ACCT 202-Recent financial statements for Madison Company follow
Subject: Business   / Accounting
Question
Question:
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Recent financial statements for Madison Company follow:
Madison Company
Balance Sheet
June 30
Assets
Current assets:
Cash            $   18,000
Accounts receivable, net               200,000
Merchandise inventory               370,000
Prepaid expenses               12,000
Total current assets               600,000
Plant and equipment, net               870,000
Total assets            $   1,470,000
Liabilities and Stockholders’ Equity
Liabilities:
Current liabilities            $   290,000
Bonds payable, 10%Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 390,000
Total liabilities               680,000
Stockholders’ equity:
Common stock, $5 par value   $   180,000
Retained earnings      610,000
Total stockholders’ equity               790,000
Total liabilities and stockholders’ equity            $   1,470,000
Madison Company
Income Statement
For the Year Ended June 30
Sales   $   2,590,000
Cost of goods sold      1,462,000
Gross margin      1,128,000
Selling and administrative expenses      590,000
Net operating income      538,000
Interest expense      39,000
Net income before taxes      499,000
Income taxes      149,700
Net income   $   349,300
Account balances at the beginning of the company’s fiscal year were: accounts receivable, $170,000; and inventory, $310,000. All sales were on account.
Required:
Compute financial ratios as follows:
1.
Gross margin percentage. (Round your answer to the nearest whole percent.)
Gross margin percentage   %
2.   Current ratio. (Round your answer to 2 decimal places.)
Current ratio
3.   Acid-test ratio. (Round your answer to 2 decimal places.)
Acid-test ratio
4.   Average collection period. (Use 365 days in a year. Round your answer to 1 decimal place.)
Average collection period   days
5.   Average sale period. (Use 365 days in a year. Do not round intermediate calculations. Round your final answer to 1 decimal place.)
Average sale period   days
6.   Debt-to-equity ratio. (Round your answer to 2 decimal places.)
Debt-to-equity ratio
7.   Times interest earned. (Round your answer to 1 decimal place.)
Times interest earned
8.
Book value per share. (Round your answer to the nearest dollar amount.)
Book value per share   $
