Presented here are an incomplete income statement and balance sheet for Schwenke Corporation.

Additional information:

1. The gross profit margin is 40%.

2. The income tax rate is 20%.

3. The inventory turnover is 8 times.4. The current ratio is 3:1.

5. The asset turnover is 1.5 times.

Instructions

Calculate the missing information using the ratios. Use ending balances instead of average balances, where averages are required for ratio calculations. Show your calculations.

Taking It Further

Why is it not possible to calculate the missing amounts in the same sequence (i.e., (a), (b), (c), etc.) that they are presented above?

Transcribed Image Text:

SCHWENKE CORPORATION Income Statement Year Ended December 31, 2021 Net sales (a) Cost of goods sold Gross profit Operating expenses (b) (c) 333,750 (d) Profit from operations Interest expense 10,500 Profit before income taxes (e) Income tax expense (f) Profit $124,600 SCHWENKE CORPORATION Balance Sheet December 31, 2021 Assets Current assets $ 7,500 (g) (h) Cash Accounts receivable Inventory Total current assets (i) Property, plant, and equipment (1) Total assets (k) Liabilities Current liabilities $ (1) Non-current liabilities 120,000 Total liabilities (m) Shareholders' Equity Common shares 250,000 Retained earnings 400,000 Total shareholders' equity 650,000 Total liabilities and shareholders' equity (n)