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3 years ago

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Simon Company’s year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 31,800 $ 35,625 $ 37,

800 Accounts receivable, net 89,500 62,500 50,200 Merchandise inventory 112,500 82,500 54,000 Prepaid expenses 10,700 9,375 5,000 Plant assets, net 278,500 255,000 230,500 Total assets $ 523,000 $ 445,000 $ 377,500 Liabilities and Equity Accounts payable $ 129,900 $ 75,250 $ 51,250 Long-term notes payable secured by mortgages on plant assets 98,500 101,500 83,500 Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 131,100 104,750 79,250 Total liabilities and equity $ 523,000 $ 445,000 $ 377,500 (1-a) Compute the current ratio for each of the three years. (1-b) Did the current ratio improve or worsen over the three year period? (2-a) Compute the acid-test ratio for each of the three years. (2-b) Did the acid-test ratio improve or worsen over the three year period?

1 answer:

Ede4ka [16]3 years ago

3 0

Answer:

Simon Company

1-a) Current ratio = 1.88 2.52 2.87

= Current assets/Current liabilities

1-b. The current ratio worsened over the three-year period.

2-a) Acid-test ratio = 1.02 1.43 1.81

= (Current assets - Inventory)/Current liabilities

2-b) The acid-test ratio worsened over the three-year period.

Explanation:

a) Data and Calculations:

At December 31 Current Yr 1 Yr Ago 2 Yrs Ago

Assets

Cash $ 31,800 $ 35,625 $ 37,800

Accounts receivable, net 89,500 62,500 50,200

Merchandise inventory 112,500 82,500 54,000

Prepaid expenses 10,700 9,375 5,000

Total current assets $244,500 $190,000 $147,000

Plant assets, net 278,500 255,000 230,500

Total assets $ 523,000 $ 445,000 $ 377,500

Liabilities and Equity

Accounts payable $ 129,900 $ 75,250 $ 51,250

Long-term notes payable secured by

mortgages on plant assets 98,500 101,500 83,500

Common stock, $10 par value 163,500 163,500 163,500

Retained earnings 131,100 104,750 79,250

Total liabilities and equity $ 523,000 $ 445,000 $ 377,500

1-a) Current ratio = 1.88 2.52 2.87

= Current assets/Current liabilities

= Total current assets $244,500 $190,000 $147,000

Accounts payable $ 129,900 $ 75,250 $ 51,250

1-b. The current ratio worsened over the three-year period.

2-a) Acid-test ratio = 1.02 1.43 1.81

= (Current assets - Inventory)/Current liabilities

Current assets - Inventory $132,000 $107,500 $93,000

Accounts payable $ 129,900 $ 75,250 $ 51,250

2-b) The acid-test ratio worsened over the three-year period.

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Majestic Corporation manufactures wheel barrows and uses budgeted machine hours to allocate variable manufacturing overhead. The

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Answer:

$409185

Explanation:

Given: Budgeted output units: 28,475 units

Budgeted machine-hours: 17,085 hours

Budgeted variable manufacturing overhead costs for 28,475 units: $358,785

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Actual machine-hours used: 15,000 hours

Actual variable manufacturing overhead costs: $384,060.

First, we will find Budgeted machine hour per unit produced.

Budgeted machine hour per unit produced= $\frac{Budgeted\ machine\ hour}{Budgeted\ units}$

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Now, lets find out flexible budget amount.

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Salary paid = $2,000

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Answer:

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"Moyas Corporation sells a single product for $10 per unit. Last year, the company's sales revenue was $280,000 and its net oper

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Answer:

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