Question
Various balance sheet and statements of earnings accounts for Home Restoration Outlet Ltd. are listed below in random order. You will have to determine which
Various balance sheet and statements of earnings accounts for Home Restoration Outlet Ltd. are listed below in random order. You will have to determine which account goes in which statement to solve the questions.
The balance sheet accounts are as of December 31, 2005, except as noted. The statement of earnings amounts are for the year January 1 to December 31, 2005. All accounts are shown in thousands of dollars.
1) Prepare a statement of earnings, a statement of retained earnings, and a balance sheet.
2) Explain the relationship between financial statements and why it is useful for managers to understand all three.
3) Perform a "current ratio" analysis for the company and explain the company's liquidity position.
Cash | $40 |
Retained earnings, Dec 31, 2004 | $255 |
Inventory, Dec 31, 2004 | $425 |
Note payable, due Feb 2006 | $25 |
Selling expenses | $482 |
Accounts payable | $85 |
Accounts receivable | $104 |
Sales | $2,409 |
Income tax rate | 50% |
Building and equipment, cost | $150 |
Dividends | $70 |
Total Long term loan, due June 2015 | $110 |
- 2006 portion | $10 ($10 of the $110) |
Purchases | $1,304 |
Income tax payable | $25 |
Marketable securities | $30 |
Depreciation expense, building and equipment | $23 |
General and administrative expenses | $215 |
Cost of goods sold | $1,419 |
Goodwill | $85 |
Other expenses, interest | $20 |
Prepaid expenses | $42 |
Common stock | $130 |
Accumulated depreciation, | $53 |
Step by Step Solution
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1 Statement of Earnings For the year ended December 31 2005 Sales 2409 LessCost of goods sold 1419 G...Get Instant Access to Expert-Tailored Solutions
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