Advanced Placement (AP), 27.04.2021 16:00 jesussaves333
Presented below are the income statement and balance sheet of Windsor, Inc:
Income Statement – 2020
Sales $100
Cost of goods sold 40
Gross profit 60
Operating expense 7
Interest expense 4
Taxes 6
Gain on sale of equipment 4
Loss on sale of investment (1)
Total expenses 20
Net income 40
Balance Sheet 2020 2019
Cash $10 $2
Accounts receivable 12 10
Inventory 14 20
Prepaid rent 6 4
Investments 6 10
Equipment 20 15
Accumulated depreciation (8) (6)
Total assets 60 55
Accounts Payable 4 3
Taxes payable 3 10
Bonds payable 8 4
Common stock 32 28
Retained earnings 13 10
Total 60 55 CONTINUED
Additional Information
Sold investment that cost $4 for $3.
Average shares of stock outstanding was $10.
Market price of a share of common stock was $30.
Equipment costing $5 with accumulated depreciation of $3 was sold for $6.
Required: Prepare a statement of cash flows using the direct method for 2020.
PROBLEM 2: Using the information from Problem 1, calculate the following ratios for 2020:
Current ratio.
Inventory turnover
Average collection period.
Times interest earned.
Debt to equity ratio.
Price earnings ratio.
Return on equity.
PROBLEM 3: Prior Corp. produces chairs. It requires 4 feet of wood per chair. Sales are estimated to be:
2020 Units
Jan. 10,000 units
Feb. 12,000
March 14,000
April 8,000
Chairs on hand at December 31, 2019 were 900 chairs. The corporation wants to maintain an inventory of 10% of the following months’ sales in its ending inventory. Prior Corp. had an inventory of wood at December 31, 2019 of 5,000 feet, and it desires to maintain ending inventories of 5% of the following months production needs. Required: Prepare a materials budget for January and February.
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Presented below are the income statement and balance sheet of Windsor, Inc:
Income Statement – 202...
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