Question

Required information The following information applies to the questions displayed below.] Tungsten Company, Inc., sells heavy construction equipment. There are 14,000 shares of capital stock outstanding. The annual fiscal period ends on December 31. The following condensed trial balance was taken from the general ledger on December 31, Current Year: Credit Debit $ 34,500 14,700 53,200 41,700 Account Titles Cash Accounts receivable (net) Inventory, ending Operational assets Accumulated depreciation Liabilities Capital stock Retained earnings, January 1, Current Year Sales revenue Sales returns and allowances Cost of goods sold Selling expense Administrative expense Bad debt expense Sales discounts Income tax expense Totals $ 17,000 24,800 73,200 16,780 147,200 5,600 80,300 14,900 15,500 2,400 7,500 8,680 $ 278,980 $278,980 Required: 1. Beginning with the amount for net sales, prepare an income statement (showing both gross profit and income from operations). (Round "Earnings per share" to 2 decimal places.) TUNGSTEN COMPANY, INC. Income Statement For the Year Ended December 31, Current Year Operating expenses: Total operating expenses Earnings per share on capital stock outstanding 2. The beginning balance in Accounts Receivable (net) was $17,000. Compute the receivables turnover ratio. Receivables Turnover Ratio Numerator Denominator O times

Answer 1

TUNGSTEN COMPANY, INC Income Statement For the Yaer Ended December 31, Current Year Sales Revenue Net sales Revenue $ Cost of goods Sold $ Gross Profit $ Operating expenses: selling Expense $ 14,900 Administrative Expense $ 15,500 Bad Debt expense $ 2,400 134,100 80,300 53,800 Income from operations Income tax expense $ $ $ 32.800 21,000 8,680 Net Income Earnings per share on capital stock outstanding $ $ 12,320 0.88 Numerator Denominator Receivables Turnover Ratio Net Sales Average accounts Receivables $ S 134,100 15.850 8.46 | Times

Working Notes: Net Sales Revenue = Sales Revenue - sales returns and allowences - Sales Discounts = $147,200-$5,600-$7,500 = $134,100 Earninsg per share = Net income / No of shares outstanding = $12,320/14,000 = $0.88 Avearge Accounts Receivables = (Beginning accounts receivables + Ending accounts receivables)/2 = ($17,000+$14,700)/2 = $15,850