96%

Answer of Part e:

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable)/2 Average Accounts Receivable = ($10,100 + $59,360) / 2 Average Accounts Receivable= $34,730

Accounts Receivable Turnover = Sales / Average Accounts Receivable Accounts Receivable Turnover = $320,670 / $34,730 Accounts Receivable Turnover = 9.23 times

Compute the laricial TaLIUS. answers to one ecimal place. Financial Ratios ga to 1 to 1 ma % Current ratio Quick ratio Working capital Return on owner's equity Accounts receivable turnover Average number of days to collect receivables Inventory turnover Average number of days to sell inventory days days

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Practical Approach

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton

4th Edition

0730382648, 978-0730382645

More Books

Students also viewed these Accounting questions

Question

3. Discuss the attitude and behavior of the executive chef.

Answered: 1 week ago