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Problem 12-6A Use ratios to analyze risk and profitability (LO12-3, 12-4) [The following information applies to the questions displayed below.] Income statements and balance sheets
Problem 12-6A Use ratios to analyze risk and profitability (LO12-3, 12-4)
[The following information applies to the questions displayed below.]
Income statements and balance sheets data for Virtual Gaming Systems are provided below.
VIRTUAL GAMING SYSTEMS Income Statements For the year ended December 31 | ||
2019 | 2018 | |
Net sales | $3,505,000 | $3,031,000 |
Cost of goods sold | 2,479,000 | 1,949,000 |
Gross profit | 1,026,000 | 1,082,000 |
Expenses: | ||
Operating expenses | 954,000 | 857,000 |
Depreciation expense | 29,000 | 26,500 |
Loss on sale of land | 0 | 7,900 |
Interest expense | 17,500 | 14,500 |
Income tax expense | 7,900 | 47,500 |
Total expenses | 1,008,400 | 953,400 |
Net income | $ 17,600 | $ 128,600 |
VIRTUAL GAMING SYSTEMS Balance Sheets December 31 | |||
2019 | 2018 | 2017 | |
Assets | |||
Current assets: | |||
Cash | $ 200,500 | $185,000 | $143,000 |
Accounts receivable | 74,500 | 80,000 | 59,000 |
Inventory | 124,500 | 104,000 | 134,000 |
Prepaid rent | 13,900 | 11,900 | 5,880 |
Long-term assets: | |||
Investment in bonds | 104,000 | 104,000 | 0 |
Land | 299,000 | 209,000 | 239,000 |
Equipment | 299,000 | 269,000 | 209,000 |
Less: Accumulated depreciation | (96,500) | (67,500) | (41,000) |
Total assets | $1,018,900 | $895,400 | $748,880 |
Liabilities and Stockholders' Equity | |||
Current liabilities: | |||
Accounts payable | $ 193,200 | $ 65,000 | $110,580 |
Interest payable | 8,700 | 5,800 | 2,900 |
Income tax payable | 11,900 | 14,500 | 13,900 |
Long-term liabilities: | |||
Notes payable | 390,000 | 284,000 | 224,000 |
Stockholders' equity: | |||
Common stock | 299,000 | 299,000 | 299,000 |
Retained earnings | 116,100 | 227,100 | 98,500 |
Total liabilities and stockholders equity | $1,018,900 | $895,400 | $748,880 |
VIRTUAL GAMING SYSTEMS Income Statements For the year ended December 31 | ||
2019 | 2018 | |
Net sales | $3,540,000 | $3,066,000 |
Cost of goods sold | 2,486,000 | 1,956,000 |
Gross profit | 1,054,000 | 1,110,000 |
Expenses: | ||
Operating expenses | 961,000 | 864,000 |
Depreciation expense | 36,000 | 30,000 |
Loss on sale of land | 0 | 8,600 |
Interest expense | 21,000 | 18,000 |
Income tax expense | 8,600 | 51,000 |
Total expenses | 1,026,600 | 971,600 |
Net income | $ 27,400 | $ 138,400 |
VIRTUAL GAMING SYSTEMS Balance Sheets December 31 | |||
2019 | 2018 | 2017 | |
Assets | |||
Current assets: | |||
Cash | $ 210,000 | $192,000 | $150,000 |
Accounts receivable | 84,000 | 87,000 | 66,000 |
Inventory | 134,000 | 111,000 | 141,000 |
Prepaid rent | 14,600 | 12,600 | 6,720 |
Long-term assets: | |||
Investment in bonds | 111,000 | 111,000 | 0 |
Land | 306,000 | 216,000 | 246,000 |
Equipment | 306,000 | 276,000 | 216,000 |
Less: Accumulated depreciation | (114,000) | (78,000) | (48,000) |
Total assets | $1,051,600 | $927,600 | $777,720 |
Liabilities and Stockholders' Equity | |||
Current liabilities: | |||
Accounts payable | $ 139,800 | $ 72,000 | $127,520 |
Interest payable | 10,800 | 7,200 | 3,600 |
Income tax payable | 12,600 | 18,000 | 14,600 |
Long-term liabilities: | |||
Notes payable | 460,000 | 291,000 | 231,000 |
Stockholders' equity: | |||
Common stock | 306,000 | 306,000 | 306,000 |
Retained earnings | 122,400 | 233,400 | 95,000 |
Total liabilities and stockholders equity | $1,051,600 | $927,600 | $777,720 |
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