Question

Financial Statements, Closing Entries & Ratio Analysis

Answer 1

The question requires preparation of Financial Statements.

i. Income Statement :

Service Revenue 68,400

Advertising Expense 1,750

Salaries and Wages Expense 47,800

Utilities Expense 5,400

Supplies Expense 2,600

Depreciation Expense 8,400

Interest Expense 1,100

Rent Expense 1,800

Total Expense 68,850

Net Loss - 450

ii. Financial Statement :

Assets :

Cash 10,450

Accounts Receivable 16,800

Prepaid Rent 7,600

Supplies 1,500

Inventory 6,400

Buildings 125,000

Equipment 32,000

Total Assets 199,750

Liabilities :

Accumulated Depreciation – Equipment 7,200

Accumulated Depreciation – Buildings 21,000

Accounts Payable 13,900

Notes Payable (due 2024) 49,000

Unearned Service Revenue 9,450

Equity :

Share Capital 76,000

Retained Earnings 31,650

Dividends 8,000

Debit Net Loss 450

Debit Total Equity and Liabilities 199,750

b. Ratio Analysis :

i Current Ratio :

Current Assets / Current Liabilities 1.7 times

ii Acid Test Ratio

Current Assets - Inventory / Current Liabilities 1.49 times

iii Account receivable turnover [Account Receivable / Sales ] * 365 84 days

iv Average collection period 365 / Average receivable turnover 4.29

v Profit Margin

Profit / Sales - 0.6%

vi Debt to total assets

Total Debt / Total Asset 1.98 times

vii Return on Asset Operating Income / Total Asset 0.0023

viii Times interest Earned EBIT / Interest Expense 0.4 times

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Answer 2

Answer: im not sure don't use my answer.

Explanation: CAHS CASH CASH