Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me to answer, thank you! The following information were contained in a report of a CPA who made an analysis of the balance

Please help me to answer, thank you!
image text in transcribed
image text in transcribed
The following information were contained in a report of a CPA who made an analysis of the balance sheet of Sison Company as of Dec. 31,2020 : 1. Working capital ratio, 2.75:1. 2. Ratio of liabilities to assets, 501/2%. 3. Ratio of total stockholders' equity to current assets, 90%. 4. Cash was 25% of merchandise inventory, while accounts receivable (net) was 1.5 times the value of merchandise inventory; the allowance for doubtful accounts being equal to 10% of the outstanding accounts receivable. 5. The land and building are mortgaged to secure a loan maturing in 2026 , interest on which had been paid up to the date of the balance sheet. Estimated life of the building is 40 years. It was constructed 5 years ago at a cost four(4) times that of the land, and is being depreciated by the straight-line method without considering any scrap value. 6. Of the current liabilities, 10% is covered by a non-interest bearing note issued to trade creditors; the rest represents balance on purchases on account. 7. Common stock consisting of 10,000 common shares were ordinarily issued at par of P200 per share and had on balance sheet date a book value of P198 per share only. REQUIRED: 1. In order to have a clearer picture of a financial position and other matters, reconstruct the whole balance sheet considering that there are no other accounts other than those implied in the report. The following information were contained in a report of a CPA who made an analysis of the balance sheet of Sison Company as of Dec. 31,2020 : 1. Working capital ratio, 2.75:1. 2. Ratio of liabilities to assets, 501/2%. 3. Ratio of total stockholders' equity to current assets, 90%. 4. Cash was 25% of merchandise inventory, while accounts receivable (net) was 1.5 times the value of merchandise inventory; the allowance for doubtful accounts being equal to 10% of the outstanding accounts receivable. 5. The land and building are mortgaged to secure a loan maturing in 2026 , interest on which had been paid up to the date of the balance sheet. Estimated life of the building is 40 years. It was constructed 5 years ago at a cost four(4) times that of the land, and is being depreciated by the straight-line method without considering any scrap value. 6. Of the current liabilities, 10% is covered by a non-interest bearing note issued to trade creditors; the rest represents balance on purchases on account. 7. Common stock consisting of 10,000 common shares were ordinarily issued at par of P200 per share and had on balance sheet date a book value of P198 per share only. REQUIRED: 1. In order to have a clearer picture of a financial position and other matters, reconstruct the whole balance sheet considering that there are no other accounts other than those implied in the report

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_2

Step: 3

blur-text-image_3

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

More Books

Students also viewed these Accounting questions