Question

Financial statements for Solomon Company follow. SOLOMON COMPANY Balance Sheets As of December 31 2019 2018 $ 23,000 21,400 55,000 140,000 29,000 268,400 32,000 280,000 32,000 $612,400 $ 19,000 7,400 47,000 148,000 14,000 235,400 25,000 265,000 27,000 $552,400 Assets Current assets Cash Marketable securities Accounts receivable (net) Inventories Prepaid items Total current assets Investments Plant (net) Land Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Notes payable Accounts payable Salaries payable Total current liabilities Noncurrent liabilities Bonds payable Other Total noncurrent liabilities Total liabilities Stockholders' equity Preferred stock, (par value $10, 4% cumulative, non-participating; 9,000 shares authorized and issued) Common stock (no par; 50,000 shares authorized; 10,000 shares issued) Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 35,400 88,800 23,000 147,200 $ 13,900 75,000 17,000 105,900 120,000 29,000 149,000 296,200 120,000 24,000 144,000 249,900 90,000 90,000 90,000 136,200 316,200 $612,400 90,000 122,500 302,500 $552,400

Answer 1

Answer to first 4 parts of the question: Working capital a) Current assets - Current liabilities 2019 $268,400 -->(a) $147,200 -->(b) $121,200 (a) - (b) Total current assets Total current liabilities Working capital Current assets / Current liabilities b) Current ratio 2019 $268,400 -->(a) Total current assets $147,200 (b) Total current liabilities (a) (b) Current ratio 1.82 -> Quick ratio Quick Assets Current liabilities c) 2019 $23,000 Cash $21,400 $55,000 $99,400 >(u) Marketable Securities Accounts Receivable, net Quick Assets $147,200 --> (v) (u)/(v) Current liabilities Quick ratio 0.16

Accts. Receivable turnover Net Sales / Average Accts. Receivable d) 2019 Beginning Accts. Receivable Ending Accts. Receivable $48,000 >(m) $55,000 $51,500 -->(n) (o) [(m)(n) / 2 Average Accts. Receivable --> $370,000 Net Sales (p) (p) (o) Accts. Receivable turnover 7.18