Financial Accounting Review
Sam’s Pizza - Balance Sheet
Assets
cash 8200
Accts
Receivable 490
inventory 1230
Equipment 9750
les deprec. - 2800
Total 16870
Liabilities
wages due
890
accounts payable 6980
Owner’s Equity
Paid
in capital 8000
Retained
earnings X
Computations:
Sam’s Pizza – Income
Statement
Revenues 9460
Cost of Goods sold
Start
inventory 1240
Purchases 3200
Remaining
inventory -1380
Total X
Operating expenses
Rent 800
Advertising
450
Wages 3800
Utilities 480
Total X
Operating Profit X
Adjust the income statement in these ways:
Go back to the original balance sheet for Sam’s Pizza.
6. What is his
current liquidity ratio?
7. What is his debt
to equity ratio?
How profitable is this business?