109.
Anthony Inc. reported the following amounts on its 2016 and 2017 income statements:
2016
Net Sales
$20,367
Cost of sales
8,198
Requirements:
A. Compute the gross profit percentage for years 2016 and 2017.
B. Provide at least two potential causes for the change in Anthony’s gross profit percentage.
110.
Twin Lakes, Inc. reported the following December 31 amounts in its financial statements:
2017
2016
Sales revenue
$250.0
$210.0
Gross profit
75.0
68.0
Net income
28.0
21.0
Total assets
90.0
80.0
Total stockholders’ equity
40.0
36.0
Requirements:
Compute the following for the 2017 ratios:
A. Gross profit percentage
B. Net profit margin
C. Total asset turnover
D. Return on assets
111.
The following information was taken from the income statement and balance sheet of The
Mickey Company for the years 2016 and 2017:
2017
2016
Sales revenues
$30,752
$27,061
Net income
2,345
1,267
Total assets
53,902
49,988
Total stockholders’ equity
26,081
23,791
Requirements:
Compute the following ratios for 2017:
A. Net profit margin
B. Total asset turnover
C. Return on assets
112.
Determine the effect of the following transactions on the identified financial statement
components and ratios. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component or ratio.
B: If the transaction results in a decrease in the financial statement component or ratio.
C: If the transaction does not affect the financial statement component or ratio.
Transaction 1: A company issued common stock at a price in excess of par value.
Revenues _____
Assets _____
Stockholders’ equity _____
Return on assets ratio _____
Transaction 2: A company recorded depreciation expense at year–end.
Net income _____
Assets _____
Stockholders’ equity _____
Total asset turnover ratio _____
113.
Determine the effect of the following transactions on the identified financial statement
components and ratios. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component or ratio.
B: If the transaction results in a decrease in the financial statement component or ratio.
C: If the transaction does not affect the financial statement component or ratio.
Transaction 1: A company accrued interest expense at year-end.
Net income _____
Assets _____
Stockholders’ equity _____
Total asset turnover ratio _____
Transaction 2: A company declared and paid dividends to stockholders.
Net income _____
Assets _____
Stockholders’ equity _____
Return on assets ratio _____
114.
Determine the effect of the following transactions on the identified financial statement
components and ratios. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component or ratio.
B: If the transaction results in a decrease in the financial statement component or ratio.
C: If the transaction does not affect the financial statement component or ratio.
Transaction 1: A company paid for research and development costs incurred to develop a
patent.
Net income _____
Property, plant, and equipment _____
Stockholders’ equity _____
Net profit margin ratio _____
Transaction 2: Inventory was purchased on account.
Net income _____
Current assets _____
Current liabilities _____
Return on assets ratio _____
115.
Determine the effect of the following transactions on the identified financial statement
components and ratios. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component or ratio.
B: If the transaction results in a decrease in the financial statement component or ratio.
C: If the transaction does not affect the financial statement component or ratio.
Transaction 1: A company acquired land by signing a long-term note payable.
Property, plant, and equipment _____
Total asset turnover ratio _____
Net profit margin ratio _____
Return on assets ratio _____
Transaction 2: Cash was used to pay a current liability.
Net income _____
Total asset turnover ratio _____
Net profit margin ratio _____
Return on assets ratio _____
116.
Determine the effect of the following transactions on the financial statements components
identified. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component or ratio.
B: If the transaction results in a decrease in the financial statement component or ratio.
C: If the transaction does not affect the financial statement component or ratio.
Transaction 1: A company sold inventory for an amount greater than its cost.
Gross profit _____
Current assets _____
Stockholders’ equity _____
Transaction 2: Advertising expense was recorded but has yet to be paid for.
Net income _____
Gross Profit _____
Stockholders’ equity _____
117.
For the year ending December 31, 2016, the accounts of Jackson Corporation showed the
following balances:
Common stock, January 1, 2016
$500,000
Retained earnings, beginning balance,
January 1, 2016
$100,000
Total revenues earned during 2016
$150,000
Total expenses incurred during 2016
$90,000
Total dividends declared during 2016
$10,000
Issuance of stock during 2016
$50,000
Requirement:
Determine the components of stockholders’ equity as of December 31, 2016.
118.
The following income statement was reported for Bauer Inc. for the first year of operations
ending December 31, 2016 reported (in thousands of dollars):
Sales revenue
$24,500
Expenses:
Cost of Sales
$14,700
Wages
3,300
Rent
700
Utilities
500
Miscellaneous
200
Total Expenses
19,400
Income before taxes
5,100
Income tax expense
1,785
Net income
$3,315
Requirement:
A. Calculate gross profit percentage.
B. Calculate net profit margin.
C. Calculate earnings per share if there are 200,000 shares of common stock outstanding.
119.
Describe the return on assets ratio and the DuPont approach for calculating return on assets.