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28 Sep 2019
In its first year of operations, your company's income taxexpense was $40,000, and your year-end income taxes payable came to$40,000. Explain what happened here.
In its first year of operations, your company's income taxexpense was $40,000, and your year-end income taxes payable came to$40,000. Explain what happened here.
27 Feb 2023
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Keith LeannonLv2
28 Sep 2019
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MugsCompany | ||
| ComparativeBalance Sheet | ||
| December 31,2007 | 2007 | 2006 |
| Assets | ||
| Cash | $ 25,000 | $40,000 |
| Marketablesecurities | 20,000 | 60,000 |
| AccountsReceivable (net) | 40,000 | 30,000 |
| Inventory | 150,000 | 170,000 |
| Property,plantand equipment (net) | 170,000 | 200,000 |
| Total Assets | $405,000 | $500,000 |
| Liabilities and stockholders' equity | ||
| Accountspayable | $ 25,000 | $ 30,000 |
| BondInterest payable | 40,000 | 90,000 |
| Bondspayable | 75,000 | 160,000 |
| CommonStock | 175,000 | 145,000 |
| Retainedearnings | 90,000 | 75,000 |
| Totalliabilities and stockholders' equity | $405,000 | $500,000 |
| MugsCompany | |||
| IncomeStatement | |||
| Forthe Year Ended 12/31/07 | |||
| NetSales | $360,000 | ||
| Costof goods sold | 184,000 | ||
| Grossprofit | 176,000 | ||
| Expenses | |||
| InterestExpense | $21,000 | ||
| SellingExpense | 30,000 | ||
| AdministrativeExpenses | 20,000 | ||
| Totalexpenses | 71,000 | ||
| Income beforeincome taxes | 105,000 | ||
| Income taxexpense | 30,000 | ||
| NetIncome | $75,000 | ||
AdditionalInformation:
- Cashdividends of $50,000 were declared and paid in 2007.
- Weighted averagenumber of shares of common stock outstanding during 2007 were62,000 shares.
- Market value ofcommon stock on December 31,2007 was $15 per share.
- Netcash provided by operating activities for 2007 was$65,000.
Using thefinancial statements and additional information, compute thefollowing ratios for the Mugs Company for 2007. You need to labelyour ratios and show your calculations for maximumcredit.
- Currentratio
- Return oncommon stockholders' equity
- Price-earningsratio
- Inventoryturnover ratio
- Average daysin inventory
- Receivableturnover
- Average daysto collect receivables
- Profit marginratio
- Payoutratio
- Return onassets
