Question

Panza Corporation experienced a fire on December 31, 2020, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances. Cash Accounts receivable (net) Inventory Accounts payable Notes payable Common stock, $100 par Retained earnings December 31, 2020 $ 31,500 80,000 205,000 54,000 33,000 401,000 116,000 December 31, 2019 $ 11,500 124,000 177,000 94,500 61,000 401,000 105,000 Additional information.

Answer 1

Answer of Part a:

Average Inventory = (Beginning Inventory + Ending Inventory) /2
Average Inventory = ($177,000 + $205,000)/2
Average Inventory = $191,000

Inventory Turnover = Cost of Goods Sold / Average Inventory
3.1 = Cost of Goods Sold / $191,000
Cost of Goods Sold = 3.1 * $191,000
Cost of Goods Sold = $592,100

Answer of Part b:

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable)/2
Average Accounts Receivable = ($124,000 + $80,000)/2
Average Accounts Receivable = $102,000

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable
7.0 = Net Credit Sales / $102,000
Net Credit Sales = 7.0 * $102,000
Net Credit Sales = $714,000

Answer of Part c:

Beginning Common Stockholders Equity = Common Stock + Retained Earnings
Beginning Common Stockholders Equity = $401,000 + $105,000
Beginning Common Stockholders Equity = $506,000

Ending Common Stockholders Equity = Common Stock + Retained Earnings
Ending Common Stockholders Equity = $401,000 + $116,000
Ending Common Stockholders Equity = $517,000

Average Common Stockholder Equity = (Beginning Common Stockholders Equity + Ending Common Stockholders Equity)/2
Average Common Stockholders Equity = ($506,000 + $517,000)/2
Average Common Stockholders Equity = $511,500

Return on Common Stockholders Equity = Net Income / Average Common Stockholders Equity
0.21 = Net Income / $511,500
Net Income = $511,500 *0.21
Net Income = $107,415

Answer of Part d:

Return on Assets = Net Income / Average Total Assets
0.125 = $107,415 / Average Total Assets
Average Total Assets = $107,415 / 0.125
Average Total Assets = $859,320

Average Total Assets = (Beginning Total Assets + Ending Total Assets)/2
$859,320 = ($597,000 + Ending Total Assets)/2
$859,320 *2 = $597,000 + Ending Total Assets
$1,718,640 = $597,000 + Ending Total Assets
Ending Total Assets = $1,718,640 - $597,000
Ending Total Assets = $1,121,640