50.1K

Verified Solution

Link Copied!

30.

Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear below. The company did not issue any new common or preferred stock during the year. A total of 600 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $1.00. The market value of the companys common stock at the end of the year was $28. All of the companys sales are on account.

Heritage Antiquing Services Comparative Balance Sheet (dollars in thousands)
	This Year			Last Year
Assets
Current assets:
Cash	$	1,110		$	1,290
Accounts receivable, net		9,500			6,800
Inventory		12,400			11,800
Prepaid expenses		790			510
Total current assets		23,800			20,400
Property and equipment:
Land		10,600			10,600
Buildings and equipment, net		51,757			42,678
Total property and equipment		62,357			53,278
Total assets	$	86,157		$	73,678
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	20,200		$	18,900
Accrued payables		990			760
Notes payable, short term		240			240
Total current liabilities		21,430			19,900
Long-term liabilities:
Bonds payable		9,700			9,700
Total liabilities		31,130			29,600
Stockholders' equity:
Preferred stock		1,000			1,000
Common stock		600			600
Additional paid-in capital		4,000			4,000
Total paid-in capital		5,600			5,600
Retained earnings		49,427			38,478
Total stockholders' equity		55,027			44,078
Total liabilities and stockholders' equity	$	86,157		$	73,678

Heritage Antiquing Services Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year			Last Year
Sales	$	75,795		$	64,000
Cost of goods sold		37,510			32,000
Gross margin		38,285			32,000
Selling and administrative expenses:
Selling expenses		11,100			11,000
Administrative expenses		6,900			6,400
Total selling and administrative expenses		18,000			17,400
Net operating income		20,285			14,600
Interest expense		970			970
Net income before taxes		19,315			13,630
Income taxes		7,726			5,452
Net income		11,589			8,178
Dividends to preferred stockholders		40			340
Net income remaining for common stockholders		11,549			7,838
Dividends to common stockholders		600			600
Net income added to retained earnings		10,949			7,238
Retained earnings, beginning of year		38,478			31,240
Retained earnings, end of year	$	49,427		$	38,478

Required:

Compute the following financial data for short-term creditors for this year:

1.	Working capital. (Enter your answer in thousands of dollars.)

Working capital

$

2.	Current ratio. (Round your answer to 2 decimal places.)

Current ratio

3.	Acid-test ratio. (Round your answer to 2 decimal places.)

Acid-test ratio

4.	Accounts receivable turnover. (Round your answer to 1 decimal place.)

Accounts receivable turnover

5.	Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)

Average collection period

days

6.	Inventory turnover. (Round your answer to 1 decimal place.)

Inventory turnover

7.	Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.)

Average sale period

days

Answer & Explanation Solved by verified expert

See Answer