Analytical case—complete an income statement and balance sheet using financial ratio data Partially completed financial statements for Whittaker, Inc., follow:

 

 

 

 

 

 

 

                                                                                                        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WHITTAKER, INC.

 

Balance Sheet December  31, 2014

 

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $    ?

 

Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ?

 

Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         ?

 

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $171,000

 

Property, plant, and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     ?

 

Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $    ?

 

Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    ?

 

Bonds payable, 15% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      70,000

 

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       $          ?

 

Stockholders’ equity:

 

Common stock, $2 par value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000

 

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    15,000

 

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ?

 

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $        ?

 

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $            ?

 

Additional information:

 

•  Financial ratios computed from these financial statements include the following:

 

Current ratio  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1.9 to 1

 

Acid-test ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1.3 to 1

 

Debt/equity ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2.0 to 1

 

Inventory turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4.0 times

 

Accounts receivable turnover. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6.8 times

 

Times interest earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4.45 times

 

Gross profit ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   40%

 

Return on investment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12%

 

Earnings per share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $5.52

 

•  All sales during the year were made on account. Cash collections during the year exceeded sales by $14,000, and no uncollectible accounts were written off.

 

•  The balance of the accounts receivable account was $57,000 on January 1, 2014.

 

•  No common stock was issued during the year.

 

•  Dividends declared and paid during the year were $7,600.

 

•  The balance of the inventory account was $48,000 on January 1, 2014.

 

•  Interest expense on the income statement relates to the 15% bonds payable;

 

$10,000 of these bonds were issued on May 1, 2014; the remaining amount of bonds payable were outstanding throughout the year. All bonds were issued at face amount.

 

 

 

 

 

 

 

 

 

Required:

 

a.       Complete the income statement and balance sheet for Whittaker, Inc. Show how each amount was determined.

 

b.      After completing part a, use your answers to recompute each of the financial ratios provided as additional information.