Comparative financial statements for Blossom and Ayayai Ltd. are shown below. BLOSSOM AND AYAYAI LTD. Income Statement
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Comparative financial statements for Blossom and Ayayai Ltd. are shown below.
BLOSSOM AND AYAYAI LTD. Income Statement Year Ended December 31 | ||||||
2021 | 2020 | |||||
Net sales | $835,000 | $820,000 | ||||
Cost of goods sold | 595,000 | 550,000 | ||||
Gross profit | 240,000 | 270,000 | ||||
Operating expenses | 154,000 | 150,000 | ||||
Profit from operations | 86,000 | 120,000 | ||||
Other revenues and expenses | ||||||
Interest expense | 30,000 | 20,000 | ||||
Profit before income tax | 56,000 | 100,000 | ||||
Income tax expense | 12,000 | 20,000 | ||||
Profit | $44,000 | $80,000 |
BLOSSOM AND AYAYAI LTD. Balance Sheet December 31 | ||||||
Assets | 2021 | 2020 | 2019 | |||
Cash | $88,000 | $80,000 | $10,000 | |||
Accounts receivable | 108,000 | 116,000 | 120,000 | |||
Inventories | 125,000 | 120,000 | 96,000 | |||
Prepaid expenses | 25,000 | 20,000 | 112,000 | |||
Land, buildings, and equipment | 390,000 | 305,000 | 300,000 | |||
Total assets | $736,000 | $641,000 | $638,000 | |||
Liabilities and Shareholders? Equity | ||||||
Liabilities | ||||||
Notes payable | $110,000 | $100,000 | $100,000 | |||
Accounts payable | 43,000 | 40,000 | 50,000 | |||
Accrued liabilities | 32,000 | 40,000 | 30,000 | |||
Bonds payable, due 2024 | 190,000 | 150,000 | 179,000 | |||
Total liabilities | 375,000 | 330,000 | 359,000 | |||
Shareholders? equity | ||||||
Common shares (20,000 issued) | 200,000 | 200,000 | 200,000 | |||
Retained earnings | 161,000 | 111,000 | 79,000 | |||
Total shareholders? equity | 361,000 | 311,000 | 279,000 | |||
Total liabilities and shareholders? equity | $736,000 | $641,000 | $638,000 |
Additional information:
1. | Seventy-five percent of the sales were on account. | |
2. | The allowance for doubtful accounts was $4,000 in 2021, $5,000 in 2020, and $3,000 in 2019. | |
3. | In 2021 and 2020, dividends of $2,000 and $8,000, respectively, were paid to the common shareholders. | |
4. | Cash provided by operating activities was $103,500 in 2021 and $120,000 in 2020. | |
5. | Cash used by investing activities was $104,000 in 2021 and $30,000 in 2020. |
Calculate all the possible liquidity, solvency and profitability for 2021 and 2022.
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