Items 1 through 3 are based on the following information:
The December 31, 2006 balance sheet of Ratio, Inc. is presented below. These are the only accounts in Ratio’s balance sheet. Amounts indicated by a question mark (?) can be calculated from the additional information given.
|
Assets |
|
|
Cash |
$ 25,000 |
|
Accounts receivable (trade) |
? |
|
Inventory |
? |
|
Property, plant and equipment (net) |
294,000 |
|
$432,000 |
|
|
Liabilities and stockholders’ equity |
|
|
Accounts payable (trade) |
? |
|
Income taxes payable (current) |
25,000 |
|
Long-term debt |
100,000 |
|
Common stock |
300,000 |
|
Retained earnings |
? |
|
? |
|
|
Additional information |
|
|
Current ratio (at year-end) |
1.5 to 1 |
|
Total liabilities divided by total stockholders’ equity |
.8 |
|
Inventory turnover based on sales and ending inventory |
15 times |
|
Inventory turnover based on cost of goods sold and ending inventory |
10.5 times |
|
Gross margin for 2006 |
$315,000 |
What was Ratio’s December 31, 2006 balance in the inventory account?
- $ 21,000
- $ 30,000
- $ 70,000
- $135,000
What was Ratio’s December 31, 2006 balance in trade accounts payable?
- $ 67,000
- $ 92,000
- $182,000
- $207,000
What was Ratio’s December 31, 2006 balance in retained earnings?
- $ 60,000 deficit.
- $ 60,000
- $132,000 deficit.
- $132,000