Question

The following income statement and balance sheets for Virtual Gaming Systems are provided. VIRTUAL GAMING SYSTEMS Income Statement For the year ended December 31, 2018 Net sales $3,076,000 1,958,000 Cost of goods sold Gross profit Expenses: Operating expenses Depreciation expense Loss on sale of land 1,118,000 $866,000 31,000 8,800 19,000 56,000 Interest expense Income tax expense Total expenses 980,800 $ 137,200 Net income VIRTUAL GAMING SYSTEMS Balance Sheets December 31 2018 2017 Assets Current assets Cash $152,000 68,000 143,000 6,960 $194,000 89,000 113,000 12,800 Accounts receivable Inventory Prepaid rent Long-term assets Investment in bonds Land 113,000 218,000 278,000 (81,000) 0 248,000 218,000 (50,000) Equipment Less: Accumulated depreciation Total assets $936,800 $785,960 Liabilities and Stockholders' Equity Current liabilities: $ 89,000 3,800 14,800 Accounts payable Interest payable Income tax payable $74,000 7,600 19,000 Long-term liabilities Notes payable Stockholders' equity 233,000 293,000 308,000 137,360 Common stock 308,000 235,200 Retained earnings $936,800 $785,960 Total liabilities and stockholders' equity Required: Assuming that all sales were on account, calculate the following risk ratios for 2018. (Use 365 days a year. Round your intermediate calculations and final answers to 1 decimal place.) Risk Ratios 1. Receivables turnover ratio times 2. Average collection period days 3 times Inventory turnover ratio 4 Average days in inventory days to 1 5. Current ratio 6. Acid-test ratio to 1 7 Debt to equity ratio 8. Times interest earned ratio % times

Answer 1

Catculation 1. Receaisable Net CascL Soles veraga Account recarvable 3026000 84000 62oo0/2 3016 o00 78500 39.2 imes 36sdas Accouot mecevalale tunavel 2. Collectim Pesufad 365 dles 39.2 times 9.3 cdas Jeacs Sald TOvemtorie Cost of Aerage tuaouer 1958000 Cu3as0 tI1300s)/ 2 1958000 128000 I5 3

Paga No Dats uAvenage clay ininentsr AIneatary tuwoaes Saio 365 days IS 3 Hmes 23.9 doys Curreat assets Curreat Itaailites 194000 t89000 t 113000 800 74000 + 7600 19000 408300 100600 Iaentery Peead Cash t9e coables urrent assets Lacorne tox urent lialsilkeAcconts tToes Casn taccaont ecisables 6.Aced dest Current liabilites 194000 29000 100600 to 1 2.8

Date Curaent liabile long Stockholde's 1. Deat to Coutty Sratia t00600 + 293000 308000t 235200 393600 5432 00 72.51a Stockhalder's eaui Common StocktRetained eamin aring befoe ine Gmd tax eauned ouoio expense 137200+ I9000 +56000 t9000 11 2 timer Net incame tLoeret t1ar Fapd tox Auea aeata/ainto Aerage 2 Batani balon c Sie celahle balan ce last lealamte is eadiag Beamint