/The following information applies to the quesions displeyed beiow Tungsten Comp

Question

/The following information applies to the quesions displeyed beiow Tungsten Company, Inc, sells heavy construction equipment There are 14 000 sheres of capial stock outstanding The annuel fiscal period ends on December 31. The following trial balance was taken from the general ledger on December 31 Current Year Account Tnies S 35.200 Accounts recevable (net) hwensoty encing Operational ascets $3,200 40.900 18 DOD 24300 72.500 Copmai stock Retoned earmings, Jenuaty 1, Curront Year Sales revums and allowances Cost of goods sold 148700 80 300 7400 7200 Sales dsoorns ncome ox experse S 2820BO 282 080

Explanation / Answer

1) Income statement of Tungsten co. is shown as follows:-

  Tungsten Co.

  Income statement

For the year ended December 31, Current Year (Amount in $)

2) Receivable Turnover Ratio = Net Sales/Average Accounts Receivables

Average Accounts Receivables = (Opening Receivables+Closing Receivables)/2

= ($16,900+$15,000)/2 = $15,950

Net Sales = $134,400/$15,950 = 8.43 times

Sales Revenue 148,700 Less: Sales Returns and Allowances (7,100) Less: Sales Discounts (7,200) Net Sales (A) 134,400 Operating Expenses: Cost of goods sold 80,300 Selling Expense 14,400 Administrative Expense 17,400 Bad debt expense 3,200 Total Operating Expense (B) 115,300 Income before tax (A-B) 19,100 Less: Income tax expense (8,180) Net Income (C) 10,920 Capital Stock outstanding (D) 14,000 shares Earnings per share on capital stock outstanding (C/D) 0.78 per share

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