Question

Willingham Ltd. Statements of Financial Position December 31 2020 2019 Plant assets (net) £205,000 £190,000 Inventory £60,000 £50,000 Accounts receivable (net) £70,000 £50,000 Cash £10,000 £30,000 £345,000 £320,000 Share capital—ordinary, £10 par £140,000 £120,000 Retained earnings £55,000 £40,000 Mortgage payable (6%) £100,000 £100,000 Accounts payable £50,000 £60,000 £345,000 £320,000 Additional information for 2020: 1. Net income was £28,000. 2. Sales on account were £418,000. Sales returns and allowances were £22,000. 3. Cost of goods sold was £190,000. Instructions Compute the following ratios at December 31, 2020. a. Current ratio. b. Acid-test ratio. c. Accounts receivable turnover. d. Inventory turnover.

          Willingham Ltd.
Statements of Financial Position
December 31
2020	2019
Plant assets (net)	£205,000	£190,000
Inventory	£60,000	£50,000
Accounts receivable (net)	£70,000	£50,000
Cash	£10,000	£30,000
	£345,000	£320,000
Share capital—ordinary, £10 par	£140,000	£120,000
Retained earnings	£55,000	£40,000
Mortgage payable (6%)	£100,000	£100,000
Accounts payable	£50,000	£60,000
	£345,000	£320,000

Additional information for 2020:
1. Net income was £28,000.
2. Sales on account were £418,000. Sales returns and allowances were £22,000.
3. Cost of goods sold was £190,000.

Instructions
Compute the following ratios at December 31, 2020.
a. Current ratio.
b. Acid-test ratio.
c. Accounts receivable turnover.
d. Inventory turnover.

Willingham Ltd.
Statements of Financial Position
December 31
2020 2019
Plant assets (net) £205,000 £190,000
Inventory £60,000 £50,000
Accounts receivable (net) £70,000 £50,000
Cash £10,000 £30,000
£345,000 £320,000
Share capital—ordinary, £10 par £140,000 £120,000
Retained earnings £55,000 £40,000
Mortgage payable (6%) £100,000 £100,000
Accounts payable £50,000 £60,000
£345,000 £320,000

Additional information for 2020:
1. Net income was £28,000.
2. Sales on account were £418,000. Sales returns and allowances were £22,000.
3. Cost of goods sold was £190,000.

Instructions
Compute the following ratios at December 31, 2020.
a. Current ratio.
b. Acid-test ratio.
c. Accounts receivable turnover.
d. Inventory turnover.

Added by Jay M.

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