On December 31, 2022, the balance sheet of ABC Ltd. shows the following information: Assets Amount Liabilities
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Question:
On December 31, 2022, the balance sheet of ABC Ltd. shows the following information:
Assets | Amount | Liabilities | Amount |
---|---|---|---|
Cash | $50,000 | Accounts Payable | $20,000 |
Accounts Receivable | $80,000 | Bank Loan | $60,000 |
Inventory | $70,000 | Total Liabilities | $80,000 |
Equipment | $120,000 | Share Capital | $100,000 |
Accumulated Depreciation | ($20,000) | Retained Earnings | $100,000 |
Total Assets | $300,000 | Total Liabilities & Equity | $300,000 |
During 2023, the following transactions occurred:
- On January 1, 2023, the company issued 1,000 common shares for $12 per share.
- On January 15, 2023, the company paid $15,000 to reduce the bank loan.
- On February 1, 2023, the company purchased $20,000 of inventory on credit.
- On March 1, 2023, the company sold $100,000 of inventory for $120,000 on credit. The cost of goods sold was $60,000.
- On April 1, 2023, the company paid $5,000 in rent for the next three months.
- On June 1, 2023, the company paid a dividend of $10,000 to its shareholders.
- On December 31, 2023, the company recorded $12,000 of accrued salaries expense.
Calculate the following financial ratios for ABC Ltd. as of December 31, 2022, and December 31, 2023:
a) Current ratio b) Debt-to-equity ratio
c) Gross profit margin
d) Net profit margin
Related Book For
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
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