SANDHILL COMPANY Balance Sheets December 31 Assets 2022 Cash $ 72,000 Debt investments (short-term) 51,000 Accounts receivable 108,000 Inventory 235,000 Prepaid expenses 26,000 Land 133,000 Building and equipment (net) 264,000 Total assets $889.000 Liabilities and Stockholders' Equity Notes payable $171,000 Accounts payable 69,000 Accrued liabilities 40.000 Bonds payable, due 2025 252,000 Common stock. $10 par 208,000 Retained earnings 149,000 Total liabilities and stockholders' equity $889,000 2021 $68,000 40,000 89.000 169,000 29.000 133,000 189,000 $717.000 $107.000 50,000 40,000 169,000 208,000 143,000 $717,000 SANDHILL COMPANY Income Statements For the Years Ended December 31 2022 2021 Sales revenue $899.000 $786,000 Cost of goods sold 645,000 574,000 Gross profit 254,000 212,000 Operating expenses 196,000 160,000 Net income $ 58,000 $ 52,000 Additional information: 1. 2. 3. 4. 5. Inventory at the beginning of 2021 was $117,000. Accounts receivable (net) at the beginning of 2021 were $89.000. Total assets at the beginning of 2021 were $632,000. No common stock transactions occurred during 2021 or 2022 All sales were on account. (b) Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2022, and (2) as of December 31, 2023, after giving effect to the situation. (Round Debt to assets ratio to O decimal places, eg. 15 and round all other answers to 1 decimal place, eg. 15.5. Round % change to O decimal places, for eg. 1% and if % change is a decrease show the numbers as negative, eg. -1% or (1%) 1. Situation 18,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $53,000 All of the notes payable were paid in 2023. All other liabilities remained at their December 31, 2022 levels. Total assets on December 31, 2023, were $868,000. The market price of common stock was $9 and $13 on December 31, 2022 and 2023, respectively Ratio Return on common stockholders' equity Debt to assets ratio 2. 3. Price-earnings ratio 2022 2023 % Change 162 % 9.0 %6 -44.7 Return on common stockholders equity Debt to assets ratio Price earnings ratio 0.60 0.42 % -305 9 32 times 7.3 times 126.5 9