Question

1. Comparative financial statement data for Blossom Corporation and Pina Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2022.

		Blossom Corporation		Pina Corporation
		2022		2022
Net sales		$2,232,000		$768,800
Cost of goods sold		1,457,000		421,600
Operating expenses		350,920		121,520
Interest expense		11,160		4,712
Income tax expense		105,400		44,640
Current assets		460,561		192,317
Plant assets (net)		659,680		173,263
Current liabilities		82,243		41,808
Long-term liabilities		134,540		50,448

Compute the debt to assets ratio for each company for 2022. (Round debt to assets ratio to 1 decimal place, e.g. 78.9%.)

		Debt to Assets Ratio
Blossom Corporation		enter debt to assets ratio in percentages rounded to 1 decimal place %
Pina Corporation		enter debt to assets ratio in percentages rounded to 1 decimal place %

2.

These items are taken from the financial statements of Grouper Corporation for 2022.

Retained earnings (beginning of year)		$33,280
Utilities expense		2,110
Equipment		68,280
Accounts payable		22,570
Cash		15,070
Salaries and wages payable		5,840
Common stock		12,000
Dividends		12,000
Service revenue		69,290
Prepaid insurance		6,340
Maintenance and repairs expense		1,690
Depreciation expense		3,490
Accounts receivable		15,970
Insurance expense		2,310
Salaries and wages expense		38,290
Accumulated depreciation—equipment		22,570

(a1)

Prepare an income statement for the year ended December 31, 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

3.

You are provided with the following information for Ayayai Enterprises, effective as of its April 30, 2022, year-end.

Accounts payable		$844
Accounts receivable		910
Accumulated depreciation—equipment		670
Cash		1,370
Common stock		1,200
Cost of goods sold		1,070
Depreciation expense		325
Dividends		335
Equipment		2,520
Income tax expense		175
Income taxes payable		145
Insurance expense		220
Interest expense		410
Inventory		1,067
Land		3,200
Mortgage payable		3,600
Notes payable (due March 31, 2023)		161
Prepaid insurance		70
Retained earnings (beginning)		1,600
Salaries and wages expense		690
Salaries and wages payable		232
Sales revenue		5,200
Stock investments (short-term)		1,290

(a1)

Prepare an income statement for Ayayai Enterprises for the year ended April 30, 2022. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answer 1

Answer of Part 1:

For Blossom Corporation:

Total Assets = Current Assets + Plant Assets (Net)
Total Assets = $460,561 + $659,680
Total Assets = $1,120,241

Total Liabilities = Current Liabilities + Long term Liabilities
Total Liabilities = $82,243 + $134,540
Total Liabilities = $216,783

Debt to Assets Ratio = Total Liabilities / Total Assets *100
Debt to Assets Ratio = $216,783 / $1,120,241 *100
Debt to Assets Ratio = 19.4%

For Pina Corporation:

Total Assets = Current Assets + Plant Assets (Net)
Total Assets = $192,317 + $173,263
Total Assets = $365,580

Total Liabilities = Current Liabilities + Long term Liabilities
Total Liabilities = $41,808 + $50,448
Total Liabilities = $92,256

Debt to Assets Ratio = Total Liabilities / Total Assets *100
Debt to Assets Ratio = $92,256 / $365,580 *100
Debt to Assets Ratio = 25.2%