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8.1 Hytek Corporation Ended 2012 With Cash of $50,000, Accounts Receivable of $100,000, and Inventory

This document provides financial information for Hytek Corporation for the year ending 2012, including cash, accounts receivable, inventory, property and equipment, current and long-term liabilities, stockholders' equity, sales, expenses, interest income/expense, and income taxes. It asks to prepare a balance sheet and income statement based on the figures provided, and then calculate and comment on the current ratio, acid test ratio, leverage ratio, and profit margin based on the results.

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Naomi Aira Gole Cruz
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250 views2 pages

8.1 Hytek Corporation Ended 2012 With Cash of $50,000, Accounts Receivable of $100,000, and Inventory

This document provides financial information for Hytek Corporation for the year ending 2012, including cash, accounts receivable, inventory, property and equipment, current and long-term liabilities, stockholders' equity, sales, expenses, interest income/expense, and income taxes. It asks to prepare a balance sheet and income statement based on the figures provided, and then calculate and comment on the current ratio, acid test ratio, leverage ratio, and profit margin based on the results.

Uploaded by

Naomi Aira Gole Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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8.

1 Hytek Corporation ended 2012 with cash of $50,000, accounts receivable of $100,000, and inventory
of $300,000. Properly, plant, and equipment were valued at their original cost of $470,000, less
accumulated depreciation of $170,000. Current liabilities other than income taxes owed (see details that
follow) were $120,000, and long-term debt was $250,000. Stockholders’ equity consisted of (a) $90,000
capital stock investment and (b) accumulated retained earnings, which had totaled $130,000 at the end
of 2011. Net sales for 2012 were $900,000. Expenses included $500,000 as cost of goods sold, $50,000
as allowance for depreciation. $85,000 as selling expenses, and $65,000 as G&A expense. Interest
income and expense were $5,000 and $25,000, respectively, and income taxes for the year (unpaid at
year’s end) were $80,000. Dividends of $20,000 were paid. Prepare a balance sheet and an income
statement reflecting these figures.
8.2 Use the output of Questions 8-1 to calculate the current ratio, acid test ratio, leverage ratio, and
profit margin of Table 8-3. Comment on the values you obtain.

Current Assets
Current Ratio=
Current Liabilities
$ 450,000
Current Ratio= =2.25
$ 200,000
Current Asset−Inventory
Acid Test Ratio=
Current Liabilities

$ 450,000−$ 300,000
Acid Test Ratio= =0.75
$ 200,000
Total Debt
Leverage Ratio=
Total Assets
$ 450,000
Leverage Ratio= =0.6
$ 750,000
Net Income
Profit Margin=
Net Sales
$ 100,000
Profit Margin= =11 %
$ 900,000

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