Question

# Bernie's Ltd. Income Statement For the Year ended December 31, 20X5 Income: Sales 682,000 Dividends 22,000...

Bernie's Ltd.

Income Statement

For the Year ended December 31, 20X5

 Income: Sales 682,000 Dividends 22,000 Interest 29,000 Gain on sale of PPE (Property Plant & Equipment) 19,000 Total income 752,000 Expenses: Cost of goods sold 360,000 Depreciation 43,000 Wages 134,000 Interest 38,000 Other expenses 41,000 Total expenses 616,000 Net income before income tax expense 136,000 Income tax expense 36,000 Net income after income tax expense 100,000

PPE purchases during 20X5 were \$735,000

Issuance of mortgage payable during 20X5 \$226,000

All prepaid expenses at the beginning of the year expired during 20X5.

\$5,000 was accrued for operating expenses at year end.

Bernie's Ltd.

Balance sheet

As at December 31

 20X5 20X4 Assets Cash 57,000 101,000 Accounts receivable 224,000 192,000 Inventory 323,000 330,000 Interest receivable 8,000 3,000 Prepaids 18,000 17,000 Long term receivable from Dennis's Ltd. 26,000 - Property, Plant and Equipment(PPE), net 1,087,000 525,000 Total 1,743,000 1,168,000 Liabilities Accounts payable 220,000 137,000 Accrued liabilities 5,000 7,000 Wages payable 6,000 12,000 Mortgage payable 384,000 185,000 Shareholder's Equity Common shares 861,000 619,000 Retained earnings 267,000 208,000 Total 1,743,000 1,168,000

Please round up to 2 decimal places.

Please note that percentages may be represented in decimal format. For example, 12% is the same as 0.12. If you calculate 0.123 it is correct to round to 12%. If you calculate 0.127 then it is correct to round to 13%.

Bernie's Ltd current ratio at December 20X4 is:

Between 0.0 - 2.50

Between 2.51 - 3.50

Between 3.51 - 4.50

Between 4.51 - 5.50

Answer is “Between 3.51 - 4.50”

December 20X4:

Current Assets = Cash + Accounts Receivable + Inventory + Interest Receivable + Prepaids
Current Assets = \$101,000 + \$192,000 + \$330,000 + \$3,000 + \$17,000
Current Assets = \$643,000

Current Liabilities = Accounts Payable + Accrued Liabilities + Wages Payable
Current Liabilities = \$137,000 + \$7,000 + \$12,000
Current Liabilities = \$156,000

Current Ratio = Current Assets / Current Liabilities
Current Ratio = \$643,000 / \$156,000
Current Ratio = 4.12

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