Question

Check my Required information The following information applies to the questions displayed below.) Part 1 of 2 Income statements and balance sheets data for Virtual Gaming Systems are provided below. points 2021 Book References VIRTUAL GAMING SYSTEMS Income Statements For the years ended December 31 2022 Net sales $3,555,000 $3,081,000 Cost of goods sold 2,489,000 1,959,000 Gross profit 1,066,000 1,122,000 Expenses Operating expenses 964,000 867,000 Depreciation expense 39,000 31.500 Loss on sale of land 8.900 Interest expense 22,500 19,500 Income tax expense 0.900 52,500 Total expenses 1,034,400 972,400 Net Income $ 31,600 $ 142,600

Answer 1

Answer of Part 7-1-a:

For 2021:

Average Receivable = (Beginning Receivable + Ending Receivable) / 2
Average Receivable = ($69,000 + $90,000) / 2
Average Receivable = $79,500

Receivable Turnover = Sales / Average Receivable
Receivable Turnover = $3,081,000 / $79,500
Receivable Turnover = 38.8 times

For 2022:

Average Receivable = (Beginning Receivable + Ending Receivable) / 2
Average Receivable = ($90,000 + $88,500) / 2
Average Receivable = $89,250

Receivable Turnover = Sales / Average Receivable
Receivable Turnover = $3,555,000 / $89,250
Receivable Turnover = 39.8 times

Answer of Part b:

For 2021:

Average Inventory = (Beginning Inventory + Ending Inventory) /2A
Average Inventory = ($144,000 + $114,000) / 2
Average Inventory = $129,000

Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $1,959,000 / $129,000
Inventory Turnover = 15.2 times

For 2022:

Average Inventory = (Beginning Inventory + Ending Inventory) /2A
Average Inventory = ($114,000 + $138,500) / 2
Average Inventory = $126,250

Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $2,489,000 / $126,250
Inventory Turnover = 19.7 times

Answer of Part c:

For 2021:

Current Assets = Cash + Accounts Receivable + Inventory + Prepaid Rent
Current Assets = $195,000 + $90,000 + $114,000 + $12,900
Current Assets = $411,900

Current Liabilities = Accounts Payable + Interest Payable + Income Tax Payable
Current Liabilities = $75,000 + $7,800 + $19,500
Current Liabilities = $102,300

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $411,900 / $102,300
Current Ratio = 4:1

For 2022:

Current Assets = Cash + Accounts Receivable + Inventory + Prepaid Rent
Current Assets = $214,500 + $88,500 + $138,500 + $14,900
Current Assets = $456,400

Current Liabilities = Accounts Payable + Interest Payable + Income Tax Payable
Current Liabilities = $118,200 + $11,700 + $12,900
Current Liabilities = $142,800

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $456,400 / $142,800
Current Ratio = 3.2:1

Answer of Part d:

For 2021:

Total Liabilities = Current Liabilities + Notes Payable
Total Liabilities = $102,300 + $294,000
Total Liabilities = $396,300

Total Equity = Common Stock + Retained Earnings
Total Equity = $309,000 + $236,100
Total Equity = $545,100

Debt to Equity Ratio = Total Liabilities / Total Equity * 100
Debt to Equity Ratio = $396,300 / $545,100 * 100
Debt to Equity Ratio = 72.7%

For 2022:

Total Liabilities = Current Liabilities + Notes Payable
Total Liabilities = $142,800 + $490,000
Total Liabilities = $632,800

Total Equity = Common Stock + Retained Earnings
Total Equity = $309,000 + $125,100
Total Equity = $434,100

Debt to Equity Ratio = Total Liabilities / Total Equity * 100
Debt to Equity Ratio = $632,800 / $434,100 * 100
Debt to Equity Ratio = 145.8%