Question

Ratio proficiency McDougal​ Printing, Inc., had sales totaling $ 41 comma 000 comma 000 in fiscal year 2019. Some ratios for the company are listed below. Use this information to determine the dollar values of various income statement and balance sheet accounts as requested. Assume a​ 365-day year. Calculate values for the​ following: a. Gross profits b. Cost of goods sold c. Operating profits d. Operating expenses e. Earnings available for common stockholders f. Total assets g. Total common stock equity h. Accounts receivable McDougal​ Printing, Inc. Year Ended December​ 31, 2019 Sales $ 41 comma 000 comma 000 Gross profit margin 76​% Operating profit margin 39​% Net profit margin 7​% Return on total assets 13.3​% Return on common equity 24​% Total asset turnover 1.9 Average collection period 64.3 days

Answer 1

Answer:

a) Gross Profit is $31,160,000      

b) Cost of goods sold is $9,840,000      

c) Operating profits is $15,990,000    

d) Operating Expenses is $15,170,000    

e) Earnings available to common stockholders is $2,870,000    

f) Total assets is $21,581,947.37      

g)Total common stock equity is $11,958,333.33  

h) Accounts Receivable is $7,222,739.73

Explanation:

McDougal​ Printing, Inc.

Year Ended December​ 31, 2019

Sales = $ 41,000,000

Gross profit margin = 76​%

Operating profit margin = 39​%

Net profit margin = 7​%

Return on total assets = 13.3​%

Return on common equity = 24​%

Total asset turnover = 1.9

Average collection period = 64.3 days

Calculation of the dollar values of various income statement and balance sheet accounts    

a) Gross Profit = Sales × Gross Profit margin

= $41,000,000 × 76%

= $31,160,000      

b) Cost of goods sold = Sales - Gross profit

= $41,000,000 - $31,160,000

= $9,840,000      

c) Operating profits = Sales × Operating profit margin

= $41,000,000 × 39% = $15,990,000    

d) Operating Expenses = Gross profit - Operating profit

= $31,160,000 - $15,990,000

= $15,170,000    

e) Earnings available to common stockholders = Sales × Net profit margin

= $41,000,000 × 7%

= $2,870,000    

f) Total assets = Sales ÷ Total asset turnover ratio

= $41,000,000 ÷ 1.9

= $21,581,947.37      

g)Total common stock equity = Earnings available to common stockholders ÷ Return on common equity %

= $2,870,000 ÷ 24%

= $11,958,333.33  

h) Accounts Receivable = (Sales ÷ 365 days) × Average collection period

= ($41,000,000 ÷ 365 days) × 64.3 days

= $7,222,739.73