The balance sheet for Plasma Screens Corporation and additional information are

Question

The balance sheet for Plasma Screens Corporation and additional information are provided below.

PLASMA SCREENS CORPORATION
Balance Sheet
December 31, 2012 and 2011


2012 2011
Assets
Current assets:
Cash $ 112,300 $ 130,000
Accounts receivable 78,100 92,600
Inventory 94,600 79,000
Investments 4,100 2,600
Long-term assets:
Land 474,000 474,000
Equipment 785,000 667,000
Less: Accumulated depreciation (428,900) (268,400)

Total assets $ 1,119,200 $ 1,176,800

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 98,600 $ 84,500
Interest payable 6,800 12,900
Income tax payable 8,300 4,900
Long-term liabilities:
Notes payable 99,000 201,000
Stockholders' equity:
Common stock 709,000 709,000
Retained earnings 197,500 164,500

Total liabilities and stockholders' equity $ 1,119,200 $ 1,176,800



Additional information for 2012:
1. Net income is $68,600.
2. Sales on account are $1,529,000.
3. Cost of goods sold is $1,154,000.



Calculate the following risk ratios for 2012 (Round your answers to 1 decimal place. Omit the "%" sign in your response.):

Risk Ratios
a. Receivables turnover ratio _____ times
b. Inventory turnover ratio _____ times
c. Current ratio _____ to 1
d. Acid-test ratio _____ to 1
e. Debt to equity ratio _____ %

Explanation / Answer

Hi, Only Straight Line Method is mentioned in the question. So I am providing details for that only. Annual Depreciation for Each Year would be: = (48000-4000)/5 = 8800 Accumulated Depreciation Year 1 = 8800 Year 2 = 17600 Year 3 = 26400 Year 4 = 35200 Year 5 = 44000 Book Value Year 1 = 44000 - 8800 = 35200 Year 2 = 44000 - 17600 = 26400 Year 3 = 44000 - 26400 = 17600 Year 4 = 44000 - 35200 = 8800 Year 5 = 44000 - 44000 = 0 Thanks.

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