Salvador Industries bought land and built its plant 20 years ago. The depreciation on the building is calculated using the straight-line method, with a life of 30 years and a salvage value of 551,000. Land is not depreciated. The depreciation for the equipment , all of which was purchased at the same time the plant was constructed, is calculated using declining balance at 20 percent. Salvador currently has two outstanding loans: one for $52.000 due December 31, 2020, and another one for which the next payment is duo in four years. During April 2020, there was a flood in the building because a nearby river overflowed its banks after unusually heavy rains. Purping out the water and clearing up the basement and the first floor of the building took a week. Manufacturing was suspended during this period and some inventory was damaged. Due to inadequate insurance, this unusual and unexpected event cost the company $102,000, net. a. Complete the balance sheet and income statement, using any of the above information that is necessary b. Shon how information from financial ratics can indicate wnether Salvador Industries can manage an unusual and unexpected event, such as the food without threatening its existence as a viable business First, complete the balance sheet. Start by completing the assets portion and then the liabilities and owners' equily portions. (Round arounts to the rearest whole dollar.) Salvador Industries Balance Sheet as of June 30, 2020 Assets Current assets Cash Accounts receivable Inventories $ 354,daa 2 790 000 2.010,000 168.00 204 XX Prepaid services Total Current Assels Long-term assets Building Less acoumulated depreciation Equipment Loss accumulated depreciation Land 460.000 520,000 Tolal Long-Term Assets Total assets Liabilities and Owners' Equity Current Liabides Liabilities and Owners' Equity Current Liabilities Accounts payable $ 915,803 Accrued taxes 29,500 Total Current Liabilities Long-term Liabilities Mortgage 1,185,000 322,000 Total Long-Term Liabilities Total Liabilities Owners' Equity Common shares 1,910,000 Total Owners' Equity Total Liabilities and Owners' Equity Now complete the income statement. (Round amounts to the nearest whole dollar. Use parentheses or a minus sign for a net loss.) Salvador Industries Income Statement for the Year Ended June 30, 2020 Revenues Gross income from sales $ 8,665,000 7,495,000 Less Net revenue from sales Expenses Depreciation 71,000 Salvador Industries Income Statement for the Year Ended June 30, 2020 Revenues Gross income from sales $ 8,665,000 Less 7,495,000 Nel revenue from sales Expenses Depreciation Interest paid Other expenses Total expenses 71,000 234,000 96,000 Income before taxes Taxes at 40% Net Income (loss) b. Show how information from financial ratios can indicate whether Salvador Industries can manage an unusual and unexpected event, such as the flood, without threatening its existence as a viable business. Calculate the current ratio, The current ratio is (Round to two decimal places as needed.) Now calculate the acid-test ratio The acid-test ratio is 17 (Round to two decimal places as needed.) Now calculate the equity ratio. The equity ratio is Taxes al 40% Net Income (loss) b. Show how information from financial ratios can indicate whether Salvador Industries can manage an unusual and unexpected event, such as the flood, without threatening its existence as a viable business. Calculate the current ratio. The current ratio is a (Round to two decimal places as needed.) Now calculate the acid-test ratio. The acid-test ratio is. (Round to two decimal places as needed.) Now calculate the equity ratio, The equity ratio is (Round to two decimal places as needed.) Now find the return-on-assets ratio The return-cn-assets ratio is %. (Round to two decimal places as needed.) Use the financial ratios to indicate whether Salvador Industries can manage an unusual and unexpected event, such as the flood, without threatening its existence as a viable business. Select all that apply. A. The retum-on-assets ratio is low, which means a loss from an extraordinary event would take a large portion of its after-tax income. B. The return-on-assots ratio is high, wnich means a loss from an extraordinary event would take only a small portion of its pro-tax income. c. The current and acid test ratios are both low, which means the company may not have the assets to cover obligations or losses from extraordinary events. D. The equity ratio is very high, indicating the company does not rely on debt financing, which makes it easy to cover a loss from an extraordinary event. IE. The current and acid test ratios are high, which mean the company has considerable security in meeting obligations and losses from extraordinary events OF. The equity ratio is slightly low indicating reliance on debt financing, which makes it harder to cover a loss from an extraordinary event. Salvador Industries bought land and built its plant 20 years ago. The depreciation on the building is calculated using the straight-line method, with a life of 30 years and a salvage value of 551,000. Land is not depreciated. The depreciation for the equipment , all of which was purchased at the same time the plant was constructed, is calculated using declining balance at 20 percent. Salvador currently has two outstanding loans: one for $52.000 due December 31, 2020, and another one for which the next payment is duo in four years. During April 2020, there was a flood in the building because a nearby river overflowed its banks after unusually heavy rains. Purping out the water and clearing up the basement and the first floor of the building took a week. Manufacturing was suspended during this period and some inventory was damaged. Due to inadequate insurance, this unusual and unexpected event cost the company $102,000, net. a. Complete the balance sheet and income statement, using any of the above information that is necessary b. Shon how information from financial ratics can indicate wnether Salvador Industries can manage an unusual and unexpected event, such as the food without threatening its existence as a viable business First, complete the balance sheet. Start by completing the assets portion and then the liabilities and owners' equily portions. (Round arounts to the rearest whole dollar.) Salvador Industries Balance Sheet as of June 30, 2020 Assets Current assets Cash Accounts receivable Inventories $ 354,daa 2 790 000 2.010,000 168.00 204 XX Prepaid services Total Current Assels Long-term assets Building Less acoumulated depreciation Equipment Loss accumulated depreciation Land 460.000 520,000 Tolal Long-Term Assets Total assets Liabilities and Owners' Equity Current Liabides Liabilities and Owners' Equity Current Liabilities Accounts payable $ 915,803 Accrued taxes 29,500 Total Current Liabilities Long-term Liabilities Mortgage 1,185,000 322,000 Total Long-Term Liabilities Total Liabilities Owners' Equity Common shares 1,910,000 Total Owners' Equity Total Liabilities and Owners' Equity Now complete the income statement. (Round amounts to the nearest whole dollar. Use parentheses or a minus sign for a net loss.) Salvador Industries Income Statement for the Year Ended June 30, 2020 Revenues Gross income from sales $ 8,665,000 7,495,000 Less Net revenue from sales Expenses Depreciation 71,000 Salvador Industries Income Statement for the Year Ended June 30, 2020 Revenues Gross income from sales $ 8,665,000 Less 7,495,000 Nel revenue from sales Expenses Depreciation Interest paid Other expenses Total expenses 71,000 234,000 96,000 Income before taxes Taxes at 40% Net Income (loss) b. Show how information from financial ratios can indicate whether Salvador Industries can manage an unusual and unexpected event, such as the flood, without threatening its existence as a viable business. Calculate the current ratio, The current ratio is (Round to two decimal places as needed.) Now calculate the acid-test ratio The acid-test ratio is 17 (Round to two decimal places as needed.) Now calculate the equity ratio. The equity ratio is Taxes al 40% Net Income (loss) b. Show how information from financial ratios can indicate whether Salvador Industries can manage an unusual and unexpected event, such as the flood, without threatening its existence as a viable business. Calculate the current ratio. The current ratio is a (Round to two decimal places as needed.) Now calculate the acid-test ratio. The acid-test ratio is. (Round to two decimal places as needed.) Now calculate the equity ratio, The equity ratio is (Round to two decimal places as needed.) Now find the return-on-assets ratio The return-cn-assets ratio is %. (Round to two decimal places as needed.) Use the financial ratios to indicate whether Salvador Industries can manage an unusual and unexpected event, such as the flood, without threatening its existence as a viable business. Select all that apply. A. The retum-on-assets ratio is low, which means a loss from an extraordinary event would take a large portion of its after-tax income. B. The return-on-assots ratio is high, wnich means a loss from an extraordinary event would take only a small portion of its pro-tax income. c. The current and acid test ratios are both low, which means the company may not have the assets to cover obligations or losses from extraordinary events. D. The equity ratio is very high, indicating the company does not rely on debt financing, which makes it easy to cover a loss from an extraordinary event. IE. The current and acid test ratios are high, which mean the company has considerable security in meeting obligations and losses from extraordinary events OF. The equity ratio is slightly low indicating reliance on debt financing, which makes it harder to cover a loss from an extraordinary event