Question

Presented below are the comparative balance sheets of Joe’s Garage, Inc., at December 31, 2020, and 2019. Sales for the year ended December 31, 2020, totaled $1,780,000.

JOE’S GARAGE, INC.
Balance Sheets
December 31, 2020, and 2019
	2020				2019
Assets
Cash	$	90,000			$	98,000
Accounts receivable		268,000				212,000
Merchandise inventory		402,000				394,000
Total current assets	$	760,000			$	704,000
Land		132,000				120,000
Plant and equipment		728,000				650,000
Less: Accumulated depreciation		(372,000	)			(314,000	)
Total assets	$	1,248,000			$	1,160,000
Liabilities
Short-term debt	$	98,000			$	86,000
Accounts payable		184,000				168,000
Other accrued liabilities		128,000				134,000
Total current liabilities	$	410,000			$	388,000
Long-term debt		174,000				214,000
Total liabilities	$	584,000			$	602,000
Stockholders’ Equity
Common stock, no par, 100,000 shares authorized, 35,000 and 28,000 shares issued, respectively	$	204,000			$	156,000
Retained earnings:
Beginning balance		402,000				336,000
Net income for the year		148,000				134,000
Dividends for the year		(90,000	)			(68,000	)
Ending balance	$	460,000			$	402,000
Total stockholders’ equity	$	664,000			$	558,000
Total liabilities and stockholders’ equity	$	1,248,000			$	1,160,000

Required:

A) Calculate ROI for 2020.
B) Calculate ROE for 2020.
C) Calculate working capital at December 31, 2020.
D) Calculate the current ratio at December 31, 2020.
E) Calculate the acid-test ratio at December 31, 2020.

Answer 1

-meret (Dec 31 000 2 - ) chileno والا ۔ Soluhou hay Di calculate Ro? fou 2020 Retrun on Invest = (net Income Avocage Jotal assets) ($ 148,000) $(1248000 + 11600000 Lutjat ($148,000) $1204000 you $ 12.29.1 2 calculation f ROE fou 2020. Dec 31 Net Incoñe/Average stocheldon's equéty) 12 (148,000) ($ 664000+ 558000) ROT 2020 - 2 = $ 148,000 $ 681000 24:221;

3) calculating of working capital 200 le 31) Cwillent Assets wicient Liabelites 410,000 $760,000 working capital $ 350,000 4) calculating of ewrient Asset Ratio (Dec 31) wruent Assets minent liability $7,60,000 $ 4, 10,000 current Assets = 1.850ieuwe 5) calculating acid test Ratio 2020 (Dec 3] - Inventory avement assets - Inu everent liabilites $ 7,6,0,000 402000 4,101000 0.87 Acid Test Ratio