Flint Corporation experienced a fire on December 31, 2017, in which its financia
ID: 2540275 • Letter: F
Question
Flint Corporation experienced a fire on December 31, 2017, in which its financial recoros were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances. Cash Accounts receivable (net) Inventory Accounts payable Notes payable Common stock, $100 par Retained earnings December 31, 2017 $ 38,300 75,100 204,800 51,900 37,400 December 31, 2016 $ 12,500 126,400 181,000 91,300 67,200 406,600 101,900 406,600 118,600 Additional information: 1. The inventory turnover is 4.1 times. 2. The return on common stockholders' equity is 18%. The company had no additional paid-in capital. 3. The receivables turnover is 11.8 times. 4. The return on assets is 18%. 5. Total assets at December 31, 2016, were $613,200. Compute the following for Flint Corporation. (Round all answers to o decimal place, e.g. 2,150.) (a) Cost of goods sold for 2017. (b) Net credit sales for 2017. (c) Net income for 2017. (d) Total assets at December 31, 2017.Explanation / Answer
a) Inventory Turnover = Cost of goods sold/Average Inventory
Average Inventory = (Closing Inventory 2016+Closing Inventory 2017)/2
= ($181,000+$204,800)/2 = $385,800/2 = $192,900
Inventory Turnover = 4.1 times
4.1 = Cost of goods sold/$192,900
Cost of good sold = 4.1*$192,900 = $790,890
Therefore the cost of goods sold for 2017 is $790,890
b) Receivable Turnover = 11.8 times = Net Credit Sales/Average Accounts receivables
Average Accounts receivables = (Opening Receivables+Closing Receivables)/2
= ($126,400+$75,100)/2 = $201,500/2 = $100,750
11.8 times = Net credit Sales/$100,750
Net credit Sales for 2017 = 11.8*$100,750 = $1,188,850
Therefore the net credit sales for 2017 is $1,188,850.
c) Return on common stockholder's equity = (Net Income/Average Common stockholder's Equity)
Average Common stockholder's Equity = (Opening + Closing)/2
= [($406,600+$101,900)+($406,600+$118,600)]/2
= $1,033,700/2 = $516,850
Return on common stockholder's equity = 18% or 0.18
0.18 = Net Income for 2017/$516,850
Net Income for 2017 = $516,850*0.18 = $93,033
d) Return on Assets = 18% = Net Income/Average Total Assets
Average Total Assets = Net Income/18% = $93,033/18% = $516,850
Average Total Assets = (Total Assets 2016+Total Assets 2017)/2
$516,850 = ($613,200+Total Assets 2017)/2
($516,850*2) - $613,200 = Total Assets 2017
Total Assets 2017 = $1,033,700 - $613,200 = $420,500
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.