Presented here are an incomplete income statement and balance sheet for Vieux Corporation. VIEUX CORPORATION Income Statement Year ended December 31, 2014 Net sales ....................... $11,000,000 Cost of goods sold ....................... (a) Gross profit ................................ (b) Operating expenses ..............1,600,000 Profit from operations .................. (c) Interest expense ......................... (d) Profit before income taxes .............. (e) Income tax expense ............... 707,000 Profit .................................... $ (f) VIEUX CORPORATION Balance Sheet December 31, 2014 Assets Current assets Cash ........................................................... $ (g) Accounts receivable ........................................... (h) Inventory ......................................................... (i) Total current assets ............................................. (j) Long-term investments ................................. 430,000 Property, plant, and equipment ...................... 4,420,000 Total assets ................................................... $ (k) Liabilities Current liabilities ........................................... $ (l) Non-current liabilities ....................................... (m) Total liabilities ................................................ (n) Shareholders' Equity Common shares .................................... 1,500,000 Retained earnings ................................. 1,900,000 Total shareholders' equity ........................ 3,400,000 Total liabilities and shareholders' equity .............. $ (o) Additional information: 1. The gross profit margin is 40%. 2. The profit margin is 15%. 3. The receivables turnover is 10 times and all sales are on account. 4. The inventory turnover is 8 times. 5. The current ratio is 2:1. 6. The return on assets is 22%. Instructions Calculate the missing information using the ratios. Use ending balances instead of average balances, where averages are required for ratio calculations. Show your calculations. Taking It Further Why is it not possible to calculate the missing amounts in the same sequence (i.e., a, b, c, etc.) that they are presented above?
Presented here are an incomplete income statement and balance sheet for Vieux Corporation.
VIEUX CORPORATION
Income Statement
Year ended December 31, 2014
Net sales ....................... $11,000,000
Cost of goods sold ....................... (a)
Gross profit ................................ (b)
Operating expenses ..............1,600,000
Profit from operations .................. (c)
Interest expense ......................... (d)
Profit before income taxes .............. (e)
Income tax expense ............... 707,000
Profit .................................... $ (f)
VIEUX CORPORATION
Balance Sheet
December 31, 2014
Assets
Current assets
Cash ........................................................... $ (g)
Inventory ......................................................... (i)
Total current assets ............................................. (j)
Long-term investments ................................. 430,000
Property, plant, and equipment ...................... 4,420,000
Total assets ................................................... $ (k)
Liabilities
Current liabilities ........................................... $ (l)
Non-current liabilities ....................................... (m)
Total liabilities ................................................ (n)
Shareholders' Equity
Common shares .................................... 1,500,000
Total shareholders' equity ........................ 3,400,000
Total liabilities and shareholders' equity .............. $ (o)
Additional information:
1. The gross profit margin is 40%.
2. The profit margin is 15%.
3. The receivables turnover is 10 times and all sales are on account.
4. The inventory turnover is 8 times.
5. The
6. The return on assets is 22%.
Instructions
Calculate the missing information using the ratios. Use ending balances instead of average balances, where averages are required for ratio calculations. Show your calculations.
Taking It Further
Why is it not possible to calculate the missing amounts in the same sequence (i.e., a, b, c, etc.) that they are presented above?
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