Question: Presented here are an incomplete income statement and balance sheet for Schwenke Corporation. SCHWENKE CORPORATION Income Statement Year Ended December 31, 2014 Net sales ............................................
Presented here are an incomplete income statement and balance sheet for Schwenke Corporation.
SCHWENKE CORPORATION
Income Statement
Year Ended December 31, 2014
Net sales ............................................ $.......... (a)
Cost of goods sold .......................................... (b)
Gross profit .................................................. (c)
Operating expenses .............................. 333,750
Profit from operations ..................................... (d)
Interest expense ........................................ 10,500
Profit before income taxes ................................. (e)
Income tax expense ......................................... (f)
Profit ................................................. $124,600
SCHWENKE CORPORATION
Balance Sheet
December 31, 2014
Assets
Current assets
Cash .................................................... $ 7,500
Accounts receivable ......................................... (g)
Inventory ...................................................... (h)
Total current assets ........................................... (i)
Property, plant, and equipment ........................... (j)
Total assets .................................................... $ (k)
Liabilities
Current liabilities .......................................... $ (l)
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)
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?
Step by Step Solution
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a Gross profit margin is 40 so gross profit of 500000 c 40 net sales of 1250000 b Net sales of 1250... View full answer
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