Question - Seaforce Manufacturing Inc. Income Statement Year Ended December 31, 20X5
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Sale
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$ 340,000
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Cost of goods sold
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$ 250,100
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Gross Profit
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$ 89,900
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Operating Expenses
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$ 55,000
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Loss on Sale of equipment
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$ 2,500
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$ 57,500
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Profit from Operations
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$ 32,400
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Other expenses
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Interest Expense
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$ 3,500
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Profit before Income Tax
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$ 28,900
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Income Tax Expense
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$ 12,000
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Profit
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$ 16,900
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Additional Information:
1. Operating expenses include depreciation expense of $10,000
2. Accounts Payable related to the purchase of inventory
3. Equipment that cost $12,500 was sold at a loss of $2,500
4. New equipment was purchased during the year for $8,500
5. Dividends declared and paid in 20X5 totalled $3,000
6. Common shares were sold for $12,000 cash
7. Interest payable in 20X5 was $800 greater than interest payable in 20X4
Seaforce Manufacturing Inc. comparative balance sheet at December 31 20X5
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20X5
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20X4
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Cash
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$ 6,450
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$ 4,100
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Accounts Receivable
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$ 72,000
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$ 6,500
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Inventory
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$ 110,250
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$ 140,000
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Prepaid Expenses
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$ 1,750
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$ 1,020
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Equipment
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$ 96,000
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$ 100,000
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Accumulated Depreciation - equipment
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$ (50,000)
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$ (42,000)
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Total Assets
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$ 236,450
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$ 209,620
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Account Payable
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$ 16,230
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$ 9,900
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Interest Payable
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$ 810
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$ 10
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Income taxes payable
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$ 10,800
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$ 9,500
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Dividends Payable
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$ 1,800
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$ 2,800
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Long-term Notes Payable
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$ 55,000
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$ 62,000
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Common shares
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$ 135,000
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$ 123,000
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Retained Earnings
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$ 16,310
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$ 2,410
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Total Liabilities & Shareholders' Equity
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$ 236,450
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$ 209,620
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Round answers to fit 2 decimal places in all questions (in % questions a 0.12 is presented as 12%, so a 0.124 is rounded as 12% and 0.127 is rounded as 13%)
The quick ratio at December 20X4 was:
A. Between 0.88 and 2.64
B. Not enough data provided to calculate it
C. Equal or above 2.65
D. Between 0.22 and 0.87
E. Equal or below 0.21