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Financial Statements, Closing Entries & Ratio Analysis

You are asked to support Telcel Company with its Financial Reporting requirements. The Senior Manager provided you with the following Adjusted Trial Balance:

Telcel Company TRIAL BALANCE (Adjusted) 31-Mar-21

Cash

Accounts Receivable

Prepaid Rent

Supplies

Inventory

Buildings

Equipment

Accumulated Depreciation – Equipment Accumulated Depreciation – Buildings Accounts Payable

Notes Payable (due 2024)

Unearned Service Revenue

Share Capital

Retained Earnings

Dividends

Service Revenue

Advertising Expense

Salaries and Wages Expense

Utilities Expense

Supplies Expense

Depreciation Expense

Interest Expense

Rent Expense

Total

Additional Information:

2020 Data

Debit

10,450 16,800 7,600 1,500 6,400 125,000 32,000

8,000

1,750 47,800 5,400 2,600 8,400 1,100 1,800

276,600

Credit

7,200 21,000 13,900 49,000

9,450 76,000 31,650

68,400

276,600

Accounts Receivable Total Assets

$8,100 $158,930

REQUIRED:

a. Using the Adjusted Trial Balance above, prepare the following statements in proper

form:

i. IncomeStatement

ii. Retained Earnings Statement

iii. A classified Statement of Financial Position

iv. A Post-Closing Trial Balance


b. Compute the following Ratios:

i. CurrentRatio

ii. Acid-testRatio

iii. Accountsreceivableturnover

iv. Average Collection period

v. ProfitMargin

vi. DebttoTotalAssets

vii. Return on Asset

viii. TimesInterestEarned

12Marks

c. Explain to the Manager, what the different classes of ratios measure and identify the bases of comparison on financial information.

4 Marks

Sagot :

ajanikewich

Answer: im not sure don't use my answer.

Explanation: CAHS CASH CASH

The question requires preparation of Financial Statements.

i. Income Statement :

Service Revenue 68,400

Advertising Expense 1,750

Salaries and Wages Expense 47,800

Utilities Expense 5,400

Supplies Expense 2,600

Depreciation Expense 8,400

Interest Expense 1,100

Rent Expense 1,800

Total Expense 68,850

Net Loss - 450

ii. Financial Statement :

Assets :

Cash 10,450

Accounts Receivable 16,800

Prepaid Rent 7,600

Supplies 1,500

Inventory 6,400

Buildings 125,000

Equipment 32,000

Total Assets 199,750

Liabilities :

Accumulated Depreciation – Equipment 7,200

Accumulated Depreciation – Buildings 21,000

Accounts Payable 13,900

Notes Payable (due 2024) 49,000

Unearned Service Revenue 9,450

Equity :

Share Capital 76,000

Retained Earnings 31,650

Dividends 8,000

Debit Net Loss 450

Debit Total Equity and Liabilities 199,750

b. Ratio Analysis :

i Current Ratio :

Current Assets / Current Liabilities 1.7 times

ii Acid Test Ratio

Current Assets - Inventory / Current Liabilities 1.49 times

iii Account receivable turnover [Account Receivable / Sales ] * 365 84 days

iv Average collection period 365 / Average receivable turnover 4.29

v Profit Margin

Profit / Sales - 0.6%

vi Debt to total assets

Total Debt / Total Asset 1.98 times

vii Return on Asset Operating Income / Total Asset 0.0023

viii Times interest Earned EBIT / Interest Expense 0.4 times

Learn more about business at https://brainly.com/question/26154564

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