Denton Equipment Inc. furnishes you with the following list of accounts. Account
ID: 2376591 • Letter: D
Question
Denton Equipment Inc. furnishes you with the following list of accounts.
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66,000
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,000
Advances to Salespersons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Advertising Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,000
Allowance for Bad Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000
Certificates of Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000
Common Stock (par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Deferred Income Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215,500
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000
Investment in Rowe Oil Co. Stock
(40% of outstanding stock owned for control purposes) . . . . . . . . . 76,500
Investment in Siebert Co. Stock (trading securities) . . . . . . . . . . . . 21,000
Paid-In Capital in Excess of Par . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,500
Premium on Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Rent Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,000
Rent Revenue Received in Advance (4 months) . . . . . . . . . . . . . . . 12,000
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,500
Taxes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,000
Instructions:
1. From the preceding list of accounts, determine working capital, total assets, total liabilities, and owners? equity per share of stock (75,000 shares outstanding).
2. Assume net income of $20,000. Compute current ratio, debt ratio, and return on equity.
Explanation / Answer
Current Assets
Cash $22,000
Certificates of deposit $16,000
Accounts receivable$ 40,000
Less: Allowance for bad debts $10,000
Advances to Salesperson $10,000
Inventory $55,000
Prepaid Insurance $6,000
Total Current Assets 139,000
Property, Plant, and Equipment
Equipment $215,500
Less: Accumulated depreciation $44,000
Tools $52,000
Total Property, Plant, and Equipment 223,500
Investments
Investments in Rowe oil co/ stock ( 40% of outstanding stock owned for control purposes) $76,500
Investments in Siebert co. stock ( trading securities) $21,000
Total Investments 97,500
Total Assets $460,000
Current Liabilities
Accounts payable $66,000
Rent Revenue received in advance ( 4 months) $12,000
Taxes payable $10,000
Total Current Liabilities 88,000
L/T Liabilities
Bonds payable $80,000
Premium on Bonds payable $6,000
Total L/T liabilities 86,000
Deferred income tax liability $46,000
Total Liabilities 220,000
Stockholders' Equity
Common stock (par) $ 100,000
Paid-in Capital in Exces of par $42,500
Retained Earnings $97,500
Total Stockholders' Equity 240,000
determine working capital,
Current Assets - Current Liabilities
total assets,
given
total liabilities,
given
and owners' equity per share of stock (75,000 shares outstanding).
Total stockholders' equity / shares outstanding
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