Question: Presented here are the comparative balance sheets of Hames, Inc., at December 31, 2017 and 2016. Sales for the year ended December 31, 2017, totaled $650,000.
|
HAMES, INC.,
Balance Sheets
December 31, 2017 and 2016
|
|
2017
|
2016
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
21,000
|
|
|
|
$
|
20,000
|
|
|
|
Accounts receivable
|
|
|
78,000
|
|
|
|
|
72,000
|
|
|
|
Merchandise inventory
|
|
|
103,000
|
|
|
|
|
99,000
|
|
|
|
Total current assets
|
|
$
|
202,000
|
|
|
|
$
|
191,000
|
|
|
|
Land
|
|
|
50,000
|
|
|
|
|
40,000
|
|
|
|
Plant and equipment
|
|
|
125,000
|
|
|
|
|
110,000
|
|
|
|
Less: Accumulated depreciation
|
|
|
(65,000
|
)
|
|
|
|
(60,000
|
)
|
|
|
Total assets
|
|
$
|
312,000
|
|
|
|
$
|
281,000
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
18,000
|
|
|
|
$
|
17,000
|
|
|
|
Accounts payable
|
|
|
64,800
|
|
|
|
|
75,500
|
|
|
|
Other accrued liabilities
|
|
|
20,000
|
|
|
|
|
18,000
|
|
|
|
Total current liabilities
|
|
$
|
102,800
|
|
|
|
$
|
110,500
|
|
|
|
Long-term debt
|
|
|
22,000
|
|
|
|
|
30,000
|
|
|
|
Total liabilities
|
|
$
|
124,800
|
|
|
|
$
|
140,500
|
|
|
|
Stockholdersâ€TM Equity
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, no par, 100,000 shares authorized
40,000 and 25,000 shares issued, respectively
|
|
$
|
74,000
|
|
|
|
$
|
59,000
|
|
|
|
Retained earnings:
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
81,500
|
|
|
|
$
|
85,000
|
|
|
|
Net income for the year
|
|
|
51,700
|
|
|
|
|
1,500
|
|
|
|
Dividends for the year
|
|
|
(20,000
|
)
|
|
|
|
(5,000
|
)
|
|
|
Ending balance
|
|
$
|
113,200
|
|
|
|
$
|
81,500
|
|
|
|
Total stockholdersâ€TM equity
|
|
$
|
187,200
|
|
|
|
$
|
140,500
|
|
|
|
Total liabilities and stockholdersâ€TM equity
|
|
$
|
312,000
|
|
|
|
$
|
281,000
|
|
|
|
Assume that instead of paying $15,000 of accounts payable on December 31, 2017. Hames, Inc., collected $15,000 of accounts receivable. What impact, if any, this receipt will have on the answers you calculated for requirements a-d (increase, decrease, or no effect)
a. ROI for the year ended December 31, 2017:
No effect
Increase
Decrease
b. ROE for the year ended December 31, 2017:
Decrease
Increase
No effect
c. Working capital as at December 31, 2017:
Decrease
Increase
No effect
d. Current ratio as at December 31, 2017:
No effect
Decrease
Increase