LOGIC COMPANY Comparative Income Statement For Years Ended December 31, 2014 and
ID: 2384453 • Letter: L
Question
LOGIC COMPANYComparative Income Statement
For Years Ended December 31, 2014 and 2015 2015 2014 Gross sales $ 19,000 $ 15,000 Sales returns and allowances 1,000 100 Net sales $ 18,000 $ 14,900 Cost of merchandise (goods) sold 12,000 9,000 Gross profit $ 6,000 $ 5,900 Operating expenses: Depreciation $ 700 $ 600 Selling and administrative 2,200 2,000 Research 550 500 Miscellaneous 360 300 Total operating expenses $ 3,810 $ 3,400 Income before interest and taxes $ 2,190 $ 2,500 Interest expense 560 500 Income before taxes $ 1,630 $ 2,000 Provision for taxes 640 800 Net income $ 990 $ 1,200 LOGIC COMPANY
Comparative Balance Sheet
December 31, 2014 and 2015 2015 2014 Assets Current assets: Cash $ 12,000 $ 9,000 Accounts receivable 16,500 12,500 Merchandise inventory 8,500 14,000 Prepaid expenses 24,000 10,000 Total current assets $ 61,000 $ 45,500 Plant and equipment: Building (net) $ 14,500 $ 11,000 Land 13,500 9,000 Total plant and equipment $ 28,000 $ 20,000 Total assets $ 89,000 $ 65,500 Liabilities Current liabilities: Accounts payable $ 13,000 $ 7,000 Salaries payable 7,000 5,000 Total current liabilities $ 20,000 $ 12,000 Long-term liabilities: Mortgage note payable 22,000 20,500 Total liabilities $ 42,000 $ 32,500 Stockholders’ Equity Common stock $ 21,000 $ 21,000 Retained earnings 26,000 12,000 Total stockholders’ equity $ 47,000 $ 33,000 Total liabilities and stockholders’ equity $ 89,000 $ 65,500 Calculate the Acid test ratio. (Round your answers to the nearest hundredth.) 2015 2014 Acid test ratio LOGIC COMPANY
Comparative Income Statement
For Years Ended December 31, 2014 and 2015 2015 2014 Gross sales $ 19,000 $ 15,000 Sales returns and allowances 1,000 100 Net sales $ 18,000 $ 14,900 Cost of merchandise (goods) sold 12,000 9,000 Gross profit $ 6,000 $ 5,900 Operating expenses: Depreciation $ 700 $ 600 Selling and administrative 2,200 2,000 Research 550 500 Miscellaneous 360 300 Total operating expenses $ 3,810 $ 3,400 Income before interest and taxes $ 2,190 $ 2,500 Interest expense 560 500 Income before taxes $ 1,630 $ 2,000 Provision for taxes 640 800 Net income $ 990 $ 1,200
Explanation / Answer
CALCULATION OF ACID TEST RATIO:
ACID TEST RATIO
2015
2014
(CASH + ACCOUNT RECEIVABLE + SHORT TERM INVESTMENT)/ CURRENT LIABILITIES
1.43
1.79
(12000+16500)/20000
(9000+12500)/12000
ACID TEST RATIO
2015
2014
(CASH + ACCOUNT RECEIVABLE + SHORT TERM INVESTMENT)/ CURRENT LIABILITIES
1.43
1.79
(12000+16500)/20000
(9000+12500)/12000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.