Presented below is information related to Nash Inc. NASH INC. BALANCE SHEET DECEMBER 31, 2020 Cash $45,400
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Presented below is information related to Nash Inc.
NASH INC. | ||||||||
Cash | $45,400 | Notes payable (short-term) | $49,700 | |||||
Receivables | $110,000 | Accounts payable | 32,100 | |||||
Less: Allowance | 15,200 | 94,800 | Accrued liabilities | 5,000 | ||||
Inventory | 171,500 | Common stock (par $5) | 262,400 | |||||
Prepaid insurance | 7,900 | Retained earnings | 141,800 | |||||
Land | 20,200 | |||||||
Equipment (net) | 151,200 | |||||||
$491,000 | $491,000 |
NASH INC. | |||||
Sales revenue | $1,398,700 | ||||
Cost of goods sold | |||||
Inventory, Jan. 1, 2020 | $202,000 | ||||
Purchases | 783,700 | ||||
Cost of goods available for sale | 985,700 | ||||
Inventory, Dec. 31, 2020 | (171,500 | ) | |||
Cost of goods sold | 814,200 | ||||
Gross profit on sales | 584,500 | ||||
Operating expenses | 168,800 | ||||
Net income | $415,700 |
(a)
Correct answer iconYour answer is correct.
Compute the following ratios or relationships of Nash Inc. Assume that the ending account balances are representative unless the information provided indicates differently.
(1) | Current ratio | 3.68 | times | ||
(2) | Inventory turnover | 4.36 | times | ||
(3) | Accounts receivable turnover | 14.75 | times | ||
(4) | Earnings per share | $ | 7.92 | ||
(5) | Profit margin on sales | 29.72 | % | ||
(6) | Return on assets on December 31, 2020 | 84.66 | % |
(b)
Indicate for each of the following transactions whether the transaction would improve, weaken, or have no effect on the current ratio of Nash Inc. at December 31, 2020.
(1) | Write off an uncollectible account receivable, $2,200. | No effect Improve Weaken | ||
(2) | Purchase additional capital stock for cash. | No effect Improve Weaken | ||
(3) | Pay $40,000 on notes payable (short-term). | No effect Improve Weaken | ||
(4) | Collect $23,000 on accounts receivable. | No effect Improve Weaken | ||
(5) | Buy equipment on account. | No effect Improve Weaken | ||
(6) | Give an existing creditor a short-term note in settlement of account. | No effect Improve Weaken |
Related Book For
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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