What is the 20X2 widget industry average for the cost of goods sold?

a) 1,000,000 b) 2,000,000 c) 3,000,000 d) 190,000

EXHIBIT A Sherman, Inc Balance Sheet As of December 31, 20%1 and 20X2 Assets 20X1 20x2 Cash Marketable securities Accounts receivate inventory Total current assos $ 23,000 0.000 66000 $49.000 10.000 92.000 170.000 3221.00 $277.000 Noncurrenties Land Buildings Equipment Les Accumulated depreciation Totalfixed assets (net) Total assets 500.000 105,000 115,000 42.000 $268.000 $ 50.000 125,000 170,000 L69.000) $275,000 5497.000 Liabilities and Stockholders' Equity Surrent abilities Accounts payable $ 47,000 Notes payable banks 50.000 Current portion of long-term debt-mortgage 30.000 Total current liabilities $127.000 $ 34,000 30.000 30.000 $94.000 Long-term liabilities Long-term debl--mortgage Total abilities $120,000 $247.000 $ 90,000 $184.000 Stockholders equity Common stock at par Retained earnings Total stockholders' equity Total liabilities and stockholders' equily $164,000 134,000 $298.000 $214,000 199.000 $413.000 $545.000 $597.000 EXHIBIT A continued) Income Statement For years ended December 31, 20x0, 20X1, and 20X2 20x0 20X1 Not sales $3,150,000 13.184.000 Cost of goods sold 2,331,000 2.270.000 Gross pront SB,000 20x2 $3,503 000 2.452.000 $1.051.000 Operating expenses Salary expense Advertising expense Depreciation expense (D Ropains and maintenance Total operating expenses Operating profit Other income (expense) Interest income Interest expenso Income before income tax Income taxes (30%) Net income $400.000 15.000 20.000 10 000 $445.000 $ 374.000 $ 425,000 17,000 22.000 11.000 $475.000 $ 411.000 5510.000 22,000 37.000 15.000 $ 584,000 $ 467.000 5 800 14.800 $ 300,000 $ 100,000 $ 252.000 51000 [ 12.0001 $ 400,000 $ 120.000 S 280.000 $1200 10.2003 $ 458.000 $ 137.400 $ 320,000 Sherman, Inc. A Statement of Accounting Policies and Principles A. Marketable securities. Consist of short-term, interest-bearing securities stated at cost 8. Accounts receivable. Shown net of allowance for bad debt of $10.000 for 20X1 and $10.000 for 20X2 C. Inventory, Stated as last-in. first-out (LIFO). If the first in, forstout FIFO) method had been used, inventories for 20X1 and 20x2 would have been $40,000 and $60,000 higher respectively D. Noncurrent (fixed) assets. Consist of land, building, and equipment stated at cost. Depreciation is calculated by the straight-line method based on the estimated useful life of the assets. Land is not depreciated E Notes payable-banks. Represents short-term, unsecured loans from banks at varying market interest rates. F Long-term debt-mortgage. Represents the amount due (net of current portion) for a mortgage loan on the noncurrent assets G Average shares of common stock outstanding. For 20X2, there were 189.000 shares of common stock outstanding H. Sherman, Inc. is a producer of high quality widgets Final Samet Analysis EXHIBIT B WIDGETS MO. 2014 ESTAD 0.9 CASH ACCOUNTS RECEIVABLE NOTES RECEIVABLE INVENTORY OTHER CURRENT 190,000 TOTAL CURRENT 290,000 270,000 PIXED ASSETS OTHER NON-CURRENT TOTAL ASSETS 560.000 100.0 40,000 40,000 ACCOUNTS PAYABLE BANK LOANS NOTES PAYABLE OTHER CURRENT 20,000 TOTAL CURRENT 100,000 17.8 110,000 1907 OTHER LONG-TERM DEFERRED CREDITS NET WORTH 350,000 62.5 TOTAL LIAB & NET WORTH 560,000 100.0 NET SALES GROSS PROFIT NET PROFIT AFTER TAX WORKING CAPITAL 3.000.000 1,000,000 250,000 190,000 100.0 33.4 8.3 WIDGETS MFG. 20x2 (148 ESTAS MED 10 RATTOS SOLVENCY QUICK RATIO TIMES) CURRENT RATIO (TIMES) 1.0 4.0