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Comprehensive problem 1-6 Course Project FINANCIAL ACCOUNTING As a recently hired accountant for a small business, SMC, Inc., you are provided with last year’s balance sheet, income statement, and...

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Comprehensive problem 1-6
Course Project FINANCIAL ACCOUNTING
As a recently hired accountant for a small business, SMC, Inc., you are provided with last year’s balance sheet,
income statement, and post-closing trial balance to familiarize yourself with the business.
SMC, Inc.
Balance Sheet
December 31, 2021
Assets
Cash ......................................................................................................... $34,500
Accounts receivable ............................................................. XXXXXXXXXX25,000
Inventory ............................................................................... XXXXXXXXXX10,000
Supplies ................................................................................ XXXXXXXXXX200
Total assets.............................................................................................. $69,700
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable ............................................................................. $12,000
Salaries payable ............................................................ XXXXXXXXXX1,000
Income taxes payable ..................................................... XXXXXXXXXX3,675
Total liabilities.......................................................................................... $16,675
Stockholders’ equity:
Capital stock (10,000 shares outstanding).................................... $25,000
Retained earnings .......................................................... XXXXXXXXXX28,025
Total stockholders’ equity ..................................................... XXXXXXXXXX53,025
Total liabilities and stockholders’ equity................................................ $69,700
SMC, Inc.
Income Statement
For the Year Ended December31,2021
Sales revenue .......................................................................................... $110,000
Rent revenue ........................................................................ XXXXXXXXXX1,000
Total revenues......................................................................................... $111,000
Less cost of goods sold........................................................... XXXXXXXXXX60,000
Gross profit ........................................................................................... $ 51,000
Less operating expenses:
Supplies expense ............................................................................. $ 400
Salaries expense ........................................................... XXXXXXXXXX22,000
Miscellaneous expense................................................ XXXXXXXXXX4, XXXXXXXXXX,500
Income beforetaxes.............................................................................
Answered Same Day Jul 23, 2022

Solution

Khushboo answered on Jul 24 2022
65 Votes
The overall financial health of the entity is good and the entity has performed well in cu
ent year. However, the entity liquidity position has been declined to some extent i.e. cu
ent ratio from 4.18 times to 3.82 times but still the entity is have strong liquidity position. Further, the debt has...
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