(Ratio Computations and Effect of Transactions) Presented below is information related to Carver Inc. CARVER INC....

 

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(Ratio Computations and Effect of Transactions) Presented below is information related to Carver Inc. CARVER INC. BALANCE SIET DECEMBER 31, 2017 $ 45,000 $ 50,000 Notes payable (short-term) Accounts payable Accrued liabilities Common stock (par $5) Retained eamings Cash Receivables Less: Alowance $110,000 15,000 32,000 5,000 95,000 Inventory Prepaid insurance Land 260,000 141,000 170,000 8,000 20,000 190,000 Equipment (net) $488,000 $488,000 CARVER INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revene Cost of goods sold Inventory, Jan. 1, 2017 $1,400,000 $200,000 Purchases 790,000 Cost of goods available for sale Inventory, Dec. 31, 2017 Cost of goods sold 990,000 (170,000) 820,000 Gross profit on sakes Operating expenses 580,000 170,000 $ 4 10,000 Net income Instructions (a) Compute the following ratios or relationships of Carver Inc. Assume that the ending account balances are representa- tive 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, 2017. (b) Indicate for each of the following transactions whether the transaction would improve, weaken, or have no effect on the current ratio of Carver Inc. at December 31, 2017. (1) Write off an uncollectible account receivable, $2,200. (2) Purchase additional capital stock 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. (Ratio Computations and Effect of Transactions) Presented below is information related to Carver Inc. CARVER INC. BALANCE SIET DECEMBER 31, 2017 $ 45,000 $ 50,000 Notes payable (short-term) Accounts payable Accrued liabilities Common stock (par $5) Retained eamings Cash Receivables Less: Alowance $110,000 15,000 32,000 5,000 95,000 Inventory Prepaid insurance Land 260,000 141,000 170,000 8,000 20,000 190,000 Equipment (net) $488,000 $488,000 CARVER INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revene Cost of goods sold Inventory, Jan. 1, 2017 $1,400,000 $200,000 Purchases 790,000 Cost of goods available for sale Inventory, Dec. 31, 2017 Cost of goods sold 990,000 (170,000) 820,000 Gross profit on sakes Operating expenses 580,000 170,000 $ 4 10,000 Net income Instructions (a) Compute the following ratios or relationships of Carver Inc. Assume that the ending account balances are representa- tive 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, 2017. (b) Indicate for each of the following transactions whether the transaction would improve, weaken, or have no effect on the current ratio of Carver Inc. at December 31, 2017. (1) Write off an uncollectible account receivable, $2,200. (2) Purchase additional capital stock 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.

Answer rating: 100% (QA)

Answer Solution Current assets Current liabilities Current ratio a1 31800000 45000950001700008000 87... View the full answer