Using the balance sheets and income statements, calculate the capitalization, return on assets, and current ratios for Year 2. Note that 75% of sales are credit sales, and $200,000 of common dividends and $34,265 of preferred dividends have been paid over the year. Show work.
Year 1
Year 2
Cash
$771,750
$900,375
Accounts Receivable
$1,221,938
$1,382,719
Inventory
$1,543,500
$1,672,125
Land
$1,218,281
$1,218,281
Building & Equipment
$1,768,594
$1,707,813
Total Assets
$6,524,063
$6,881,313
Year 1
Year 2
Accounts Payable
$2,572,500
$2,701,125
Notes Payable
$200,000
$300,000
Long-term Bond Payable
$1,286,250
$803,906
Common Stock
$192,938
$192,938
Additional Paid-in Capital
$1,125,469
$1,125,469
Retained Earnings
$1,146,906
$1,757,875
Total Liabilities + Stock Equity
$6,524,063
$6,881,313
Year 1
Year 2
Sales
$6,431,250
$8,000,000
Cost of Goods Sold
$3,858,750
$5,042,100
Gross Profit
$2,572,500
$2,957,900
Advertising Expense
$160,781
$418,031
Depreciation Expense
$257,250
$328,251
Office Supplies Expense
$128,625
$144,703
Interest Expense
$257,250
$192,938
Income Tax Provision
$1,215,506
$1,028,743
Net Income
$533,088
$845,234