Principles of Accounting Volume 1 Financial Accounting, 2019a

Volume 1

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$200,000 = $175,000 + $25,000

$0 + $12,500 + $5,800 – $1,450 = $16,850

Book value of equipment = $2,000 – $500 = $1,500

Working capital = $26,540 – $5,400 = $21,140

Gross profit margin ratio = ⎛ ⎝$293,500 – $180,000 ⎞ ⎠
$293,500
= 0.39, or 39%

($70,000 + $90,000)
Average accounts receivable = = $80,000
2
Average accounts receivable =
($90,000 + $85,000)
2
= $87,500

$20,000 × 9% × 1 12 = $150

$100,000 × 7% ×
12 6 = $3,500

Original ownership percentage =
1,000 50 =5%
Number of new shares to be purchase=5%×200shares=10shares

Total number of issue shares after the new issue=1,000+200=1,200shares
New ownership percentage = 50
1,200 = 4.17%

8,000 shares × $21.50 = $172,000
($21.50 − $1.50) × 8,000 = $160,000

$8,000 − $3,000 = $5,000
⎛
⎝$21.50 − $1.50 ⎞ ⎠ × 8,000 = $160,000

($45 − $8) × 1,000 = $37,000

9,200 shares × $0.50 = $4,600

60,000 shares × $3.50 = $210,000

Earnings per share =
$50,000 − $10,000
5,000
= $8.00

Earnings per share =
$15,000
= $0.75 per share
20,000 shares
Earnings per share =
$15,000
= $0.86 per share
17,500 shares

Dale: ⎛ ⎝$10,000 × 50% ⎞ ⎠ = $5,000
Ciara: ⎛ ⎝$10,000 × 50% ⎞ ⎠ = $5,000

Dale: ⎛ ⎝$10,000 × 50% ⎞ ⎠ = $5,000
Ciara: ⎛ ⎝$10,000 × 50% ⎞ ⎠ = $5,000

Dollar change = $120,000 – $1000,000 = $20,000
Percentage change = ⎛ ⎝ $20,000 ⎞
$100,000⎠ × 100 = 20%

Common-size percentage = ⎛ ⎝ $110,000 ⎞
$250,000⎠ × 100 = 44%

Working capital = $200,000 – $100,000 = $100,000

Current ratio = ⎛ ⎝ $200,000 ⎞
$100,000⎠ = 2 or 2:1
Quick ratio = ⎛ $110,000 + $20,000 + $30,000⎞
⎝ $100,000 ⎠
= 1.6 or 1.6:1

Debt-to-equity ratio = ⎛ ⎝ $150,000 ⎞
$100,000⎠ = 1.5 or 1.5:1
Times interest earned = ⎛ ⎝ $43,000
$2,000
⎞
⎠
= 21.5 times

Average accounts receivable =
$20,000 + $30,000
= $25,000
2
Accounts receivable turnover = $100,000
$25,000 = 4 times
Average total assets =
$200,000 + $250,000
= $225,000
2
Total assets turnover = $120,000 = 0.53 times (rounded)
$225,000

Average inventory =
$35,000 + $40,000
= $37,500
2
Inventory turnover = $60,000 = 1.6 times
$37,500
Days' sales in inventory = ⎛ ⎝ $40,000 ⎞
$60,000⎠ × 365 = 243 days (rounded)

Profit margin = ⎛ ⎝ $35,000 ⎞
$120,000⎠ = 0.29 (rounded) or 29%
Average total assets =
$200,000 + $250,000
= $225,000
2
Return on total assets = $35,000 = 0.16 (rounded) or 16%
$225,000

Average stockholder equity =
$90,000 + $100,000
= $95,000
2
Return on equity = $35,000 = 0.37 (rounded) or 37%
$95,000