Reference no: EM131765546
Question: Presented here are the comparative balance sheets of Hames, Inc., at December 31, 2017 and 2016. Sales for the year ended December 31, 2017, totaled $650,000.
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HAMES, INC.,
Balance Sheets
December 31, 2017 and 2016
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2017
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2016
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Assets
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Cash
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$
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21,000
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$
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20,000
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Accounts receivable
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78,000
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72,000
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Merchandise inventory
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103,000
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99,000
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Total current assets
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$
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202,000
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$
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191,000
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Land
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50,000
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40,000
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Plant and equipment
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125,000
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110,000
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Less: Accumulated depreciation
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(65,000
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)
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(60,000
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)
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Total assets
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$
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312,000
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$
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281,000
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Liabilities
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Short-term debt
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$
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18,000
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$
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17,000
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Accounts payable
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64,800
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75,500
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Other accrued liabilities
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20,000
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18,000
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Total current liabilities
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$
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102,800
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$
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110,500
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Long-term debt
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22,000
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30,000
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Total liabilities
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$
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124,800
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$
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140,500
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Stockholdersâ€TM Equity
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Common stock, no par, 100,000 shares authorized
40,000 and 25,000 shares issued, respectively
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$
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74,000
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$
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59,000
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Retained earnings:
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Beginning balance
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$
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81,500
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$
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85,000
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Net income for the year
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51,700
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1,500
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Dividends for the year
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(20,000
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)
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(5,000
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)
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Ending balance
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$
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113,200
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$
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81,500
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Total stockholdersâ€TM equity
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$
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187,200
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$
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140,500
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Total liabilities and stockholdersâ€TM equity
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$
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312,000
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$
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281,000
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Assume that instead of paying $15,000 of accounts payable on December 31, 2017. Hames, Inc., collected $15,000 of accounts receivable. What impact, if any, this receipt will have on the answers you calculated for requirements a-d (increase, decrease, or no effect)
a. ROI for the year ended December 31, 2017:
No effect
Increase
Decrease
b. ROE for the year ended December 31, 2017:
Decrease
Increase
No effect
c. Working capital as at December 31, 2017:
Decrease
Increase
No effect
d. Current ratio as at December 31, 2017:
No effect
Decrease
Increase
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