Presented below and on page 640 is information related to Leland Inc.

Instructions

(a) Compute the following ratios or relationships of Leland Inc. Assume that the ending account balances are representative unless the information provided indicates differently.
(1) Current ratio.
(2) Inventory turnover.
(3) Accounts receivable turnover.
(4) Earnings per share.
(5) Profit margin on sales.
(6) Return on assets on December 31, 2015.

(b) Indicate for each of the following transactions whether the transaction would improve, weaken, or have no effect on the current ratio of Leland Inc. at December 31, 2015.
(1) Write off an uncollectible account receivable, €2,200.
(2) Repurchase ordinary shares for cash.
(3) Pay €40,000 on notes payable (short-term).
(4) Collect €23,000 on accounts receivable.
(5) Buy equipment on account.
(6) Give an existing creditor a short-term note in settlement of account.

Transcribed Image Text:

LELAND INC. STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2015 Equipment (net) Land Prepaid insurance Inventory Receivables 150,000 Share capital-ordinary (par 5) 260,000 20,000 Retained earnings 141,000 8,000 Notes payable (short-term) 50,000 170,000 Accounts payable 32,000 110,000 Accrued liabilities 5,000 Less: Allowance 15,000 Cash 95,000 45,000 488,000 488,000