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Q1) Following are selected data from comparative income statement and balance sheet for Deerfield Corporation for years ended December 31, 20X8 and 20X7:

Selected Data

  20X8 20X7
Net sales (all on credit) $97,600 $93,000
Cost of goods sold 53,500 52,500
Gross profit 44,700 40,500
Income from operations 16,300 15,000
Interest expense 3,100 3,500
Net income 9,800 9,000

 

Cash 7,700 7,500
Accounts receivable, net 10,700 12,500
Inventory 20,000 26,000
Prepaid expenses 1,000 900
Total current assets 39,400 46,900
Total long-term assets 50,000 67,000
Total current liabilities 32,000 44,500
Total long-term liabilities 11,000 39,800
Common stock, no par *10,000 10,000
Retained earnings 25,400 19,600

NOTE: 2000 shares of common stock have been issued and outstanding since company started operations. During entire fiscal year ended December 31, 20X8, stock was selling for $45 per share.

Compute the following ratios at December 31, 20X8:

a) Acid-test ratio
b) Rate of return on total assets
c) Times-interest-earned ratio
d) Current ratio

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M919935

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