The Following 3 Ratios Have Been Computed Using the Financial

Question

Examlex · Accepted Answer

The Answer is Adjustments:
(a)Using LIFO:
Ending inventory decreases by $15,500 ($43,000 - $58,500).
Net income for 2011 decreases by $3,500 [($43,000 - $58,500) - ($36,000 - $48,000)].
Beginning retained earnings decreases by $12,000 ($36,000 - $48,000).
(b)12-year useful life:
Book value at December 31, 2008:
7-year life: $120,000 - [($120,000 ¸ 7) ´ 4 years] = $51,429
12-year life: $120,000 - [($120,000 ¸ 12) ´ 4 years] = $80,000
Book value increases by $28,571 ($51,429 - $80,000).
Net income for 2011 increases by $7,143 [($120,000 ¸ 7) - ($120,000 ¸ 12)]
Beginning retained earnings increases by $21,428 [($120,000 ¸ 7) ´ 3 years] - [($120,000 ¸ 12) ´ 3 years].
(c)Environmental cleanup obligation:
Net income for 2011 decreases by $17,100 [($18,000 ´ .05) - $18,000].
Environmental cleanup obligation increases by $17,100.
Adjusted current ratio: ($80,000 - $15,500) ¸ $43,000 = 1.5
Adjusted debt-to-equity ratio: ($110,000 + $17,100) ¸ ($125,000 - $3,500 - $12,000 + $7,143 + $21,428 - $17,100) = 1.05
Adjusted return on sales ratio: ($45,000 - $3,500 + $7,143 - $17,100) ¸ $400,000 = 0.079

The Following 3 Ratios Have Been Computed Using the Financial

Essay

Correct Answer:
Verified

The Following 3 Ratios Have Been Computed Using the Financial

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified