You are at year-end-and you are at wit's end; the person in charge of putting together the financial statements did get the income statement done but is now ill and unable to complete the statements before a major deadline. One other piece of good news-some financial ratios were calculated and you have a few other scraps of information.
First of all: the income statement:
Net Sales $600,000 (all sales made on credit)
Cost of Goods Sold 348,000
Gross Profit 252-,000
Selling and Admin. 180,000
Operating Income 72,000 (which also equals earnings before interest and taxes)
Interest expense 5,000
Income tax 25,000
Net Income after tax $42,000
Earnings per share $525 (assume no dilutive securities)
Financial ratios (end of year where relevant; use Gibson textbook formulas) are:
Accounts Receviable Turnover = 12 times
Inventory Turnover = times 5.8
Sales to Fixed Assets = 6 times
Working capital = $51,000
Debt ratio = 0.632
Dividends per share = $2.50
Additional information:
Total depreciation expense was $12,000
No noncash activities for statement of cash flows
No treasury stock during year
No balance sheet accounts active during the year except those listed below
No stock dividends, preferred stock or corporate reorganizations $22,000 of fixed assets purchased during year.
$10,000 of long-term debt retired during year
complete the [a] statement of retained earnings and [b] comparative balance sheet shown below:
Statement of Retained Earnings
Beginning Balance $40,000
Add: Net Income
Less: Common dividends paid
Ending balance $
Balance sheet
| Assets |
|
|
|
Liabilities and Stockholder's Equity (SE) |
|
|
|
Begin |
Ending |
|
|
Begin |
Ending |
| Cash |
$9,000 |
$ |
|
Current Liabilities |
$70,000 |
$ |
| Accounts Receivable |
54,000 |
|
|
Long-Term Debt |
80,000 |
|
| Inventory |
56,000 |
|
|
Total Liabilities |
150,000 |
|
| Plant Assets(net) |
95,000 |
|
|
Common Stock $2 Par |
16,000 |
|
| Total Assets |
$214,000 |
$ |
|
Additional Paid-in Cap. |
8,000 |
|
|
|
|
|
Retained Earnings |
40,000 |
|
|
|
|
|
Stockholders' Equity |
64,000 |
|
|
|
|
|
Liabilities and SE |
$214,000 |
$ |