Q22E The following data are adapted f... [FREE SOLUTION]

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Chapter 15: Q22E (page 843)

The following data are adapted from the financial statements of Bridget鈥檚 Shops, Inc.:
Total Current Assets $ 1,216,000
Accumulated Depreciation 2,000,000
Total Liabilities 1,540,000
Preferred Stock 0
Debt Ratio 55%
Current Ratio 1.60
Prepare Bridget鈥檚 condensed balance sheet as of December 31, 2018.

Short Answer

Expert verified

Answer

Total Assets = $2,800,000, Total Liabilities and stockholders鈥� equity = $2,800,000

Step by step solution

Working Notes

Current Ratio= Current Assets/ Current Liabilities

1.60= $1,216,000/ Current Liabilities

Current Liabilities= $1,216,000/1.6

=$760,000

Hence Current Liabilities =$760,000

Debt Ratio = Total Liabilities / Total Assets

0.55=$1,540,000/Total Assets

Total Assets = $2,800,000

Therefore, Total Assets =$2,800,000

Preparation of Balance Sheet

BALANCE SHEET
Bridget鈥檚 Shops, Inc.
Dec. 31,2018
Current Assets	$1,216,000
Other Assets ($2,800,000-1,216,000)	1,584,000
Total Assets	$2,800,000
Current Liabilities	$760,000
Long Term Liabilities ($1,540,000-760,000)	780,000
Total Liabilities	1,540,000
Stock Holder鈥檚 equity ($2,800,000-1,540,000)	1,260,000
Total Liabilities and stockholders equity	$2,800,000

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XYZ ATHLETIC SUPPLY, INC.
Five-Year Financial Summary (Partial; adapted)
(Dollar amounts in thousands except per share data)	2018	2017	2016	2015	2014	2016
Net sales revenue	\(275,000	\)222,000	\(199,000	\)171,000	131,000
Net Sales Revenue Increase	24%	12%	16%	31%	17%
Domestic Comparative Store Sales Increase	6%	6%	5%	8%	10%
Other Income鈥擭et	2,090	1,780	1,770	1,700	1,310
Cost of Goods Sold	208,725	169,386	154,822	134,235	103,883
Selling and Administrative Expenses	41,280	36,340	31,670	27,450	22,540
Interest:
Interest Expense	(1,070)	(1,370)	(1,330)	(1,100)	(800)
Interest Income	140	155	150	230	140
Income Tax Expense	4,420	3,900	3,610	3,390	2,730
Net Income	21,735	12,939	9,488	6,755	2,497
Per Share of Common Stock:
Net Income	1.10	0.80	0.70	0.50	0.28
Dividends	0.45	0.43	0.39	0.35	0.31
Financial Position
Current Assets, Excluding Merchandise Inventory	\(30,900	\)27,200	\(26,800	\)24,400	$21,800
Merchandise Inventory	24,700	22,400	21,600	19,300	17,000	16,800
Property, Plant, and Equipment, Net	51,600	46,200	40,500	35,000	25,200
Total Assets	107,200	95,800	88,900	78,700	64,000
Current Liabilities	32,600	27,800	28,800	25,600	17,000
Long-term Debt	23,000	21,200	16,800	18,600	12,900
Stockholders鈥� Equity	51,600	46,800	43,300	35,500	34,100
Financial Ratios
Acid-Test Ratio	0.9	1.0	0.9	1.0	1.3
Rate of Return on Total Assets	22.5%	15.5%	12.8%	10.9%	9.9%
Rate of Return on Common Stockholders鈥� Equity	44.2%	28.7%	24.1%	19.4%	18.9%

Cash	\(19,000
Accounts Receivable, Net	82,000
Merchandise Inventory	183,000
Total Assets	638,000
Accounts Payable	102,000
Accrued Liabilities	35,000
Short-term Notes Payable	50,000
Long-term Liabilities	221,000
Net Income	69,000
Common Shares Outstanding	50,000 shares

SANFIELD, INC. Comparative Income Statement Years Ended December 31, 2018, and 2017
	2018	2017
Net Sales Revenue	\( 462,000	\) 430,000
Cost of Goods Sold	236,000	213,000
Gross Profit	226,000	217,000
Operating Expense	135,000	133,000
Income from Operations	91,000	84,000
Interest Expense	8,000	12,000
Income Before Income Tax	83,000	72,000
Income Tax Expense	18,000	22,000
Net Income	\( 65,000	\) 50,000

SANFIELD, INC. Comparative Balance Sheet December 31, 2018, and 2017
	2018	2017	2016
Asset
Current Assets:
Cash	\( 99,000	\) 97,000
Accounts Receivable, Net	109,000	117,000	\( 100,000
Merchandise Inventory	142,000	164,000	207,000
Prepaid Expenses	15,000	5,000
Total Current Assets	365,000	383,000
Property, Plant, and Equipment, Net	215,000	177,000
Total Assets	\) 580,000	\( 560,000	\) 599,000

Liabilities
Total Current Liabilities	\( 222,000	\) 244,000
Long-term Liabilities	113,000	92,000
Total Liabilities	335,000	336,000

Stockholders鈥� Equity
Preferred Stock, 4%	92,000	92,000
Common Stockholders鈥� Equity, no par	153,000	132,000	85,000
Total Liabilities and Stockholders鈥� Equity	\( 580,000	\) 560,000

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Working Notes

Preparation of Balance Sheet

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