Question 1 a Show the calculations! 0 Assume the company uses Direct Method a) Quincy Industries began the year with $46,700 in accounts receivable and ended the year with $31,900 in accounts receivable. If sales for the year were $687,000, What's amount of the cash collected from customers during the year? b) Cost of goods sold for Richie Corporation during 2019 was $480,000. Beginning inventory was $165,000 and ending inventory was $195,000. Beginning accounts payable was $61,500 and ending accounts payable was $72,000. How much cash was paid to suppliers during 2019? c) Stone Corporation reported the following infonnation: December 20 19 201 8 Equipment (net) $130,000 $120,000 Purchased 35,000 Loss on sale of equipment 2,000 Amortization expense 3,000 What was the amount of the cash receipt from the sale? (1) The beginning and ending balances of long-term debt for Rambler Corporation are $61,500 (beginning balance) and $35,400(ending balance), respectively. If cash payments of long-term debt are $35,100, how much new long-term debt was issued/borrowed during the year? e) The beginning and ending balances of retained earnings for JAK Corporation are $185,000(beginning balance) and $255,000 (ending balance), respectively. The income statement reported net income of $105,000. The beginning and ending balances of dividends payable was zero. How much dividends were paid during the year? AVENGER HARDWARE LTD. Balance Sheet December 31, 2020 and 2019 2018 2020 2019 (selected 2018 amounts Current assets given for computation of Cash $ 21,000 $ 25,000 ratios) 80,500 $ 62,500 Current receivables, net 116,000 Inventories 149,000 137,000 86,000 Prepaid expenses 6,000 9,000 Total current assets 292,000 251,500 Property, plant, and equipment, net 154,500 143,500 Total assets $446,500 $395,000 351,500 Total current liabilities $141,000 $138,500 Long-term liabilities 114,500 121,000 Total liabilities 255,500 259,500 Preferred shares, $1.50 30,000 30,000 Common shares 75,000 60,000 60,000 Retained earnings 86,000 45,500 19,000 Total liabilities and shareholders' equity $446,500 $395,000 Other information: . Market price of Avenger Hardware Lid. common shares: $19.00 at December 31, 2020, and $31.00 at December 31, 2019. Weighted-average number of common shares outstanding: 15,000 during 2020 and 12,000 during 2019. . There are 2,000 preferred shares outstanding. Dividends were declared each year. . All sales are on credit. Required 1. Compute the following ratios for 2020 and 2019, rounding all answers to two decimal places: a. Current ratio b. Inventory turnover c. Accounts receivable turnover d. Debt/equity ratio e. Times-interest-earned ratio f. Return on assets g. Return on common shareholders' equity h. Earnings per common share i. Price-earnings ratio j. Book value per common share at year end 2. Decide (a) whether Avenger Hardware Lid.'s ability to pay its debts and to sell inventory improved or deteriorated during 2020 and (b) whether the investment attractiveness of its common shares appears to have increased or decreased. P18 GB InP18-5B Comparative financial statement data of Avenger Hardware Ltd. are as follows: 4 Usin AVENGER HARDWARE LTD. shar Income Statement For the Years Ended December 31, 2020 and 2019 2020 2019 Net sales $351,500 $310,000 Cost of goods sold 201,000 155,000 Gross margin 150,500 155,000 Operating expenses 65,000 71,000 Income from operations 85,500 84,000 Interest expense 26,000 20,000 Income before income tax 59,500 64,000 19,000 22,500 Income tax expense $ 40,500 $ 41,500 Net income
