Selected Balances from a Company's Financial Statements Are Shown Below

question 169

Essay

Selected balances from a company's financial statements are shown below:
$\begin{array}{|l|c|c|c|} \hline& \begin{array}{c}\text { Dec. 31, } \\2013\end{array} & \begin{array}{c}\text { Dec. 31, } \\2014\end{array} & \begin{array}{c}\text { For the } \\\text { Year 2014 }\end{array} \\\hline \text { Merchandise inventory } & \$ 15,000 & \$ 20,000 & \\\hline \text { Accounts payable } & 32,000 & 26,000 \\\hline \text { Salaries payable } & 4,400 & 3,000 \\\hline \text { Accounts receivable } & 24,000 & 21,000 \\\hline \text { Total assets } & 234,000 & 286,000 \\\hline \text { Sales (all on credit) } & & & \$ 312,000 \\\hline \text { Cost of goods sold } & & & 165,600 \\\hline \text { Salaries expense } & & & 48,000 \\\hline \text { Other expenses } & & & 75,000 \\\hline \text { Net income } & & & 24,000\\\hline\end{array}$ Use the information above to calculate the following current year ratios:
(a) 2014 inventory turnover.
(b) Days' sales uncollected at Dec. 31, 2014.
(c) 2014 profit margin.
(d) 2011 return on total assets.

Distinguish between the types of expenses and their classifications in financial statements.

Understand the perpetual and periodic inventory systems and their journal entries.

Identify the components and calculation of net income.

Analyze the similarities and differences in financial statements between service and retail businesses.

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