Exercise 13-12 Monty Corp. experienced a fire on December 31, 2019, in which its
ID: 2593569 • Letter: E
Question
Exercise 13-12
Monty Corp. experienced a fire on December 31, 2019, in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances.
December 31, 2019
December 31, 2018
Additional information:
Compute the following for Monty Corp.. (Round all answers to 0 decimal places, e.g. 2,150.)
December 31, 2019
December 31, 2018
Cash $ 40,900 $ 18,100 Accounts receivable (net) 74,500 126,200 Inventory 205,900 181,600 Accounts payable 52,200 93,500 Notes payable 37,300 65,200 Common stock, $100 par 402,800 402,800 Retained earnings 116,000 106,900Explanation / Answer
Solutions
(a) Cost of goods sold for 2019
Inventory turnover = Cost of goods sold / Average Inventory*
4.3 = Cost of goods sold / $ 193,750
Cost of goods sold = $ 193,750 X 4.3
Cost of goods sold = $ 833,125 (Answer)
*Average Inventory = (Inventory at December 31, 2018 + Inventory at December 31, 2019) /2
= ($ 181,600 + 205,900) / 2
= $ 387,500 / 2
= $ 193,750
(b) Net credit sales for 2019
Receivables turnover = Net Credit Sales / Average Account Receivable (net)*
12.2= Net Credit Sales / $ 100,350
Net Credit Sales= $ 100,350 X 12.2
Net Credit Sales= $ 1,224,270 (Answer)
*Average Account Receivable (net) = [Account Receivable (net) at December 31, 2018 + Account Receivable (net) at December 31, 2019] /2
= ($126,200 + 74,500) / 2
= $ 200,700 / 2
= $ 100,350
(c) Net income for 2019
Return on common stockholders’ equity= Net Income / Average Common Stock* X 100
21 = Net Income / $ 402,800 X 100
Net Income = ($ 402,800 X 21) / 100
Net Income = $ 84,588 (Answer)
*Average Common Stock= (Common Stock at December 31, 2018 + Common Stock at December 31, 2019) /2
= ($402,800 + 402,800) / 2
= $ 805,600 / 2
= $ 402,800
(d) Total assets at December 31, 2019
Return on assets= Net Income / Average total assets* X 100
17 = Net Income / [(Total assets at December 31, 2018 + Total assets at December 31, 2019) /2] X 100
17 = $ 84,588 / [(Total assets at December 31, 2018 + Total assets at December 31, 2019) /2] X 100
17 = $ 84,588 / [(Total assets at December 31, 2018 + Total assets at December 31, 2019) /2] X 100
17 = $ 84,588 / [($606,700 + Total assets at December 31, 2019) /2] X 100
$606,700 + Total assets at December 31, 2019 = ($ 84,588 X 100 X 2) / 17
$606,700 + Total assets at December 31, 2019 = $ 16,917,700 / 17
$606,700 + Total assets at December 31, 2019 = $ 995,153
Total assets at December 31, 2019 = $ 995,153 - $ 606,700
Total assets at December 31, 2019 = $ 388,453 (Answer)
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