Check my work 10 Selected year-end financial statements of Cabot Corporation fol
ID: 2397596 • Letter: C
Question
Check my work 10 Selected year-end financial statements of Cabot Corporation follow. (All sales were on credit, selected balance sheet amounts at December 31, 2016, were inventory, $54,900; total assets, $229,400; common stock, $81,000; and retained earnings, $40,219.) 2 points CABOT CORPORATION Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Interest expense Income before taxes Incone taxes $ 456,600 297,150 159,450 99,000 4,300 56,150 22,619 $ 33,531 eBook Print Net income CABOT CORPORATION Balance Sheet December 31, 2017 Liabilities and Equity Assets Cash Short-term investments Accounts receivable, net Notes receivable (trade)* Merchandise inventory 16,500 4,000 3,500 $16,000 Accounts payable 8,600 Accrued wages payable 31,600 Income taxes payable 7,000 32,150 Long-term note payable, secured by 71,400 mortgage on plant assets Prepaid expenses Plant assets, net Total assets 2,500 Common stock 152,300 Retained earnings 81,000 73,750 250,150 Total liabilities and equity $ 250,150 McExplanation / Answer
Answer 1.
Current Assets = Total Assets - Plant Assets, net
Current Assets = $250,150 - $152,300
Current Assets = $97,850
Current Liabilities = Accounts Payable + Accrued Wages Payable + Income Taxes Payable
Current Liabilities = $16,500 + $4,000 + $3,500
Current Liabilities = $24,000
Current Ratio = Current Assets / Current Liabilities
Current Ratio = $97,850 / $24,000
Current Ratio = 4.08 to 1
Answer 2.
Quick Assets = Current Assets - Merchandise Inventory - Prepaid Expenses
Quick Assets = $97,850 - $32,150 - $2,500
Quick Assets = $63,200
Acid-test Ratio = Quick Assets / Current Liabilities
Acid-test Ratio = $63,200 / $24,000
Acid-test Ratio = 2.63 to 1
Answer 3.
Current Receivables = Accounts Receivable, net + Notes Receivable (trade)
Current Receivables = $31,600 + $7,000
Current Receivables = $38,600
Days Sales Uncollected = Current Receivables / Sales * 365
Days Sales Uncollected = $38,600 / $456,600 * 365
Days Sales Uncollected = 30.86 days
Answer 4.
Average Inventory = ($54,900 + $32,150) / 2
Average Inventory = $43,525
Inventory Turnover = Cost of Goods Sold / Average Inventory
Inventory Turnover = $297,150 / $43,525
Inventory Turnover = 6.83 times
Answer 5.
Days’ Sales in Inventory = Merchandise Inventory / Cost of Goods Sold * 365
Days’ Sales in Inventory = $32,150 / $297,150 * 365
Days’ Sales in Inventory = 39.49 days