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Quiz 2 Answers

The balance sheet, income statement, and statement of equity provide financial information for Dee Gong Commercial for the year. According to the documents, Dee Gong Commercial had total assets of $1,090,000 but suffered a net loss of $85,500 for the year resulting in negative returns. Liquidity ratios indicate the company can meet its current obligations but efficiency ratios show room for improvement in asset usage and debt levels.

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85 views6 pages

Quiz 2 Answers

The balance sheet, income statement, and statement of equity provide financial information for Dee Gong Commercial for the year. According to the documents, Dee Gong Commercial had total assets of $1,090,000 but suffered a net loss of $85,500 for the year resulting in negative returns. Liquidity ratios indicate the company can meet its current obligations but efficiency ratios show room for improvement in asset usage and debt levels.

Uploaded by

MARVIE JUNE CARBON
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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1.

DEE GONG COMMERCIAL


BALANCE SHEET

ASSETS LIABITIES AND EQUITY


Cash on Hand 10,000.00 Accounts Payable
Cash in Bank 500,000.00 Mortgage Payable
Accounts Receivable 65,000.00 TOTAL LIABILITIES
Office Supplies 15,000.00 Dee Captital
Merchandise Inventory 200,000.00 Retained Earnings
Machinery and Equipment 300,000.00 TOTAL EQUITY

TOTAL ASSETS 1,090,000.00 TOTAL LIABITIES AND EQUITY

DEE GONG COMMERCIAL


INCOME STATEMENT

Sales 400,000.00
Cost of Sales 200,000.00
Gross Profit 200,000.00

Expenses:
Advertising and Promotion Expense 15,000.00
Rent Expense 42,000.00
Salaries Expense 180,000.00
Taxes & Licenses 14,000.00
Transportation expense 7,500.00
Utilities Expense 30,000.00 288,500.00

Gain on Sale of Equipment 3,000.00

Net Income -85,500.00

DEE GONG COMMERCIAL


STATEMENT OF EQUITY

Dee, Beginning Capital 611,500.00


Net Income -85,500.00
Subtotal 526,000.00
Dee, Drawing 5,000.00
Dee, Ending Capital 521,000.00

2.
ASSETS = LIABILITIES + EQUITY
1090000 = 575000 + 521000
1090000 = 1090000

3.
a) Profit Margin =(sales-cost of sales)/ sales -21.38%
Dee Gong Commercial has a profitability of -21%, which means the business is earning

b) Return on Assets =Net income/Total Assets -7.84%


Dee Gong Commercial has more assets involved in generating its profits  given it has a

c) Return on Equity Net income/Equity -16.41%


Dee Gong Commercial shareholders are losing, rather than gaining, value.

d) Receivables Turnover =sales/accounts receivable 6.15


Dee Gong Commercial's collection of accounts receivable is efficient and it has a high p

e) Average Collection period (365 days) 365 days/ receivables turnover 59.31
On average, the debtors of Dee Gong Commercial buy and pay back six times a year.

f) Inventory Turnover =cost of sales/inventory 1


This may indicate that Dee Gong Commercial's products have a declining demand.

g) Fixed Assets Turnover =sales/assets 0.37


Dee Gong Commercial is inefficient in generating income from its assets.

h) Total Assets Turnover =net sales/total sales 0.5


For each peso of assets Dee Gong Commercia has, it generates 50 cents of sales.

i) Current Ratio current asset/current liabilities 10.53


Dee Gong Commerical has a relatively high current ratio, an indication that the firm is

j) Quick Ratio quick assets/current liabilities 7.87


Dee Gong Commercial has plenty of cash and cash equivalents to cover any debt paym

k) Debt to total assets =total liabilities/total assets 0.53


Dee Gong Commercial debt is used to fund a significant share of assets.
Accounts Payable
75,000.00 Accounts Receivable
500,000.00 Advertising and Promotion Expense
575,000.00 Cash in Bank
606,500.00 Cash on Hand
(85,500.00) Cost of Sales
521,000.00 Dee, Beginning Capital
Dee, Drawing
1,096,000.00 Gain on Sale of Equipment
Machinery and Equipment
Merchandise Inventory
Mortgage Payable
Office Supplies
Rent Expense
Salaries Expense
Sales
Taxes & Licenses
Transportation expense
Utilities Expense
hich means the business is earning less than its expenditure.

enerating its profits  given it has a negative return on assets.

er than gaining, value.

vable is efficient and it has a high proportion of quality customers who pay their debts quickly.

days
uy and pay back six times a year.

ucts have a declining demand.

come from its assets.

generates 50 cents of sales.

atio, an indication that the firm is liquid and has the ability to pay its current obligations on time as and when they become due.

quivalents to cover any debt payments that may come due within the next year or so.

ant share of assets.


75,000.00
65,000.00
15,000.00
500,000.00
10,000.00
200,000.00
611,500.00 606,500.00
5,000.00
3,000.00
300,000.00
200,000.00
500,000.00
15,000.00
42,000.00
180,000.00
400,000.00
14,000.00
7,500.00
30,000.00
n they become due.

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