$1.2.$ Preparing financial statements $-$ preparing a balance sheet and income statement.

Calculating the different ratios from $($a$)$Problem $1$: $8-1.$ Hytek Corporation ended last year with cash of $$50,000,$ accounts receivable of $$100,000,$ andinventory of $$300,000.$ Property, plant, and equipment were valued at their original cost of $$470,000,$ lessaccumulated depreciation of $$170,000.$ Current liabilities other than income taxes owed $($see detaits that follow$)$ were$$120,000,$ and long$-$term debt was $$250,000.$ Stockholders' equity consisted of $($a$)$ $$90,000$ capital stock investmentand $($b$)$ accumulated retained earnings, which had totaled $ $130,000$ at the end of $2017.$ Net sales for $2018$ were$$900,000.$ Expenses included $$500,000$ as cost of goods sold, $$50,000$ as allowance for depreciation, $$85,000$ asselling expense, and $$65,000$ as G&A expense. Interest income and expense were $$5,000$ and $$25,000,$ respectively,and income taxes for the year $($unpaid at year's end$)$ were $$80,000.$ Dividends of $$20,000$ were paid. Prepare abalance sheet and an income statement reflecting these figures.

$1.($Note: For samples, use the financial statement shown in Table $8-1($page $162)$ and the income statementshown in Table $8-2($page $164).$

Balance Sheet Table:

Assets

Current assets

Cash

Securities $($at cost$)$

Accounts receivable

Inventories $($at lower cost or market$)$

Raw materials and supplies

Work in progress

Finished goods

Prepaid expenses

Total current assets

Property,plant,and equipment

Less accumulated depreciation and depletion

Net property,plant, equipment

Total Assets

LIABILITIES ANDSTOCKHOLDERS EQUITY

Current liabilities

Account peyable

Installments due within one year ondebt

Federal income and other taxes

Other accrued liabilities

Total current liabilities

Long$-$term debt

Total Liabilities

Stockholders equity

Capital stock

Retained earnings

Total equity

Total Liabilities and Equity

Income Statement Table sheet:

Gross sales

Less returns and allowances

Net sales

Less expenses and costs goods sold

Cost of goods sold

Depreciation and depletion

Selling expenses

General and administrative expenses Operating profit

Plus interest and other income

Gross income

Less interest expense

Income before taxes

Provision for income taxes

Net income

Retained earnings January $1$

Dividends paid

Retained earnings December $31$

Problem $2$: $8-2.$ Use the output of Problem $8-1$ to calculate the current ratio, acid test ratio, leverage ratio, and profitmargin $.$ Comment on the values you obtain.

$.$ Solve Problem $8-2($page $169),$ which uses the output of the problem above. For samples, use the financialratios shown in Table $8-3($page $165).$ Calculate different financial ratios as identified in the problem $($fourratios$).$ Remember this question asks for your comments on the ratios.

Financial Ratios Table

Ratio

Liquidity ratios:

Current ratio$=$ Current assets$/$Current liabilities

Acid test ratio$=$ Current assets$-$inventory$/$currentliabilities

Leverage ratios:

Debt$-$to$-$assets ratio $=$Total debt$/$Total assets

Activity ratios:

Inventory turnover $=$Cost of goods sold$/$inventory

Asset turnover $=$Net sales$/$Total assets

Accounts receivable turnover$=$ Net sales$/$Accounts receivable

Profitability ratio:

Profit margin$=$ Net income$/$Net sales

Solutions submission details:Use one Excel spreadsheet to complete the assignment. The format of the balance sheet and the income statementshould be of the same format as shown in Tables $8-1$ and $8-2$ from the book.Use three separate tabs in the spreadsheet for: $(1)$ income statement and balance sheet; $(2)$ ratio calculations$($second problem$)$; and $(3)$ your comments.Ratios, formulas, and calculations should be clearly shown and should be like the format shown in Table $8-3.$ This isimportant $-$ you need to show the numerator and denominator text as well.For example:Profit Margin $=$ Net Income$/$Net Sales $=280,000/3,050,000=0\mathrm{.}091($or $9\mathrm{.}1\%)$When you use an Excel spreadsheet to prepare the balance sheet and also to calculate the ratios, do not 'hide' anycell or column or row any other info in the sheet since I need to see the formulae. In your spreadsheet, please makesure you enter the formula and the number as text as well, and calculate the ratios in a different cell using a formula.For example:Current ratio $=$ Current Assets$/$Current Liabilities $=130,000/50,000=2\mathrm{.}72$Any of these approaches will reduce potential errors or mistakes.