Accounting-balance sheet and income statement

Argo Sales Corporation has in recent years maintained the following relationships among the data on its financial statements:

Gross profit margin 40%
Net profit margin 10%
Rate of selling expenses to net sales 20%
Accounts receivable turnover 8 times per year
Inventory turnover 6 times per year
Quick-asset composition: 8% cash, 32% marketable securities, 60% accounts receivable
Acid-test ratio (Quick ratio) 2-to-1
Current ratio: 3-to-1
Asset turnover: 2 per year
Ratio of total assets to intangible assets 20-to-1
Ratio of accumulated depreciation to gross property, plant and equipment : 1-to-3
Ratio of accounts receivable to accounts payable: 1.5-to-1
Ratio of working capital to stockholders’ equity: 1-to-1.6
Debt/Equity ratio: 1-to-2

The corporation had a net income of $120,000 for 2004, which resulted in earnings of $5.20 per share of common stock. No common or preferred shares were sold or bought back during 2004. The corporation does not have minority share of earnings, equity income or non-recurring items. Additional information includes the following:

Capital stock authorized, issued (all in 1970), and outstanding:
Common, $10 per share per share, issued at 10% premium.
Preferred, 6% nonparticipating, $100 per share par value, issued at a 10% premium.
Market value per share of common at December 31, 2004: $78.
Preferred dividends paid in 2004: $3,000.
Times interest earned in 2004: 33.

The amounts of the following were the same at December 31, 2004, as at January 1, 2004: inventory, accounts receivable, 5% bonds payable – due 2013, total assets and total stockholders’ equity.

Assuming there is no income tax expense and specific depreciation expense, but still need the accumulated depreciation for balance sheet.

Administration expense, accrued expense payable and prepaid expenses are all backed in numbers.

All purchases and sales were on account. Assume the company uses direct write-off method to account for uncollectible accounts.

Required: Prepare in good form the balance sheet and income statement for the year ending December 31, 2004. Please show all calculations.

Please I need help in figuring out the operating income, interest expense, administrative expense on the income statement

Balance sheet: I got stuck on the gross receivables part and others. Please tell if what I have already done is correct and how to find the rest stuff.

income statement i came up with
Gross Profit 480,000
Operating expenses
Selling expenses $240,000
Adminstrative expenses

Interest expense
Net income $120,000

Balance sheet


Market Securities
Gross A/R

Allowance for doubtful accounts
Net A/R

Prepaid expenses

Total current assets
Gross property, plant & equipment
Accumulated Depreciation

Net Fixed Assets

Total Assets

Accounts Payable

Accrued Expenses

Current portion of LTD

Total Current Liabilities

Bonds payable 5%

Total Liabilities

Owners Equity

Preferred Stock

Common Stock
Additional paid-in capital
Retained Earnings
Total Owners equity
Total liabilities and owners equity


  1. 👍
  2. 👎
  3. 👁

Respond to this Question

First Name

Your Response

Similar Questions

  1. radio message

    The nearest star beyond the sun is Alpha Centauri, 4.2 x 1016 meters away. If we received a radio message from the star today, how long ago would it have been sent? The distance that light travels in a vacuum in one year,

  2. Math

    A company predicts that this years sales will be equivalent to 144% of last years sales. Which value represents 144%? A. 14.4 B. 1 11/25 C. 1.56 D. 14 4/5

  3. HeLP MATH !!!!

    The annual sales S (in billion of dollars) of oracle corporation from 2004 through 2009 can approximated by linear equation S=2.903t-1.98, 4 < t < 9, where t represent the year,with t=4 corresponding to 2004.use the model estimate

  4. math

    The Survey of Earned Doctorates regularly assesses the numbers and types of doctorates awarded at U.S. universities.It also provides data on the length of time, in years, it takes to complete a doctorate. Below is a modified list

  1. Math Help

    A division of a corporation produces "Personal Income Tax" diaries. Each diary sells for $8. The monthly fixed costs incurred by the division are $20,000, and the variable cost of producing each diary is $3. What should be the

  2. Math

    Hi can someone please help me? A recent study gave the information shown in the table about ages of children receiving toys. The percentages represent all toys sold. Age (years) Percentage of Toys 2 and under 3-5 6-9 10-12 13 and

  3. pre calc

    population of city has varied considederably in recent years. the data it the relates the pollution P to time t, in years, where t=0 correponds to 1990. use a quadratic function fitted to the data to predict the population in 2000

  4. math

    the circle graph shows hamburger sales by various restaurants in a recent year. The total sales were $40 billion

  1. Math

    You own 5% of Corporation A. Corporation A owns 30% of Corporation B. What percentage of Corporation B do you own through your ownership in Corporation A?

  2. accounting

    Express the following comparative income statements in common- size percents and assess whether or not this company’s situation has improved in the most recent year. 5 points) MULAN CORPORATION Comparative Income Statements For

  3. FRL

    The Torrey Pine Corporation's purchases from suppliers in a quarter are equal to 75 percent of the next quarter's forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 18 percent of sales, and

  4. statistics

    A manager wishes to determine the relationship between the number of miles (in hundreds of miles) the manager's sales representatives travel per month and the amount of sales (in thousands of dollars) per month. Find the equation

You can view more similar questions or ask a new question.