Exercise 1410 Lingenfelter Corporation experienced a fire on

Exercise 14-10 Lingenfelter Corporation experienced a fire on December 31, 2017, 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 Cash Accounts receivable (net) Inventory Accounts payable Notes payable Common stock, $100 par Retained earnings 31, 2017 31, 2016 10,000 126,000 180,000 0,000 90,000 60,000 400,000 101,000 30,000 72,500 200,000 30,000 400,000 113,500 Additional information: 1. The inventory turnover is 4.5 times. 2. The return on common stockholders\' equity is 16%. The company had no additional paid-in capital. 3. The accounts receivable turnover is 8.8 times. 4. The return on assets is 12.5%. 5. Total assets at December 31, 2016, were $655,000. Compute the following for Lingenfelter Corporation. (a) Cost of goods sold for 2017 (b) Net sales (credit) for 2017 (c) Net income for 2017 (d) Total assets at December 31, 2017

Solution

working:

inventory turnover ratio = cost of goods sold / average inventory

here,

inventory turnover = 4.50

average inventory = (200,000 + 180,000) /2

=>190,000.

=>4.50 = cost of goods sold / (190,000)

=>cost of goods sold = 855,000.

b.receivable turnover = 11.2 times.

net credit sales / average accounts receivable

here,

average accounts receivable = (72,500 + 126,000) / 2

=>$99,250.

=>8.8 = net credit sales / 99,250

=>net credit sales =>$873,400

c.net income :

return on common stockholder\'s equity = 16%

common stockholder\'s equity =(400,000+113,500 retained earnings) =>513,500

=>net income = common stockholde\'s equity * return

=>515,300 * 16%

=>$82,160.

d.total assets\"

return on assets =12.5%

net income / average total assets

=>$82,160 / average total assets = 12.5%

=>average total assets = $82,160 / 12.5%

=>$657,280.

average total assets = (opening assets + ending assets ) / 2

=>657,280 = (655,000 + ending assets ) / 2

=>ending assets = 1314560-655,000

=>$659,560.

a.cost of goods sold for 2017	$855,000
b.net sales (credit) for 2017	$873,400
c.net income for 2017	$82,160
d.total assets december 31 2017	$659,560