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Panza Corporation experienced a fire on December 31, 2020, in which its financial records were partially destroyed. It has beCompute the following for Panza Corporation. a) Cost of goods sold for 2020 373,000 (b) Net credit sales for 2020. 767,600 (c

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Answer #1

a) compute cost of goods sold

   Inventory turnover ratio. = Cost of goods sold/ average inventory

  Given inventory turnover ratio = 3.3 times

Average inventory = (202000+171000)/2 =186500

cost of goods sold =186500 × 3.3 times

   = $615450

​​​​​b) compute net credit sales

   Account receivable turnover = net credit sales/average account receivable

Given account receivable turnover = 7.6 times,

Average aaccount receivable = (74000+128000)/2 =101000

Net credit sales = 101000 × 7.6 times = $767600

c) compute net income

Return on common stock holder equity = net income/ shareholders fund

Given return on common stock holder equity ratio 28%

Shareholders fund=common stock + retained earnings

= 402000 + 114000 = 516000

NET income = 516000 × 28% =$144480

d) compute total assets

Return on asset = net income/average total assets

Given, return on asset = 12.5% , net income = $144480

average total assets = $144480/12.5%= $1155840

​​​​given also given previous years assets value = $619000

Average assets = total assets of 2019+ total assets of 2020/2

​​​​$1155840 × 2 = $619000 + total assets of 2020

Total assets of 2020 = $2311680 - $619000 = $1692680

Therefore

   Cost of goods sold = $615450

   NET credit sales = $767600

   NET income = $144480

   Total assets of 2020 = $1692680

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