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Question - Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December
31 appear on the following page. The company did not issue any new common or preferred stock
during the year. A total of 700 thousand shares of common stock were outstanding. The interest rate
on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common
stock was $1.00. The market value of the company's common stock at the end of the year was $24.
All of the company's sales are on account.

Heritage Antiquing Services
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current
assets:
Cash $ 1,120 $ 1,270
Accounts
receivable,
net 9,600 6,800
Invent ...Read More ory 13,900 12,400
Prepaid
expenses 740 620

Total
current
assets 25,360 21,090

Property
and
equipment:
Land 10,800 10,800
Buildings
and
equipment,
net
39,910 40,520

Total
property 50,710 51,320

and
equipment

Total
assets $ 76,070 $ 72,410













Liabilities
and
Stockhold
ers' Equity

Current
liabilities:
Accounts
payable $ 20,500 $ 19,300
Accrued
payables 980 860
Notes
payable,
short term 130 130

Total
current
liabilities 21,610 20,290
Long-term
liabilities:
Bonds
payable 9,500 9,500

Total
liabilities 31,110 29,790

Stockholder
s' equity:
Preferred
stock 1,000 1,000

Common
stock 700 700
Additional
paid-in
capital 4,000 4,000

Total paid-
in capital 5,700 5,700
Retained
earnings 39,260 36,920

Total
stockholder
s' equity 44,960 42,620

Total
liabilities
and
stockholder
s' equity
$ 76,070 $ 72,410















Heritage Antiquing Services
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales $ 71,340 $ 65,000
Cost of
goods sold 47,340 35,000

Gross
margin 24,000 30,000

Selling and
administrati
ve
expenses:

Selling
expenses 11,100 11,000
Administrat
ive
expenses 6,800 6,400

Total
selling and
administrati
ve
expenses
17,900 17,400

Net
operating
income 6,100 12,600
Interest
expense 950 950

Net income
before
taxes 5,150 11,650
Income
taxes 2,060 4,660

Net income 3,090 6,990
Dividends
to
preferred
stockholder
s
50 310

Net income
remaining 3,040 6,680

for
common
stockholder
s
Dividends
to common
stockholder
s
700 700

Net income
added to
retained
earnings
2,340 5,980
Retained
earnings,
beginning
of year
36,920 30,940

Retained
earnings,
end of year
$ 39,260 $ 36,920















Required:
Compute the following financial data for short-term creditors for this year:

1. Working capital. (Enter your answer in thousands of dollars. Omit the "$" sign in your
response.)

Working capital $

2. Current ratio. (Round your answer to 2 decimal places.)

Current ratio

3. Acid-test ratio. (Round your answer to 2 decimal places.)

Acid-test ratio

4. Accounts receivable turnover. (Round your answer to 1 decimal place.)

Accounts receivable turnover

5. Average collection period. (Use 365 days in a year. Round your intermediate calculations and
final answer to 1 decimal place.)

Average collection period days

6. Inventory turnover. (Round your answer to 1 decimal place.)

Inventory turnover

7. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final
answer to 1 decimal place.)

Average sale period days
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