Question

Pepper Company provided the incomplete financial statements shown below as well as the following additional information: 1. All sales during the year were on account. 2. There was no change in the number of shares of common stock outstanding during the year. 3. The interest expense on the income statement relates to the bonds payable; the amount of bonds outstanding did not change during the year. 4. Selected balances at the beginning of the current year were:
Accounts receivable $ 270,000
Inventory $ 360,000
Total assets $ 1,800,000
e. Selected financial ratios computed from the statements below for the current year are:
Earnings per share $ 2.30 Debt-to-equity ratio 0.875 Accounts receivable turnover 14.0 Current ratio 2.75 Return on total assets 18.0 %
Times interest earned ratio 6.75 Acid-test ratio 1.25 Inventory turnover 6.5 Required:
Compute the missing amounts on the company's financial statements.

Answer 1

The missing amounts on the company's financial statements include the current asset of $880000, quick asset is $400000 and an inventory of $480000.

How to calculate the asset?

Based on the information given, it should be noted that the current assets will be:

= Current liability × Current ratio

= $320000 × 2.75

= $880000

The quick assets will be:

= $320000 × 1.25

= $400000

The inventory will be:

= $880000 - $400000

= $480000

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