Question

Edman Company is a merchandiser that has provided the following balance sheet and income statement for this year.

		Beginning Balance			Ending Balance
Assets
Cash	$	62,800		$	150,000
Accounts receivable		160,000			180,000
Inventory		230,000			240,000
Property, plant & equipment (net)		833,000			793,000
Other assets		37,000			37,000
Total assets	$	1,322,800		$	1,400,000
Liabilities & Stockholders’ Equity
Accounts payable	$	70,000		$	80,000
Bonds payable		550,000			550,000
Common stock		410,000			410,000
Retained earnings		292,800			360,000
Total liabilities & stockholders’ equity	$	1,322,800		$	1,400,000

		This Year
Sales	$	2,500,000
Variable expenses:
Cost of goods sold		1,600,000
Variable selling expense		240,000
Total variable expenses		1,840,000
Contribution margin		660,000
Fixed expenses:
Fixed selling expenses		220,000
Fixed administrative expenses		300,000
Total fixed expenses		520,000
Net operating income		140,000
Interest expense (8%)		44,000
Net income before tax		96,000
Tax expense (30%)		28,800
Net income	$	67,200
1. Refer to the “Requirement 1 Financials” tab within your template. For this year, create formulas within column D that calculate the average balance for each balance sheet account. a. What is the average balance for the following accounts: b. What is this year’s average total liabilities and stockholders’ equity?

1. Accounts receivable _____

2. Inventory _____

3. Retained Earnings _____

4. What is this year’s average total liabilities and stockholders’ equity? ________

Answer 1

Since excel sheet is not given, formulas cant be formulated, but i have given solution with figures given, so in formulas refer to cells with those figures given.

a.
1. Accounts Receivable = ($160000+180000) / 2 = $170000
2. Inventory = ($230000+240000) / 2 = $235000
3. Retained Earnings = ($292800+360000) / 2 = $326400

b.
Average Total Liabilities = ($70000+550000+80000+550000) / 2 = $625000
Average Stockholder's Equity = ($410000+292800+410000+360000) / 2 = $736400