Analytical case-complete an income statement and balance sheet using financial ratio data.Partially completed financial statements for Whittaker, Inc., follows:
Whitaker, Inc.
Income Statement
For the year ended December 31, 2011
Sales...................... $ ?
Cost of goods sold............... $ ?
Gross profit................. $ ?
Operating expenses.............. $ ?
Income from operations............. $ ?
Interest expense................ $ ?
Income before taxes............. $ ?
Income taxes (20%).............. $ ?
Net income.................. $ ?
Whitaker, Inc.
Balance Sheet 31-Dec-11
Current assets:
Cash................... $ ?
Accounts receivable, net............ $ ?
Inventory.................. $ ?
Total current assets.............. $171,000
Property, plant and equipment, net........ $ ?
Total assets.................. $ ?
Current liabilities............... $ ?
Bonds payable, 15%.................................................... 70,000
Total liabilities................. $ ?
Owners' equity:
Common stock, $2 par value.......... $10,000
Additional paid-in capital........... 15,000
Retained earnings............... $ ?
Total owners' equity............. $ ?
Total liabilities and owners' equity........ $ ?
Additional information:
Financial ratios computed from these financial statements include the following
Current ratio ...............1.9 to 1
Acid-test ratio ................1.3 to 1
Debt/equity ratio................2.0 to 1
Inventory turnover...........4.0 times
Accounts receivable turnover.........6.8 times
Times interest earned....................4.45 times
Gross profit ratio....................................40%
Return on investment..................................12%
Earnings per share.....................................$5.52
All sales during the year were made on account. Cash collections during the year xceeded sales by $14,000, and no uncollectible accounts were written off. The balances of the accounts receivable account was $57,000 on January 1, 2011.No common stock was issued during the year. Dividends declared and paid during the year were $7,600. The balance of the inventory account was $48,000 on January 1, 2011. Interest expense on the income statement relates to the 15% bonds payable; $10,000 of these bonds were issued on May 1, 2011; the remaining amount of bonds payable were outstanding throughout the year. All bonds were issued at face amount.
a. Complete the income statement and balance sheet for Whittaker, Inc. Show how each amount was determined.
b. After completing part a, use your answers to recompute each of the financial ratios provided as additional information.