Problem: An accountant for Micro Dynamics prepared the following list from the company's accounting records for the year ended December 31, 2006:
Net Sales: $165,000 Cash $30,000
Accounts Receivable $14,000 Selling Expenses $44,000
Property, plant, equipment (Net) $42,000 Common Stock $17,000
Accounts Payable $12,000 Interest Income $3,000
General & Administrative expense $40,000 Cost of Goods Sold $51,000
Inventory $22,000 Prepaid Expenses $2,000
Income Taxes Payable $5,000 Income Taxes Expense $18,000
Notes Payable (Long Term) $20,000 Retained Earnings ???
A) Prepare an Income Statement for Micro Dynamics for year ended December 31, 2006.
B) Prepare a Balance Sheet for Micro Dynamics as of December 31, 2006.
C) Compute the following financial ratios for 2006: (Please show how ratios were derived).
1) Current ratio
2) Quick ratio
3) Average collection period
4) Inventory turnover
5) Debt ratio
6) Gross profit margin
7) Net profit margin
8) Return on equity