The financial statements for Castile Products, Inc., are given below:
Castile Products, Inc. Balance Sheet December 31 |
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Assets | ||||||
Current assets: | ||||||
Cash | $ | 23,000 | ||||
Accounts receivable, net | 160,000 | |||||
Merchandise inventory | 340,000 | |||||
Prepaid expenses | 8,000 | |||||
Total current assets | 531,000 | |||||
Property and equipment, net | 880,000 | |||||
Total assets | $ | 1,411,000 | ||||
Liabilities and Stockholders' Equity | ||||||
Liabilities: | ||||||
Current liabilities | $ | 250,000 | ||||
Bonds payable, 8% | 320,000 | |||||
Total liabilities | 570,000 | |||||
Stockholders’ equity: | ||||||
Common stock, $5 par value | $ | 170,000 | ||||
Retained earnings | 671,000 | |||||
Total stockholders’ equity | 841,000 | |||||
Total liabilities and stockholders’ equity | $ | 1,411,000 | ||||
Castile Products, Inc. Income Statement For the Year Ended December 31 |
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Sales | $ | 3,060,000 | |
Cost of goods sold | 1,147,000 | ||
Gross margin | 1,913,000 | ||
Selling and administrative expenses | 640,000 | ||
Net operating income | 1,273,000 | ||
Interest expense | 25,600 | ||
Net income before taxes | 1,247,400 | ||
Income taxes (30%) | 374,220 | ||
Net income | $ | 873,180 | |
Account balances at the beginning of the year were: accounts receivable, $180,000; and inventory, $280,000. All sales were on account.
Required:
Compute the following financial data and ratios:
1. Working capital.
2. Current ratio. (Round your answer to 1 decimal place.)
3. Acid-test ratio. (Round your answer to 2 decimal places.)
4. Debt-to-equity ratio. (Round your answer to 2 decimal places.)
5. Times interest earned ratio. (Round your answer to 2 decimal places.)
6. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)
7. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)
8. Operating cycle. (Round your intermediate calculations and final answer to 1 decimal place.)
Ans. 1 | Working capital = Total current assets - Total current liabilities | |||
$531,000 - $250,000 | ||||
$281,000 | ||||
Ans. 2 | Current ratio = Total current assets / Total current liabilities | |||
$531,000 / $250,000 | ||||
2.1 : 1 | ||||
Ans. 3 | Acid test ratio = (Total current assets - Inventory - Prepaid expenses) / Total current liabilities | |||
($531,000 - $340,000 - $8,000) / $250,000 | ||||
$183,000 / $250,000 | ||||
0.73 : 1 | ||||
Ans. 4 | Debt to equity ratio = Total liabilities / Total stockholder's equity | |||
$570,000 / $841,000 | ||||
0.68 | ||||
Ans. 5 | Time interest earned = Net operating income / Interest expenses | |||
$1,273,000 / $25,600 | ||||
49.73 times | ||||
Ans. 6 | Average collection period = No. of days in year / Net credit sales * Average accounts receivables | |||
365 / $3,060,000 * $170,000 | ||||
20.3 | days | |||
*Average receivable = (Beginning receivables + Ending receivables) / 2 | ||||
($180,000 + $160,000) / 2 | ||||
$170,000 | ||||
Ans. 7 | Average sales period = No. of days in year / Cost of goods sold * Average inventory | |||
365 / $1,147,000 * $310,000 | ||||
98.6 | days | |||
*Average inventory = (Beginning inventory + Ending inventory) / 2 | ||||
($280,000 + $340,000) / 2 | ||||
$310,000 | ||||
Ans. 8 | Operating cycle = Average collection period + Average sales period | |||
20.3 + 98.6 | ||||
118.9 days | ||||
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 20,000 Accounts receivable, net 240,000 Merchandise inventory 400,000 Prepaid expenses 8,000 Total current assets 668,000 Property and equipment, net 840,000 Total assets $ 1,508,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 300,000 Bonds payable, 12% 310,000 Total liabilities 610,000 Stockholders’ equity: Common stock, $10 par value $ 180,000 Retained earnings 718,000 Total stockholders’ equity 898,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 20,000 Accounts receivable, net 220,000 Merchandise inventory 320,000 Prepaid expenses 11,000 Total current assets 571,000 Property and equipment, net 880,000 Total assets $ 1,451,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 290,000 Bonds payable, 10% 400,000 Total liabilities 690,000 Stockholders’ equity: Common stock, $10 par value $ 150,000 Retained earnings 611,000 Total stockholders’ equity 761,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance sheet December 31 Assets Current assets: Cash 19,000 Accounts receivable, net 240,000 Merchandise inventory 370,000 Prepaid expenses 8,000 Total current assets 637,000 Property and equipment, net 850,000 Total assets $1,487,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 220,000 Bonds payable, 10% 380,000 Total liabilities 600,000 Stockholders' equity: Common stock, $10 per value $ 180,000 Retained earnings 707,000 Total stockholders' equity 887,000 Total liabilities and stockholders'...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses $ 24,000 190,000 310,000 11,000 Total current assets Property and equipment, net 535,000 900,000 Total assets $1,435,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 11% $ 230,000 390,000 620,000 Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings $ 120,000 695,000 Total stockholders' equity 815,000 Total liabilities and...
The financial statements for Castile Products, Inc., are given below Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses 21,000 240,000 320,000 7,000 Total current assets 588,000 910,000 Property and equipment, net Total assets $1,498,000 Liabilities and Stockhoiders' Equity Liabilities: Current liabilities Bonds payable, 10% $ 240,000 390,000 . Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings 630,000 ole $ 180,000 688,000 Total stockholders' equity 868,000 Total liabilities...
The financial statements for Castile Products, Inc., are given below Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 21,000 260,000 360,000 8,000 Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets 649,000 820,000 Property and equipment, net Total assets $1,469,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $300,000 350,000 Bonds payable, 11% Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings 650,000 $110,000 709,000 Total stockholders' equity 819,000 Total liabilities and equity $1,469,000...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net $ Accounts 23,000 190,000 400,000 8,000 621,000 890,000 890,000 Total assets $1,511,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 12% $ 210,000 370,000 Total liabilities Stockholders' equity Common stock, $5 par value Retained earnings 580,000 $ 130,000 801,000 Total stockholders' equity Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses $ 21,000 260,000 350,000 8,000 Total current assets Property and equipment, net 639,000 890,000 $1,529,000 Total assets Liabilities and Stockholders' Equity Liabilities $ 230,000 Current liabilities Bonds payable, 12% 320,000 550,000 $ 200,000 Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings 779,000 979,000 $1,529,000 Total stockholders' equity Total liabilities...
Need some help. The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 19,000 200,000 300,000 12,000 531,000 900,000 $1,431,000 $ 250,000 330,000...
Castile Products, Inc Balance Sheet December 31 Assets Current assets: $ Cash 20,000 160,000 320,000 Accounts receivable, net Merchandise inventory Prepaid expenses 11,000 511,000 Total current assets 870,000 Property and equipment, net $1,381,000 Total assets Liabilities and Stockholders' Equity Liabilities: $ Current liabilities 270,000 320,000 590,000 Bonds payable, 9% Total liabilities Stockholders' equity: Common stock, $10 par value Retained earnings Total stockholders' equity $ 120,000 671,000 791,000 $1,381,000 Total liabilities and stockholders' equity Castile Products, Inc. Income Statement For the...