Priscoll Company Balance Sheets December 31 Assets 2022 2021 Cash $70,000 $65,000 Debt investments (short-term) 55,000 40,000 Accounts receivable (net) 104,000 90,000 Inventory 230,000 165,000 Prepaid expenses 25,000 23,000 Land 130,000 130,000 Building and equipment (net) 260,000 185,000 Total assets $874,000 $698,000 Liabilities and Stockholders' Equity Notes payable (current) $170,000 $120,000 Accounts payable 65,000 52,000 Accrued liabilities 40,000 40,000 Bonds payable, due 2025 250,000 170,000 Common stock, $10 par 200,000 200,000 Retained earnings 149,000 116,000 Total liabilities and stockholders' equity $874,000 $698,000 Priscoll Company Income Statements For the Years Ended December 31 2022 2021 Net sales $882,000 $790,000 Cost of goods sold 640,000 575,000 Gross profit 242,000 215,000 Operating expenses 190,000 167,000 Net income $52,000 $48,000 Additional information: 1. Inventory at the beginning of 2021 was $115,000. 2. Accounts receivable (net) at the beginning of 2021 were $86,000. 3. Total assets at the beginning of 2021 were $660,000. 4. No common stock transactions occurred during 2021 or 2022 5. All sales were on credit. Indicate, by using ratios, the change in liquidity and profitability of Priscoll Company from 2021 to 2022. (Round Current ratio, Asset turnover and Earnings per share to 2 decimal places, eg. 165, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%) LIQUIDITY Current ratio Accounts receivable turnover Inventory turnover PROFITABILITY Profit margin Asset turnover Return on assets Earnings per share eTextbook and Media 2022 times 2021 times times times times % % times The following are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2022, and (2) as of December 31, 2023, after giving effect to the situation. (Round answers to 1 decimal place, eg 6.8 or 6.8%) Situation Ratio (1) 18,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $54,000. Return on common stockholders' equity (2) All of the notes payable were paid in 2023. All other liabilities remained at their December 31, 2022, levels. Total assets on December 31, 2023, were $900,000. Debt to assets ratio (3) The market price of common stock was $9 and $12 on December 31, 2022 and 2023, respectively. Net income for 2023 was $54,000. Price-earnings ratio Return on common stockholders' equity Debt to assets ratio Price-earnings ratio 2022 % % times 2023 % times

Priscoll Company Balance Sheets December 31 Assets 2022 2021 Cash $70,000 $65,000 Debt investments (short-term) 55,000 40,000 Accounts receivable (net) 104,000 90,000 Inventory 230,000 165,000 Prepaid expenses 25,000 23,000 Land 130,000 130,000 Building and equipment (net) 260,000 185,000 Total assets $874,000 $698,000 Liabilities and Stockholders' Equity Notes payable (current) $170,000 $120,000 Accounts payable 65,000 52,000 Accrued liabilities 40,000 40,000 Bonds payable, due 2025 250,000 170,000 Common stock, $10 par 200,000 200,000 Retained earnings 149,000 116,000 Total liabilities and stockholders' equity $874,000 $698,000 Priscoll Company Income Statements For the Years Ended December 31 2022 2021 Net sales $882,000 $790,000 Cost of goods sold 640,000 575,000 Gross profit 242,000 215,000 Operating expenses 190,000 167,000 Net income $52,000 $48,000 Additional information: 1. Inventory at the beginning of 2021 was $115,000. 2. Accounts receivable (net) at the beginning of 2021 were $86,000. 3. Total assets at the beginning of 2021 were $660,000. 4. No common stock transactions occurred during 2021 or 2022 5. All sales were on credit. Indicate, by using ratios, the change in liquidity and profitability of Priscoll Company from 2021 to 2022. (Round Current ratio, Asset turnover and Earnings per share to 2 decimal places, eg. 165, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%) LIQUIDITY Current ratio Accounts receivable turnover Inventory turnover PROFITABILITY Profit margin Asset turnover Return on assets Earnings per share eTextbook and Media 2022 times 2021 times times times times % % times The following are three independent situations and a ratio that may be affected. For each situation, compute the affected ratio (1) as of December 31, 2022, and (2) as of December 31, 2023, after giving effect to the situation. (Round answers to 1 decimal place, eg 6.8 or 6.8%) Situation Ratio (1) 18,000 shares of common stock were sold at par on July 1, 2023. Net income for 2023 was $54,000. Return on common stockholders' equity (2) All of the notes payable were paid in 2023. All other liabilities remained at their December 31, 2022, levels. Total assets on December 31, 2023, were $900,000. Debt to assets ratio (3) The market price of common stock was $9 and $12 on December 31, 2022 and 2023, respectively. Net income for 2023 was $54,000. Price-earnings ratio Return on common stockholders' equity Debt to assets ratio Price-earnings ratio 2022 % % times 2023 % times

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

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