Exercise 1811 Wiemers Corporations comparative balance sheet

Exercise 18-11 Wiemers Corporation\'s comparative balance sheets are presented below. WIEMERS CORPORATION Balance Sheets December 31 2017 2016 Cash Accounts receivable (net) Inventory Land Buildings Accumulated depreciation-buildings 21,400 10,100 20,100 70,500 (15,500) (10,500) $ 3,700 23,600 7,100 25,900 70,500 Total Accounts payable Common stock Retained earnings $110,900 $120,300 $31,100 69,200 20,000 $110,900 $120,300 s 12,100 74,800 24,000 Total Wiemers\'s 2017 income statement included net sales of $103,000, cost of goods sold of $59,100, and net income of $15,100. Compute the following ratios for 2017. (Round answers to 2 decimal places, e.g. 1.65, or 1.65% .)

Solution

Answer1:

2017:

Current Assets = Cash + Accounts Receivable + Inventory
Current Assets = $4,300 + $21,400 + $10,100
Current Assets = $35,800

Current Liabilities = Accounts Payable
Current Liabilities =$12,100

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $35,800 / $12,100
Current Ratio =2.96:1

Answer 2:

2017:

Acid test Ratio = (Cash +Accounts Receivable) / Current Liabilities
Acid test Ratio = ($4,300 + $21,400) / $12,100
Acid test Ratio = $25,700 / $12,100
Acid test Ratio = 2.12:1

Answer 3:

2017:

Average Accounts Receivable = (Opening Accounts Receivable + Closing Accounts Receivable)/2
Average Accounts Receivable = ($23,600 + $21,400) / 2
Average Accounts Receivable = $22,500

Accounts Receivable Turnover = Net Sales / Average Accounts Receivable
Accounts Receivable Turnover = $103,000 / $22,500
Accounts Receivable Turnover =4.58 times

Answer 4:

2017:

Average Inventory = (Opening Inventory + Closing Inventory) / 2
Average Inventory = ($7,100 + $10,100) /2
Average Inventory = $17,200 / 2
Average Inventory =$8,600

Inventory Turnover = COGS / Average Inventory
Inventory Turnover = $59,100 / $8,600
Inventory Turnover =6.87 times