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Inferring Year-End Adjustments, Computing Earnings per Share and Total Asset Turnover, and Recording Closing Entries LO4-1, 4-3, 4-4 [The following information applies to the questions displayed below
Inferring Year-End Adjustments, Computing Earnings per Share and Total Asset Turnover, and Recording Closing Entries LO4-1, 4-3, 4-4 [The following information applies to the questions displayed below.) Ramirez Company is completing the information processing cycle at its fiscal year-end on December 31. Following are the correct balances at December 31 for the accounts both before and after the adjusting entries. Trial Balance, December 31 of the Current Year Before After Adjusting Entries Adjustments Adjusting Entries Items Debit Credit Debit Credit Debit Credit a. Cash $ 14,400 $ 14,400 b. Accounts receivable 360 c. Prepaid insurance 840 560 d. Equipment 169,380 169,380 e. Accumulated depreciation, equipment $ 41,700 $ 47,000 1. Income taxes payable 1,930 g. Common stock and additional paid-in capital 108,000 108,000 h. Retained earnings, January 1 15,100 15, 100 1. Service revenue 74,300 74,660 1. Salary expense 54,480 54,480 k. Depreciation expense 5,300 1. Insurance expense 280 m. Income tax expense 1,930 $ 239,100 $ 239, 100 $ 246,690 $ 246,690 P4-6 Part 4 4. Compute the total asset turnover ratio, assuming total assets at the beginning of the year were $113,200. (Round your answer to 2 decimal places.) Total asset turnover ratio
Expert Solution
| Ramirez Company | ||||||
| Befor | Adjustment | After | ||||
| Adjusting Entries | Adjusting Entries | |||||
| Debit | Credit | Debit | Credit | Debit | Credit | |
| Cash | $ 14,400.00 | $ 14,400.00 | ||||
| Accounts Receivable | $ 360.00 | $ 360.00 | ||||
| Prepaid Insurance | $ 840.00 | $ 280.00 | $ 560.00 | |||
| Equipment | $ 1,69,380.00 | $ 1,69,380.00 | ||||
| Accumulated Depreciation-Equipment | $ 41,700.00 | $ 5,300.00 | $ 47,000.00 | |||
| Income tax Payable | $ 1,930.00 | $ 1,930.00 | ||||
| Common Stock and additional paid in capital | $ 1,08,000.00 | $ 1,08,000.00 | ||||
| Retained Earnings 1 jan | $ 15,100.00 | $ 15,100.00 | ||||
| Service Revenue | $ 74,300.00 | $ 360.00 | $ 74,660.00 | |||
| Salaries Expense | $ 54,480.00 | $ 54,480.00 | ||||
| Depreciation Expense | $ 5,300.00 | $ 5,300.00 | ||||
| Insurance Expense | $ 280.00 | $ 280.00 | ||||
| Income Tax Expense | $ 1,930.00 | $ 1,930.00 | ||||
| Total | $ 2,39,100.00 | $ 2,39,100.00 | $ 7,870.00 | $ 7,870.00 | $ 2,46,690.00 | $ 2,46,690.00 |
| Revenue or Turnover=(A) | $ 74,660.00 | |||||
| Beginning Assets=(i) | 113200 | |||||
| Assets at year end=(II) | $ 1,37,700.00 | (*) | ||||
| Average Assets=((I)+(II))/2=(B) | 125450 | |||||
| Total Assets Turnover ratio=Turnover/Average Assets=(A)/(B) | $ 0.595 | times | ||||
| Total Assets Turnover Ratio | $ 0.60 | times | ||||
| Assets at year End | (*) | |||||
| Cash | $ 14,400.00 | |||||
| Accounts Receivable | $ 360.00 | |||||
| Prepaid Insurance | $ 560.00 | |||||
| Equipment | $ 1,69,380.00 | |||||
| Less: Accumulated Depreciation | $ -47,000.00 | |||||
| Assets at year End | $ 1,37,700.00 |
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