Problem:
BENNIS COMPANY
Balance Sheets
December 31
|
|
2009
|
2008
|
|
Cash
|
$15,000
|
$30,000
|
|
Receivables (net)
|
70,000
|
60,000
|
|
Inventories
|
60,000
|
50,000
|
|
Plant assets (net)
|
200,000
|
180,000
|
|
|
$345,000
|
$320,000
|
|
Accounts payable
|
$50,000
|
$60,000
|
|
Mortgage payable (15%)
|
100,000
|
100,000
|
|
Common stock, $10 par
|
140,000
|
120,000
|
|
Retained earnings
|
55,000
|
40,000
|
|
|
$345,000
|
$320,000
|
Additional information for 2009:
1. Net income was $25,000
2. Sales on account were $410,000. Sales returns and allowances were $20,000.
3. Cost of goods sold was $198,000.
4. The allowance for doubtful accounts was $2,500 on December 31, 2009, and $2,000 on December 31, 2008.
Instructions:
Compute the following ratios at December 31, 2009.
(a) Current
(b) Acid-test
(c) Receivables turnover
(d) Inventory turnover