The following financial information is for Cheaney Company. Additional information:1. Inventory at the beginning of 2011 was

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The following financial information is for Cheaney Company.

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Additional information:1. Inventory at the beginning of 2011 was $115,000.2. Receivables (net) at the beginning of 2011 were $86,000.3. Total assets at the beginning of 2011 were $660,000.4. No common stock transactions occurred during 2011 or 2012.5. All sales were on account.Instructions(a) Indicate, by using ratios, the change in liquidity and profitability of Cheaney Company from 2011 to 2012. (Note: Not all profitability ratios can be computed nor can cashbasis ratios be computed.)(b) Given below are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2012, and (2) as of December 31, 2013, after giving effect to the situation. Net income for 2013 was $54,000. Total assets on December 31, 2013, were $900,000.

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Financial Accounting Tools for business decision making

ISBN: 978-0470534779

6th Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

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