E13-19B (Ratio Computations and Effect of Transactions) Presented below is information related to Lakeland Inc. LAKELAND INC. BALANCE SHEET DECEMBER 31, 2014 Cash $ 8,000 Notes payable (short-term) $ 92,000 Receivables $175,000 Accounts payable 163,000 Le

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E13-19B (Ratio Computations and Effect of Transactions) Presented below is information related to Lakeland Inc.

                                                        LAKELAND INC.

                                                       BALANCE SHEET

                                                      DECEMBER 31, 2014                                                    

Cash                                      $ 8,000                Notes payable (short-term)      $ 92,000

Receivables     $175,000                                    Accounts payable                   163,000

Less: Allowance 20,000      155,000                 Accrued liabilities                      18,000

Inventories                           271,000                 Capital stock (par $1)                 72,000

Prepaid insurance                    6,000                 Retained earnings                    298,000

Land                                       50,000

Equipment (net)                    153,000

                                           $643,000                                                                 $643,000

                                                          LAKELAND INC.

                                                      INCOME STATEMENT

                                     FOR THE YEAR ENDED DECEMBER 31, 2014                                            

Sales                                                                                              $2,800,000

Cost of goods sold

Inventory, Jan. 1, 2012                   $ 200,000

Purchases                                      2,031,000

Cost of goods available for sal      2,231,000

Inventory, Dec. 31, 2012                  271,000

Cost of goods sold                                                                           1,960,000

Gross profit on sales                                                                          840,000

Operating expenses                                                                           506,000

Net income                                                                                       $ 334,000

Instructions

(a) Compute the following ratios or relationships of Lakeland Inc. Assume that the ending account balances are representative unless the information provided indicates differently.

(1) Current ratio.

(2) Inventory turnover.

(3) Receivables turnover.

(4) Earnings per share.

(5) Profit margin on sales.

(6) Rate of return on assets on December 31, 2014.

(b) Indicate for each of the following transactions whether the transaction would improve, weaken, or have no effect on the current ratio of Lakeland Inc. at December 31, 2014.

(1) Write off an uncollectible account receivable, $6,800.

(2) Repurchase capital stock for cash.

(3) Pay $46,000 on notes payable (short-term).

(4) Collect $70,000 on accounts receivable.

(5) Buy equipment on account.

(6) Give an existing creditor a short-term note in settlement of account.

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