Question

Net Income.. Balance Sheet.. Ratio and Analysis..

The following accounts (in no particular order) are for Perfect Reb Corporation for the fiscal year ended December 31, 2017. (S/T = Short-Term; L/T = Long-Term) REQUIRED: A) Calculate Perfect Reb Corporation's net income or net loss for the 2017 fiscal year. It is HIGHLY RECOMMENDED that your work follow the format of a multiple step income statement. B) Using proper form, prepare Perfect Reb Corporation's balance sheet for 2017. C) Using the information provided, solve for the requested ratios. $52,000 Sales Discounts $5,000 Common Stock (13,000 shares outstanding) Accrued Expenses (Payables) 20,000 Income Tax Expense (25% of IBIT) ?????? Miscellaneous Operating Expenses 50,000 Cash Cash 142,000 Accounts Receivable 20,000 Interest Expense 4,000 Buildings 186,000 Marketable Securities 62,000 Retained Earnings ?????? Notes Payable (due in 5 years) 12,000 Wages Expense 60,000 Rent Expense 11,000 Inventory 40,000 Unearned Revenue 19,000 Accumulated Depreciation - Buildings 48,000 15,000 Allowance for Uncollectible Accounts Sales Accounts Payable 41,000 433,000 Gain on Sale of Equipment 62,000 Mortgage Payable ($12,000 S/T) 144,000 Land 50,000 Sales Returns & Allowances 12,000 Bad Debt Expense 2,000 Depreciation Expense 11,000 L/T Investments 7,000 Cost of Goods Sold 109,000 Notes Receivable ($2,000 S/T) 13,000 Interest Revenue 3,000

Answer 1

Perfect Reb Corporation Income Statement For the Year Ended December 31, 2017 Sales 433,000 5,000 12,000 109,000 307,000 142,000 40,000 Less: Sales discount Less: Sales returns & allowances Less: Cost of goods sold Gross profit Less: Operating expenses: Misc operating expense Wages expense Bad debt expense Rent expense Gain on sale of equipment Depreciation expense Total Operating Expenses 5,000 2,000 62,000 251,000 50,000 60,000 2,000 11,000 62,000 11,000 7,000 11,000 18,000 IBIT 196,000 111,000 4,000 4,000 Less: Non-Operating expenses: Interest expense Total Non-Operating Expenses Add: Non-Operating Income: Interest revenue Total Non-Operating Income IBT Income tax expense (111000*25%) Net income Perfect Reb Corporation Balance Sheet For the Year Ended December 31, 2017 Assets Current assets: Cash Inventory Accounts receivable 20,000 Less: Allowance for uncollectable accounts 15,000 S/T notes receivable Marketable securities Total current assets Long-Term assets: L/T investments L/T notes receivable (13000-2000) Total long term assets Fixed assets Buildings 186,000 Less: Accumulated depreciation 48,000 Land Total fixed assets Total assets Liabilities and Shareholders' Equity Current liabilities: Accounts payable Accrued expenses Unearned revenue S/T mortgage payable Income tax payable Total current liabilities Long-term liabilities: Notes payable L/T mortgage payable (144000-12000) Total long term liabilities Total liabilities Equity Common stock Retained earnings Total Equity Total liabilities and Equity 138,000 50,000 188,000 457,000 3,000 3,000 110,000 27,750 82,250 41,000 20,000 19,000 12,000 27,750 119,750 Perfect Reb Corporation Statement of Shareholders' Equity For the Year Ended December 31, 2017 Common Stock 52,000 Retained Earnings 59,000 Beginning Balance Add: Net income Ending Balance 12,000 132,000 144,000 263,750 82,250 141,250 52,000 $ 52,000 141,250 193,250 457,000

Ratio Calculation Answer 1 Quick (Acid-Test) Ratio (251000-40000)/119750 1.76 times 2 Dividend Yied 1.25/94.50 X 100 1.32% 3 Gross Profit Percentage 307000/433000 X 100 70.90% Average Accounts Receivable (2000+5000)/2 3500 Formula Current Asset-Inventory Current Liabilities Dividend per Share X 100 Market Price per Share Gross Profit X 100 Sales (Beginning Accounts Receivable + Ending Accounts Receivable)/2 Credit Sales Average Accounts Receivable (Beginning Inventory + Ending Inventory)/2 Cost of Goods Sold Average Inventory Net Income No. of Common Stock Market Price per Share Earning per Share 4 Accounts Receivable Turnover Average Inventory 433000/3500 (15000+40000)/2 123.71 times 27500 5 Inventory Turnover 109000/27500 3.96 times Earning per Share 82250/13000 6.33 6 Price Earnings Ratio 94.50/6.33 14.93 times It is not mentioned in the question to calculate Turnover in days. Thus not calculated in days. Please give as many likes for the hard work.