Question

Liquidity Ratios

E 10 The accounts and balances that follow are from the general ledger of Dimaz

Company. Compute the (1) working capital

Accounts Payable                                                       $ 6,640

Accounts Receivable                                                  4,080

Cash                                                                                  600

Current Portion of Long-Term Debt                               4,000

Long-Term Investments                                                 8,320

Marketable Securities                                                    5,040

Merchandise Inventory                                                10,160

Notes Payable (90 days)                                                6,000

Notes Payable (2 years)                                             16,000

Notes Receivable (90 days)                                        10,400

Notes Receivable (2 years)                                            8,000

Prepaid Insurance                                                             160

Property, Plant, and Equipment                                  48,000

Property Taxes Payable                                                    500

I. Dimaz, Capital                                                          22,640

Salaries Payable                                                               340

Supplies                                                                            140

Unearned Revenue                                                           300

Profitability Ratios

E 11. The following end-of-year amounts are from the financial statements of

Jang Company: total assets, $213,000; total liabilities, $86,000; owner’s equity,

$127,000; net sales, $391,000; cost of goods sold, $233,000; operating expenses,

$94,000; and withdrawals, $20,000. During the past year, total assets increased by

$37,500. Total owner’s equity was affected only by net income and withdrawals.

Compute the (1) profit margin, (2) asset turnover, (3) return on assets, (4) debt

to equity ratio, and (5) return on equity.

Classified Balance Sheet

P 3. The following information is from the June 30, 2011, post-closing trial

balance of Mike’s Hardware Company.

Account Name Debit Credit

Cash $ 32,000

Short-Term Investments 33,000

Notes Receivable 10,000

Accounts Receivable 276,000

Merchandise Inventory 145,000

Prepaid Rent 1,600

Prepaid Insurance 4,800

Sales Supplies 1,280

Office Supplies 440

Deposit for Future Advertising 3,680

Building, Not in Use 49,600

Land 23,400

Delivery Equipment 41,200

Accumulated Depreciation–Delivery Equipment $ 28,400

Trademark 4,000

Accounts Payable 114,600

Salaries Payable 5,200

Interest Payable 840

Long-Term Notes Payable 80,000

M. Logan, Capital 396,960

Answer 1