Problem: Module $4$ Textbook Problem $6$

Learning Objectives:

$4-2$ Calculate ratios for assessing a company's liquidity

$4-3$ Calculate ratios for assessing a company's solvency

The December $31,$ Year $4,$ balance sheet for Thornton Corporation is presented here. These are the only accounts on Thornton$$s balance sheet. Amounts indicated by question marks $(?)$ can be calculated using the following additional information:

THORNTON CORPORATION

Balance Sheet As of December $31,$ Year $4$

Assets

Cash $ $32,000$

Accounts receivable $($net$)?$

Inventory $?$

Property, plant, and equipment $($net$)320,000$

$ $442,000$

Liabilities and Stockholders$$ Equity

Accounts payable $($trade$)$ $ $?$

Income taxes payable $($current$)32,000$

Long$-$term debt $?$

Common stock $326,000$

Retained earnings $?$

$ $?$

Additional Information

Current ratio $($at year end$)1\mathrm{.}6$ to $1\mathrm{.}0$

Total liabilities $-$: Total stockholders$$ equity $70\%$

Gross margin percentage $30\%$

Inventory turnover $($Cost of goods sold $-$: Ending inventory$)11\mathrm{.}5$ times

Gross margin for Year $4$ $ $345,000$

Required

a$.$ Compute the balance in trade accounts payable as of December $31,$ Year $4.$

b$.$ Compute the balance in retained earnings as of December $31,$ Year $4.$

c$.$ Compute the balance in the inventory account as of December $31,$ Year $4.($Assume that the level of inventory did not change from last year.$)$

$($For all requirements, negative amounts should be indicated by a minus