Problem
|
LOGIC COMPANY
Comparative Income Statement
For Years Ended December 31, 2016 and 2017
|
|
2017
|
2016
|
|
Gross sales
|
22,000
|
17,250
|
|
Sales returns and allowances
|
1,000
|
100
|
|
Net sales
|
21,000
|
17,150
|
|
Cost of merchandise (goods) sold
|
11,250
|
8,250
|
|
Gross profit
|
9,750
|
8,900
|
|
Operating expenses:
|
|
|
|
Depreciation
|
1,000
|
750
|
|
Selling and administrative
|
4,450
|
3,500
|
|
Research
|
850
|
650
|
|
Miscellaneous
|
660
|
450
|
|
Total operating expenses
|
6,960
|
5,350
|
|
Income before interest and taxes
|
2,790
|
3,550
|
|
Interest expense
|
860
|
650
|
|
Income before taxes
|
1,930
|
2,900
|
|
Provision for taxes
|
772
|
1,160
|
|
Net income
|
1,158
|
1,740
|
|
LOGIC COMPANY
Comparative Balance Sheet
December 31, 2016 and 2017
|
|
2017
|
2016
|
|
Assets
|
|
|
|
Current assets:
|
|
|
|
Cash
|
13,500
|
10,500
|
|
Accounts receivable
|
18,000
|
14,000
|
|
Merchandise inventory
|
10,000
|
15,500
|
|
Prepaid expenses
|
25,500
|
11,500
|
|
Total current assets
|
67,000
|
51,500
|
|
Plant and equipment:
|
|
|
|
Building (net)
|
15,900
|
12,500
|
|
Land
|
15,000
|
10,500
|
|
Total plant and equipment
|
30,900
|
23,000
|
|
Total assets
|
97,900
|
74,500
|
|
Liabilities
|
|
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
14,500
|
8,500
|
|
Salaries payable
|
8,500
|
6,500
|
|
Total current liabilities
|
23,000
|
15,000
|
|
Long-term liabilities:
|
|
|
|
Mortgage note payable
|
23,600
|
22,000
|
|
Total liabilities
|
46,600
|
37,000
|
|
Stockholders' Equity
|
|
|
|
Common stock
|
22,500
|
22,600
|
|
Retained earnings
|
28,800
|
14,900
|
|
Total stockholders' equity
|
51,300
|
37,500
|
|
Total liabilities and stockholders' equity
|
97,900
|
74,500
|
Calculate the average day's collection ratio.