Problem 2 (12 points) Flora Resort Balance Sheet For the year ended 31 December 2021 Assets HKS HKS Cash on hand Bank Accounts Receivable Marketable Securities Inventory Liabilities & Owner's Equity Accounts Payable Deposit Received Short-term bank loan 152,000 257,500 654,000 148,000 282,300 1,493,800 1,240,300 83,500 152,000 1,453,800 Long-term bank loan 500,000 Fixed Assets 1,500,000 Owner's Equity 1,000,000 Total Liabilities & Owner's Equity Total Assets 2,993,800 2,993,800 Flora Resort achieved HK$1,000,000 revenue and $500,000 of net income (Last year 2020: $500,000 revenue and $400,000 net income), cost of goods sold for the month of December was $37,700; all of the sales transactions were on credit and the year-end balances above reflect the average balances for the year. a) Current Ratio b) Acid-Test Ratio c) Debt to Total Assets Ratio d) Long-Term Debt to Equity Ratio e) Return on Assets Ratio f) Profit Flow Through% g) Receivable Turnover Ratio h) Inventory Turnover for December 2021 Required: Calculate all of the above financial ratios and write down your answers on the answer sheet. (1.5 points each) 5 6/10 Problem 3 (14 points) At 31 December 2020, Universal Limited reported the following information on its balance sheet: Accounts receivable Less: Allowance for doubtful accounts $1,120,000 $80,000 During 2021, the company had the following transactions related to receivables: a) b) c) Sales on account Sales returns and allowances Collections of accounts receivable Write-offs of accounts receivable deemed uncollectible Recovery of bad debts previously written off as uncollectible $2,642,000 $95,000 $1,170,000 $40,000 $15,000 d) e) Required: (i) Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable (2 points each); (ii) Prepare the journal entry to record bad debts expense for 2021, assuming that an aging of accounts receivable indicates that estimated bad debts are $72,000 (2 points); and (iii) Compute the accounts receivable turnover ratio for the year 2021 (2 points). Write down your answers on the answer sheet 6