13-221
217. Kearin Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $33,000 $100,000
Accounts receivable 281,000 250,000
Inventory 122,000 130,000
Prepaid expenses 68,000 80,000
Total current assets 504,000 560,000
Plant and equipment, net 1,016,000 980,000
Total assets $1,520,000 $1,540,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $80,000 $100,000
Accrued liabilities 31,000 30,000
Notes payable, short term 56,000 70,000
Total current liabilities 167,000 200,000
Bonds payable 260,000 260,000
Total liabilities 427,000 460,000
Stockholders’ equity:
Common stock, $5 par value 500,000 500,000
Additional paid-in capital-common stock 70,000 70,000
Retained earnings 523,000 510,000
Total stockholders’ equity 1,093,000 1,080,000
Total liabilities & stockholders’ equity $1,520,000 $1,540,000
Income Statement—Year 2
For the Year Ended December 31, Year 2
Sales (all on account) $1,300,000
Cost of goods sold 800,000
Gross margin 500,000
Operating expenses 448,692
Net operating income 51,308
Interest expense 19,000
Net income before taxes 32,308
Income taxes (35%) 11,308
Net income $21,000
Dividends on common stock during Year 2 totaled $8,000. The market price of common stock at
the end of Year 2 was $2.02 per share.
The company’s gross margin percentage for Year 2 is closest to:
13-223
218. Kearin Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $33,000 $100,000
Accounts receivable 281,000 250,000
Inventory 122,000 130,000
Prepaid expenses 68,000 80,000
Total current assets 504,000 560,000
Plant and equipment, net 1,016,000 980,000
Total assets $1,520,000 $1,540,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $80,000 $100,000
Accrued liabilities 31,000 30,000
Notes payable, short term 56,000 70,000
Total current liabilities 167,000 200,000
Bonds payable 260,000 260,000
Total liabilities 427,000 460,000
Stockholders’ equity:
Common stock, $5 par value 500,000 500,000
Additional paid-in capital-common stock 70,000 70,000
Retained earnings 523,000 510,000
Total stockholders’ equity 1,093,000 1,080,000
Total liabilities & stockholders’ equity $1,520,000 $1,540,000
Income Statement—Year 2
For the Year Ended December 31, Year 2
Sales (all on account) $1,300,000
Cost of goods sold 800,000
Gross margin 500,000
Operating expenses 448,692
Net operating income 51,308
Interest expense 19,000
Net income before taxes 32,308
Income taxes (35%) 11,308
Net income $21,000
Dividends on common stock during Year 2 totaled $8,000. The market price of common stock at
the end of Year 2 was $2.02 per share.
The company’s return on total assets for Year 2 is closest to:
13-225
219. Kearin Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $33,000 $100,000
Accounts receivable 281,000 250,000
Inventory 122,000 130,000
Prepaid expenses 68,000 80,000
Total current assets 504,000 560,000
Plant and equipment, net 1,016,000 980,000
Total assets $1,520,000 $1,540,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $80,000 $100,000
Accrued liabilities 31,000 30,000
Notes payable, short term 56,000 70,000
Total current liabilities 167,000 200,000
Bonds payable 260,000 260,000
Total liabilities 427,000 460,000
Stockholders’ equity:
Common stock, $5 par value 500,000 500,000
Additional paid-in capital-common stock 70,000 70,000
Retained earnings 523,000 510,000
Total stockholders’ equity 1,093,000 1,080,000
Total liabilities & stockholders’ equity $1,520,000 $1,540,000
Income Statement—Year 2
For the Year Ended December 31, Year 2
Sales (all on account) $1,300,000
Cost of goods sold 800,000
Gross margin 500,000
Operating expenses 448,692
Net operating income 51,308
Interest expense 19,000
Net income before taxes 32,308
Income taxes (35%) 11,308
Net income $21,000
Dividends on common stock during Year 2 totaled $8,000. The market price of common stock at
the end of Year 2 was $2.02 per share.
The company’s return on equity for Year 2 is closest to:
220. Doonan Corporation has provided the following financial data from its balance sheet and
income statement:
Year 2 Year 1
Total assets $1,489,000 $1,440,000
Stockholders’ equity:
Common stock, $4 par value $360,000 $360,000
Additional paid-in capital-common stock $70,000 $70,000
Retained earnings $570,000 $550,000
Total stockholders’ equity $1,000,000 $980,000
Interest expense $15,000
Income taxes (35%) $14,162
Net income $26,300
The market price of common stock at the end of Year 2 was $4.79 per share.
The company’s return on total assets for Year 2 is closest to:
221. Doonan Corporation has provided the following financial data from its balance sheet and
income statement:
Year 2 Year 1
Total assets $1,489,000 $1,440,000
Stockholders’ equity:
Common stock, $4 par value $360,000 $360,000
Additional paid-in capital-common stock $70,000 $70,000
Retained earnings $570,000 $550,000
Total stockholders’ equity $1,000,000 $980,000
Interest expense $15,000
Income taxes (35%) $14,162
Net income $26,300
The market price of common stock at the end of Year 2 was $4.79 per share.
The company’s return on equity for Year 2 is closest to:
222. Doonan Corporation has provided the following financial data from its balance sheet and
income statement:
Year 2 Year 1
Total assets $1,489,000 $1,440,000
Stockholders’ equity:
Common stock, $4 par value $360,000 $360,000
Additional paid-in capital-common stock $70,000 $70,000
Retained earnings $570,000 $550,000
Total stockholders’ equity $1,000,000 $980,000
Interest expense $15,000
Income taxes (35%) $14,162
Net income $26,300
The market price of common stock at the end of Year 2 was $4.79 per share.
The company’s earnings per share for Year 2 is closest to:
223. Doonan Corporation has provided the following financial data from its balance sheet and
income statement:
Year 2 Year 1
Total assets $1,489,000 $1,440,000
Stockholders’ equity:
Common stock, $4 par value $360,000 $360,000
Additional paid-in capital-common stock $70,000 $70,000
Retained earnings $570,000 $550,000
Total stockholders’ equity $1,000,000 $980,000
Interest expense $15,000
Income taxes (35%) $14,162
Net income $26,300
The market price of common stock at the end of Year 2 was $4.79 per share.
The company’s price-earnings ratio for Year 2 is closest to:
13-231
224. Settles Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $142,000 $110,000
Accounts receivable 104,000 120,000
Inventory 119,000 120,000
Prepaid expenses 37,000 40,000
Total current assets 402,000 390,000
Plant and equipment, net 717,000 720,000
Total assets $1,119,000 $1,110,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $156,000 $180,000
Accrued liabilities 84,000 70,000
Notes payable, short term 66,000 60,000
Total current liabilities 306,000 310,000
Bonds payable 250,000 250,000
Total liabilities 556,000 560,000
Stockholders’ equity:
Common stock, $4 par value 240,000 240,000
Additional paid-in capital-common stock 90,000 90,000
Retained earnings 233,000 220,000
Total stockholders’ equity 563,000 550,000
Total liabilities & stockholders’ equity $1,119,000 $1,110,000
Income Statement—Year 2
For the Year Ended December 31, Year 2
Sales (all on account) $1,360,000
Cost of goods sold 850,000
Gross margin 510,000
Operating expenses 462,692
Net operating income 47,308
Interest expense 19,000
Net income before taxes 28,308
Income taxes (35%) 9,908
Net income $18,400
Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at
the end of Year 2 was $5.89 per share.
The company’s return on total assets for Year 2 is closest to:
13-233
225. Settles Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $142,000 $110,000
Accounts receivable 104,000 120,000
Inventory 119,000 120,000
Prepaid expenses 37,000 40,000
Total current assets 402,000 390,000
Plant and equipment, net 717,000 720,000
Total assets $1,119,000 $1,110,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $156,000 $180,000
Accrued liabilities 84,000 70,000
Notes payable, short term 66,000 60,000
Total current liabilities 306,000 310,000
Bonds payable 250,000 250,000
Total liabilities 556,000 560,000
Stockholders’ equity:
Common stock, $4 par value 240,000 240,000
Additional paid-in capital-common stock 90,000 90,000
Retained earnings 233,000 220,000
Total stockholders’ equity 563,000 550,000
Total liabilities & stockholders’ equity $1,119,000 $1,110,000
Income Statement—Year 2
For the Year Ended December 31, Year 2
Sales (all on account) $1,360,000
Cost of goods sold 850,000
Gross margin 510,000
Operating expenses 462,692
Net operating income 47,308
Interest expense 19,000
Net income before taxes 28,308
Income taxes (35%) 9,908
Net income $18,400
Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at
the end of Year 2 was $5.89 per share.
The company’s return on equity for Year 2 is closest to:
13-235
226. Settles Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $142,000 $110,000
Accounts receivable 104,000 120,000
Inventory 119,000 120,000
Prepaid expenses 37,000 40,000
Total current assets 402,000 390,000
Plant and equipment, net 717,000 720,000
Total assets $1,119,000 $1,110,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $156,000 $180,000
Accrued liabilities 84,000 70,000
Notes payable, short term 66,000 60,000
Total current liabilities 306,000 310,000
Bonds payable 250,000 250,000
Total liabilities 556,000 560,000
Stockholders’ equity:
Common stock, $4 par value 240,000 240,000
Additional paid-in capital-common stock 90,000 90,000
Retained earnings 233,000 220,000
Total stockholders’ equity 563,000 550,000
Total liabilities & stockholders’ equity $1,119,000 $1,110,000
Income Statement—Year 2
For the Year Ended December 31, Year 2
Sales (all on account) $1,360,000
Cost of goods sold 850,000
Gross margin 510,000
Operating expenses 462,692
Net operating income 47,308
Interest expense 19,000
Net income before taxes 28,308
Income taxes (35%) 9,908
Net income $18,400
Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at
the end of Year 2 was $5.89 per share.
The company’s earnings per share for Year 2 is closest to:
13-237
227. Settles Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets Year 2 Year 1
Current assets:
Cash $142,000 $110,000
Accounts receivable 104,000 120,000
Inventory 119,000 120,000
Prepaid expenses 37,000 40,000
Total current assets 402,000 390,000
Plant and equipment, net 717,000 720,000
Total assets $1,119,000 $1,110,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $156,000 $180,000
Accrued liabilities 84,000 70,000
Notes payable, short term 66,000 60,000
Total current liabilities 306,000 310,000
Bonds payable 250,000 250,000
Total liabilities 556,000 560,000
Stockholders’ equity:
Common stock, $4 par value 240,000 240,000
Additional paid-in capital-common stock 90,000 90,000
Retained earnings 233,000 220,000
Total stockholders’ equity 563,000 550,000
Total liabilities & stockholders’ equity $1,119,000 $1,110,000
Income Statement—Year 2
For the Year Ended December 31, Year 2
Sales (all on account) $1,360,000
Cost of goods sold 850,000
Gross margin 510,000
Operating expenses 462,692
Net operating income 47,308
Interest expense 19,000
Net income before taxes 28,308
Income taxes (35%) 9,908
Net income $18,400
Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at
the end of Year 2 was $5.89 per share.
The company’s price-earnings ratio for Year 2 is closest to:
228. Recher Corporation’s common stock has a par value of $3 per share and has been stable
at a total value of $270,000 on the company’s balance sheet for several years. The total
stockholders’ equity at the end of this year was $1,023,000 and at the beginning of the year was
$1,010,000. Net income for the year was $17,500. Dividends on common stock during the year
totaled $4,500. The market price of common stock at the end of the year was $3.76 per share.
The company’s earnings per share is closest to:
229. Recher Corporation’s common stock has a par value of $3 per share and has been stable
at a total value of $270,000 on the company’s balance sheet for several years. The total
stockholders’ equity at the end of this year was $1,023,000 and at the beginning of the year was
$1,010,000. Net income for the year was $17,500. Dividends on common stock during the year
totaled $4,500. The market price of common stock at the end of the year was $3.76 per share.
The company’s price-earnings ratio is closest to: