Type your answer here

The comparative balance sheet of Cookie & Coffee Creations Inc. at October 31, 2020 for the years 2020 and 2019, and the income statements for the years ended October 31, 2019 and 2020, are presented below. COOKIE & COFFEE CREATIONS INC. Balance Sheet October 31 Assets 2020 2019 Cash $22,324 $5,550 Accounts receivable 3,250 2,710 Inventory 7,897 7,450 Prepaid expenses 5,800 6,050 Equipment 102,000 75,500 Accumulated depreciation (25,200) (9,100) Total assets $116,071 $88,160 Liabilities and Stockholders' Equity Accounts payable $1,150 $2,450 Income taxes payable 9,251 7,200 Dividends payable 27,000 27,000 Salaries and wages payable 7,250 1,280 Interest payable 188 0 Note payable-current portion 4,000 0 Note payable-long-term portion 6,000 0 Preferred stock, no par, $6 cumulative- 3,000 and 2,800 shares issued, respectively 15,000 14,000 Common stock, $1 par-25,180 shares issued 25,180 25,180 Additional paid in capital-treasury stock 250 250 Retained earnings 20,802 10,800 Total liabilities and stockholders' equity $116,071 $88,160 COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31 2020 2019 Sales $485,625 $462,500 Cost of goods sold 222,694 208,125 Gross profit 262,931 254,375 Operating expenses Salaries and wages expense 147,979 146,350 Depreciation expense 17,600 9,100 10402 Other operating expenses 48,186 42,925 Total operating expenses 213,765 198,375 Income from operations 49,166 56,000 Other expenses Interest expense 413 0 Loss on disposal of plant assets 2,500 0 Total other expenses 2,913 o Income before income tax 46,253 56,000 Income tax expense 9,251 14,000 Net income $37,002 $42,000 Additional information: Natalie and Curtis are thinking about borrowing an additional $20,000 to buy more kitchen equipment. The loan would be repaid ove 4-year period. The terms of the loan provide for equal semi-annual payments of $2,500 on May 1 and November 1 of each year, plus nterest of 5% on the outstanding balance. 2020 2019 1. Current ratio 0.80 : 1 0.57 :1 2. Debt to assets 47 % 43 % Contato 54 0/ O 3. Gross profit rate 54 % 55 % 4. Profit margin 7.6 % 9.1 % 5. Return on assets (Total assets at November 1, 2018, were $33,180.) 36.2 % 69.2 % 6. Return on common stockholders' equity (Total common stockholders' equity at November 1, 2018, was $23,180. Dividends on preferred stock were $16,800 in 2019 and $18,000 in 2020). 46.1 % 84.8 % COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31 Horizontal Analysis Sales 5 % Cost of goods sold 7 % Gross profit 3 % Operating expenses Salaries and wages expense 1 % Depreciation expense 93 % Other operating expenses 12 % Total operating expenses 8 % Income from operations -12 % Atbar DONCAC Other expenses Interest expense Loss on disposal of plant assets Total other expenses Income before income tax -17 % Income tax expense -34 % Net income -12 % COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31 2020 Vertical Analysis 2019 Vertical Analysis Sales 100.00 % 100.00 % Cost of goods sold 45.86 % 45.00 % Gross profit 54.14 % 55.00 % Operating expenses Salaries and wages expense 30.47 % 31.64 % Depreciation expense 3.62 % 1.97 % Other onerating exnenses 9.92 % 9 28 % Other expenses Interest expense Loss on disposal of plant assets Total other expenses Income before income tax -17 % Income tax expense -34 % Net income -12 % COOKIE & COFFEE CREATIONS INC. Income Statement Year Ended October 31 2020 Vertical Analysis 2019 Vertical Analysis Sales 100.00 % 100.00 % Cost of goods sold 45.86 % 45.00 % Gross profit 54.14 % 55.00 % Operating expenses Salaries and wages expense 30.47 % 31.64 % Depreciation expense 3.62 % 1.97 % Other onerating exnenses 9.92 % 9 28 % Total operating expenses 44.02 % 42.89 % Income from operations 10.12 % 12.11 % Other expenses Interest expense 0.09% 0.00 % Loss on disposal of plant assets 0.51 % 0.00 % Total other expenses 0.60 % 0.00 % Income before income tax 9.52 % 12.11 % Income tax expense 1.90 % 3.03 % Net income 7.62 % 9.08 % Comment on your findings. | B 1 y T, T? T iti lil lil LUI bill lill 11 O Words