The following balance sheet (statement of financial position) is presented for L
ID: 2509474 • Letter: T
Question
The following balance sheet (statement of financial position) is presented for Level Up Corporation.
Level Up Corporation
Statement of Financial Position
At December 31, 2020
Assets
Liabilities
Current
Current
Cash
$60
Accounts Payable
$100
Accounts Receivable
140
Loan Payable
20
Merchandise Inventory
250
Notes Payable
60
Prepared Expenses
10
180
460
Non-current
Non-current
Property, plant & equipment (net)
330
Loan Payable
140
320
Shareholders’ Equity
Preferred shares, 10% (8 shares)
120
Common shares (50 shares)
250
Retained earnings
100
470
Total Assets
$790
Total Liability and Equity
$790
Level Up Corporation
Income Statement
For the Year Ending December 31, 2020
Net Sales (all on credit)
$800
Cost of Goods Sold
600
Gross Profit
200
Selling and Administration Expenses
100
Income from Operations
100
Interest Expense
20
Income before Income Taxes
80
Income Taxes
30
Net Income
$50
Additional information from December 31, 2019 statement of financial position:
Accounts receivable $180
Merchandise inventory 200
Property, Plant and Equipment (net) 250
Retained earnings 80
Preferred shares 120
Common Shares 250
Requirements:
1. Compute the following ratios, showing all work.
Current ratio
Acid-test ratio
Accounts receivable collection period
Number of days of sales in inventory
Debt to shareholders’ equity ratio
Return on shareholder’s equity
2. What do these ratios tell you about the Level Up Corporation?
Level Up Corporation
Statement of Financial Position
At December 31, 2020
Assets
Liabilities
Current
Current
Cash
$60
Accounts Payable
$100
Accounts Receivable
140
Loan Payable
20
Merchandise Inventory
250
Notes Payable
60
Prepared Expenses
10
180
460
Non-current
Non-current
Property, plant & equipment (net)
330
Loan Payable
140
320
Shareholders’ Equity
Preferred shares, 10% (8 shares)
120
Common shares (50 shares)
250
Retained earnings
100
470
Total Assets
$790
Total Liability and Equity
$790
Explanation / Answer
1. Current Ratio= Current assets/current liabilities=$460/$180=2.56:1
Do give your feedback!! Happy Learning :)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.