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3 years ago

Sprague Company has been operating for several years, and on December 31, 207, presented the following balance sheet.

Business

1 answer:

Firdavs [7]3 years ago

4 0

Answer:

A. Current Ratio= 2.63

B. Acid-Test Ratio = 1.44

C. Debt to Assets Ratio 51.16%

D. Return on assets 5.81%

Explanation:

a. Calculation forn Current Ratio

First step is to Calculate the Total Current Assets

Cash 40,000

Receivables 75,000

Inventory 95,000

Total Current Assets 210,000

Now let calculate Current Ratio

Current Ratio= Current Assets / Current Liabilities

Current Ratio=210,000/80,000

Current Ratio= 2.63

b Calculation for Acid-Test Ratio

Acid-Test Ratio=(Current Assets - Inventory) / Current Liabilities

Acid-Test Ratio =(210,000-95,000)/80,000

Acid-Test Ratio =115,000/80,000

Acid-Test Ratio = 1.44

c. Calculation for Debt to Assets Ratio

First step is to calculate total Debt

Accounts payable 80,000

Mortgage payable 140,000

Total Debt 220,000

Now let calculate the Debt to Assets Ratio

Debt to Assets Ratio= Total Debt/ Total Assets

Debt to Assets Ratio=220,000/430,000

Debt to Assets Ratio= 51.16%

d. Calculation for Return on assets

Return on assets= Net Income/ Average Assets

Return on assets=25,000/430,000

Return on assets 5.81%

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3 years ago

Read 2 more answers

Fey Corporation uses the equity method of accounting for its investment in a 30%-owned investee that earned $56,000 and paid $18

tatiyna

Answer:

The answer is : C. Investment overstated; retained earnings overstated

Explanation:

Under the equity method of accounting, Fey Corporation should record the correct entry as below:

Dr Equity Investment 16,800

Cr Equity Income 16,800

Dr Cash 5,400

Cr Equity Investment 5,400

As a result, Investment account has been overstated by $5,400 while Dividend Revenue account has been overstated by $5,400. The overstating in Dividend Revenue will subsequently result to the overstating in Retained Earnings account through closing entry.

So, C. Investment overstated; retained earnings overstated is the correct answer.

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3 years ago

Stiller Corporation incurred fixed manufacturing costs of $24,000 during 2015. Other information for 2015 includes: The budgeted

Talja [164]

Answer:

Operating profit using absorption costing will be higher by $3,600 than operating income if using variable costing.

Explanation:

The difference between profit under variable costing and under absorption costing is simply the value of the change in inventory.

Usually, a decrease in inventory would cause profit under absorption costing to be lower . This is so because cost of goods sold would become higher leading to a lower profit . And vice versa

Difference in profit = POAR × change inventory 

Predetermined Overhead absorption rate(POAR)

= Estimated overhead/ estimated production unit

= $24,000/2,000 units = $12 per unit

Change in inventory = 1500 - 1200= 300 units

Difference in profit = 300 × $12 per unit = $3,600

Operating profit using absorption costing will be higher by $3,600 than operating income if using variable costing.

7 0

3 years ago

¿Qué relación existe entre las exportaciones cafeteras y el crecimiento económico del país?

Gelneren [198K]

Answer:

Todo tipo de exportación, en general, forma parte del cúmulo de actividades por las cuales el gobierno obtiene un rédito económico a través del cobro de impuestos. Así, sea a través de la exportación del café como de otras materias primas o manufacturadas, el gobierno cobra un impuesto en concepto de retenciones a la exportación, que engrosa las arcas públicas.

A su vez, el gobierno redistribuye estos fondos, fomentando la producción económica, generando programas de asistencia social o financiando servicios públicos, entre otras. Todas estas actividades, en definitiva, contribuyen al progreso social, generando las condiciones necesarias para que los individuos puedan ser más productivos, generando así un mayor crecimiento económico para el país.

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3 years ago

Hay, Straw and Clover formed the HSC Partnership, agreeing to share profits and losses equally. Clover will manage the business

Sergeeva-Olga [200]

Answer:

D. Ordinary Income: $20,000 , Guaranteed payment: $30,000

Explanation:

Ordinary Income refers to that part of income which is classified under salaries, wages or net income in case of Partnership. Such income is taxable at ordinary rates.

Net income refers to income arrived at after deduction of all expenses and taxes from profits. In case of partnership, profits and losses are distributed in agreed profit sharing ratio as per the clause in partnership deed.

In the given case,

Net Income before adjusting guaranteed payment to Clover: $90,000

Less: Guaranteed payment to Clover: ($30,000)

Ordinary Income/Net Income for all 3 partner's $60,000

Clover's share in ordinary income is one third i.e $20,000

Clover's guaranteed payment $30,000

6 0

3 years ago