The following ratios have been computed for Platt Company for 2020. Profit margin 20% Times interest earned
Posted: Sun May 29, 2022 5:07 pm
The following ratios have been computed for Platt Company for 2020.
Profit margin 20%
Times interest earned 12 times
Receivables turnover 5 times
Acid-test ratio 1.4 : 1
Current ratio 2.5 : 1
Debt to total assets ratio 24%
The 2020 financial statements for Platt Company with missing information follows:
PLATT COMPANY
Comparative Balance Sheet
December 31,
———————————————————————————————————————————
Assets 2020 2019
Cash $ 25,000 $ 35,000
Short-term Investments 15,000 15,000
Accounts receivable (net) ? (6) 50,000
Inventory ? (8) 50,000
Property, plant, and equipment (net) 200,000 160,000
Total assets $ ? (9) $310,000
Liabilities and stockholders' equity
Accounts payable $ ? (7) $ 25,000
Short-term notes payable 35,000 30,000
Bonds payable ? (10) 20,000
Common stock 200,000 200,000
Retained earnings 47,000 35,000
Total liabilities and stockholders' equity $ ? (11) $31PLATT COMPANY
PLATT COMPANY
Income Statement
For the Year Ended December 31, 2020
———————————————————————————————————————————
Net sales $200,000
Cost of goods sold 100,000
Gross profit 100,000
Expenses:
Depreciation expense $ ? (5)
Interest expense 5,000
Selling expenses 10,000
Administrative expenses 15,000
Total expenses ? (4)
Income before income taxes ? (2)
Income tax expense ? (3)
Net income $ ? (1)
Instructions
Use the above ratios and information from the Platt Company financial statements to fill in the missing information on the financial statements. Follow the sequence indicated. Show computations that support your answers.
Profit margin 20%
Times interest earned 12 times
Receivables turnover 5 times
Acid-test ratio 1.4 : 1
Current ratio 2.5 : 1
Debt to total assets ratio 24%
The 2020 financial statements for Platt Company with missing information follows:
PLATT COMPANY
Comparative Balance Sheet
December 31,
———————————————————————————————————————————
Assets 2020 2019
Cash $ 25,000 $ 35,000
Short-term Investments 15,000 15,000
Accounts receivable (net) ? (6) 50,000
Inventory ? (8) 50,000
Property, plant, and equipment (net) 200,000 160,000
Total assets $ ? (9) $310,000
Liabilities and stockholders' equity
Accounts payable $ ? (7) $ 25,000
Short-term notes payable 35,000 30,000
Bonds payable ? (10) 20,000
Common stock 200,000 200,000
Retained earnings 47,000 35,000
Total liabilities and stockholders' equity $ ? (11) $31PLATT COMPANY
PLATT COMPANY
Income Statement
For the Year Ended December 31, 2020
———————————————————————————————————————————
Net sales $200,000
Cost of goods sold 100,000
Gross profit 100,000
Expenses:
Depreciation expense $ ? (5)
Interest expense 5,000
Selling expenses 10,000
Administrative expenses 15,000
Total expenses ? (4)
Income before income taxes ? (2)
Income tax expense ? (3)
Net income $ ? (1)
Instructions
Use the above ratios and information from the Platt Company financial statements to fill in the missing information on the financial statements. Follow the sequence indicated. Show computations that support your answers.