Use the provided information to answer parts a-m

the statement of earnings (2020) and the summary statement of financial 020) for Trek Inc. Trek Inc. Statement of Earnings For the vear ended December 31, 2020 (in thousands of dollars) Sales $1.640 Cost of sales JADO Gross profit 840 Depreciation expense (40) Selling and administrative expenses JE Earnings from operations 400 Loss on sale of equipment (6) Interest expense 24 Earnings before income taxes 370 Income tax expense Net earnings 270 Dec. 31, 2019 S Trek Inc. Summary Statement of Financial Position (in thousands of dollars) Dec 31, 2020 Assets Cash $ 52 Short-term Investments 80 Account Receivable (net) 198 Inventories 240 Prepaid Expenses 3 Property. Plant and Equipment (net) 852 Total Assets $1.430 60 30 80 160 892 $1.200 Liabilities and Shareholders' Equity Current Liabilities $ 240 Bonds Pavable Common Shareholders' Equity Total Liabilities and Shareholders' Equity 200 990 51430 S 160 200 840 $1.200 Additional information: a) Trek, Inc. purchased new equipment in 2020 for $55,000. It also sold used equipment during the year b) Trek Inc. had 84.000 common shares outstanding at December 31, 2019. On January 2, 2020, Trek Inc. sold and issued 6,000 additional common shares for a total amount of $60,000. There were no other transactions affecting common shares during 2020. The market price per share was $33 at December 31, 2020. Trek's board of directors declared dividends at December 31, 2020, payable in January 2021. This question consists of two independent parts. 1. A gym's sales of annual memberships for $40,000 have been included in Membership fees revenue. This amount was received on July 1, 2020 for memberships which are valid from July 1, 2020 to June 30, 2021. Examine whether it is appropriate to include the entire $40,000 in revenues for the year ended December 31, 2020. If it is appropriate, provide justification. If it is not appropriate, explain why and prepare the required journal entry to adjust the accounts. 2. Wellefson Equipment Company sells computers for $2,000 each and also gives each customer a 1-year warranty that requires the company to perform periodic services and to replace defective parts. During 2020, the company sold for cash 500 computers that had a cost of $700 each. Based on past experience, the company has estimated warranties to be 3% of sales. During 2020, the Company reimbursed customers for 10 defective computers, which were returned to the manufacturer. Record the journal entries to reflect the above transactions (accrual method) for 2020. Assume sales are on a cash basis and that a perpetual inventory system is used. The quick ratio for 2020 is equal to: Select one: a. 2.39 O b. 1.38 O c.0.22 O d. 0.55 The inventory turnover ratio for 2020 is equal to: Select one: a. 4.00 O b.3.33 O c.5.00 O d. 8.20 The return on assets ratio for 2020 is equal to: Select one: O a. 21.86% O b. 20.53% O c. 22.36% O d. 18.88% The times interest earned ratio for 2020 is equal to Select one a. 12 25 O b. 0.08 O c. 11.25 O d. 16:42 . The price-earings ratio for 2020 is equal to: Select one O a. 11.00 O b. 0.00 O c. 10.28 O d. 10.65 The dividend yield ratio for 2020 is equal to: Select one: O a. 6.06% O b. 1.51% O c. 4.00% Od 18.33% What is the amount of cash that Trek Inc received for the sale of the equipment? Select one O a 55.000 O b. $38.000 O $30,000 Od $13,000 The quick ratio measures the ability of the company Select one: O a to pay its total liabilities with cash on-hand O b. to pay its current liabilities using quick assets O c. to pay its current liabilities with current assets Od to transform its total assets into cash Notes 0 Which of the following is NOT TRUE about the inventory turnover ratio? Select one O a. The ratio measures how many times average inventory was purchased and sold during the period O b. If an ice cream stand has consistently weak sales due to rainy weather, this would likely result in a low inventory turnover ratio. O c. A company's inventory turnover ratio should be compared across the years and to its competitors' inventory turnover ratios in order to conclude whether it is favorable or not. O d. A high turnover ratio typically means a company has weaker sales and declining demand for a company's product Notes 2 Which of the following best explains the purpose of the debt-to-equity ratio? Select one: O a. It is an exclusive measure of the proportion of cash in a company that is financed via bank loans or shares issued to investors. O b. It measures how much debt has been used to finance the acquisition of assets relative to equity financing O c. It measures how much of a company's start-up costs were financed either through debt or asset financing O d. It measures the ability of the company to pay its total liabilities with total assets. Notes Which of the following is TRUE about the price earnings ratio? Select one: O a. It measures the relationship between a company's earnings per share at the beginning and ending of a given period O b. It is considered a test of solvency. c. Its calculation requires information about the current market price per share. O d. It measures how the company's product prices impact its earnings Notes The write-off of an uncollectible account receivable would have which effect on the company's quick ratio? Assume the quick ratio is less than 1. Select one: O a. Increase O b. Decrease O c. No effect Od Dollar amounts are needed to determine the direction of the effect Notes Which of the following transactions would represent a decrease in the company's current ratio, which equals 0.93? Select one: O a. The write-off of an account receivable b. The purchase of the company's own bonds from bondholders c. The issuance of shares in exchange for land O d. The purchase of merchandise inventory on account Notes