Question

Assets The comparative balance sheet of Cookies Coffee Creations Inc. at October 31, 2020 for the years 2020 and 2019, and the income statements for the years ended October 31, 2019 and 2020, are presented below. COOKIE & COFFEE CREATIONS INC Balance Sheet October 31 2020 2019 Cash $22,324 $5,550 Accounts receivable 2,710 Inventory 7,097 7,450 Prepaid expenses 5,800 6,050 Equipment 102,000 75,500 Accumulated depreciation (25,200) (9.100) Total assets $116,071 $88,160 Liabilities and Stockholders' Equity Accounts payable $1,150 $2,450 Income taxes payable 9,25 7,200 Dividends payable 27,000 27,000 Salaries and wages payable 7,250 1,280 Interest payable 188 0 Note payable-current portion 4,000 o Note payable-long-term portion 6,000 0 Preferred stock, no par, $6 cumulative- 3,000 and 2,800 shares issued, respectively 15,000 14,000 Common stock, $1 par-25,180 shares issued 25,180 25,180 Additional paid in capital-treasury stock 250 250 Retained earnings 20,802 10,800 Total abilities and stockholders' equity $116,071 $88,160 COOKIE & COFFEE CREATIONS INC. Year Ended October 31 2020 2019 Sales $485,625 $462,500 Cost of goods sold 222,694 208,125 Gross profit 262,931 254,375 Operating expenses Salaries and wages expense 147,979 146,350 Depreciation expense 17,600 9,100 Other operating expenses 48,186 42,925 Total operating expenses 213,765 198,375 Income from operations 49,166 56,000 Other expenses Interest expense 413 0 Loss on disposal of plant assets 2,500 0 Total other expenses 2,913 Income before income tax 46,253 56,000 Income tax expense 9,251 14,000 Net income $37,002 $42,000 0 Additional information: Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more kitchen equipment. The loan would be repaid over a 4-year period. The terms of the loan provide for equal semi-annual payments of $2.500 on May 1 and Calculate the following ratios for 2019 and 2020. (Round current ratio to 2 decimal places, eg. 12.61, debt to assets and gross profit rate to decimal places, e... 12 and all other answers to 1 decimal place, c.9. 12.6% 2020 2019 :1 1. Current ratio 2. Debt to assets 3. Gross profit rate 4. Profit margin 5. Return on assets (Total assets at November 1, 2018, were $33,180.) 6. Return on common stockholders' equity (Total common stockholders' equity at November 1, 2018, was $23,180. Dividends on preferred stock were $16,800 in 2019 and $18,000 in 2020). Click if you would like to show Work for this question Open Show Work

Answer 1

Question 1;

RATIOS:
	2020	2019
current ratio	0.80	0.57
debt to assets	47%	43%
gross profit rate	54%	55%
profit margin	7.6%	9.1%
return on assets	36.2%	69.2%
	[37002*2/(116071+88160)]	[42000*2/(33180+88160)]
return on equity	46.1%	84.8%
	[(37002-18000)*2/ (25180+250+20802+25180+250+10800)	[(42000-16800)*2/ (25180+250+10800+23180)

Question 2:

(a) Journalize the February transactions:

2020
Feb. 1	Cash ..............................................................	12,150
	Common Stock..........................................		6,750
	Paid in Capital in Excess of Par................		5,400
1	Cash...............................................................	8,000
	Note Payable.............................................		8000
1	Equipment......................................................	8,720
	Cash...........................................................		8,720
1	Utilities Expense............................................	200
	Cash...........................................................		200
3	Supplies..........................................................	1,060
	Accounts Payable......................................		1,060
4	No entry.........................................................
5	Prepaid Insurance...........................................	2,700
	Cash...........................................................		2,700
5	Cash...............................................................	3,650
	Loss on Disposal of Plant Assets..................	250
	Equipment.................................................		3,900
16	Accounts Receivable......................................	3,500
	Service Revenue........................................		3,500
17	Cash...............................................................	540
	Unearned Service Revenue.......................		540
18	Accounts Payable...........................................	400
	Cash...........................................................		400
20	Treasury Stock...............................................	900
	Cash...........................................................		900
23	Accounts Receivable......................................	4,400
	Service Revenue........................................		4,400
24	Salaries and Wages Expense....(4 * $530 * 2 weeks)	4,240
	Cash...........................................................		4,240
25	Cash...............................................................	2,300
	Accounts Receivable.................................		2,300
27	Prepaid Expenses...........................................	200
	Cash...........................................................		200
28	Dividends......( 4500 - 300 ) shares * $0.20	840
	Cash.................		840