Question
Pepper Company provided the incomplete financial statements shown below as well as the following additional information: All sales during the year were on account. There
Pepper Company provided the incomplete financial statements shown below as well as the following additional information:
- All sales during the year were on account.
- There was no change in the number of shares of common stock outstanding during the year.
- The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year.
- Selected balances at the beginning of the current year were:
Accounts receivable | $ | 330,000 |
Inventory | $ | 440,000 |
Total assets | $ | 1,850,000 |
e. Selected financial ratios computed from the statements below for the current year are:
Earnings per share | $ | 3.72 | |
Debt-to-equity ratio | 0.870 | ||
Accounts receivable turnover | 16.0 | ||
Current ratio | 2.00 | ||
Return on total assets | 10 | % | |
Times interest earned ratio | 5.5 | ||
Acid-test ratio | 1.18 | ||
Inventory turnover | 9.0 | ||
Required:
Compute the missing amounts on the company's financial statements. (Hint: Whats the difference between the acid-test ratio and the current ratio?) (Do not round intermediate calculations.)
Pepper IndustriesIncome StatementFor the Year Ended March 31Sales$4,700,000Cost of goods sold2,902,500Gross margin1,797,500Selling and administrative expenses1,456,500Net operating income341,000Interest expense62,000Net income before taxes279,000Income taxes (40%)83,700Net income$195,300
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