Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:**LOGIC COMPANY Comparative Income Statement**
*For Years Ended December 31, 2017 and 2018*
| **2018** | **2017** |
|---|---|
| **Gross sales** | **$19,400** | **$15,300** |
| **Sales returns and allowances** | **800** | **300** |
| **Net sales** | **$18,600** | **$15,000** |
| **Cost of merchandise (goods) sold** | **11,900** | **8,700** |
| **Gross profit** | **$6,700** | **$6,300** |
| **Operating expenses:** | | |
| Depreciation | **$ 740** | **$ 620** |
| Selling and administrative | **2,500** | **2,200** |
| Research | ** 590** | ** 520** |
| Miscellaneous | ** 400** | ** 320** |
| **Total operating expenses** | **$4,230** | **$3,660** |
| **Income before interest and taxes** | **$2,470** | **$2,640** |
| **Interest expense** | ** 600** | ** 520** |
| **Income before taxes** | **$1,870** | **$2,120** |
| **Provision for taxes** | ** 748** | ** 848** |
| **Net income** | **$1,122** | **$1,272** |
**LOGIC COMPANY Comparative Balance Sheet**
*December 31, 2017 and 2018*
**Assets**
| **2018** | **2017** |
|---|---|
| **Current assets:** | | |
| Cash | **$12,100** | **$ 9,300** |
| Accounts receivable | **16,700** | **12,700** |
| Merchandise inventory | ** 8,700** | **14,200** |
| Prepaid expenses | **24,200** | **10,200** |
| **Total current assets** | **$61,700** | **$46,400** |
| Plant and equipment: | | |
| Building (net) | **14,500**
Transcribed Image Text:### LOGIC COMPANY
#### Comparative Balance Sheet
#### December 31, 2017 and 2018
---
**Current Assets:**
- **Cash:** $12,100 (2018) | $9,300 (2017)
- **Accounts Receivable:** $12,200 (2018)
- **Merchandise Inventory:** $16,700 (2018) | $12,700 (2017)
- **Prepaid Expenses:** $8,700 (2018) | $14,200 (2017)
- **Total Current Assets:** $24,200 (2018) | $10,200 (2017)
**Plant and Equipment:**
- **Building (Net):** $14,600 (2018) | $11,200 (2017)
- **Land:** $13,700 (2018) | $9,200 (2017)
- **Total Plant and Equipment:** $61,700 (2018) | $46,400 (2017)
**Total Assets:** $90,000 (2018) | $66,800 (2017)
---
**Current Liabilities:**
- **Accounts Payable:** $13,200 (2018) | $7,200 (2017)
- **Salaries Payable:** $7,200 (2018) | $5,200 (2017)
- **Total Current Liabilities:** $20,400 (2018) | $12,400 (2017)
**Long-Term Liabilities:**
- **Mortgage Note Payable:** $22,400 (2018) | $20,700 (2017)
- **Total Liabilities:** $42,800 (2018) | $33,100 (2017)
---
**Stockholders' Equity:**
- **Common Stock:** $21,100 (2018) | $21,100 (2017)
- **Retained Earnings:** $26,100 (2018) | $12,600 (2017)
- **Total Stockholders’ Equity:** $47,200 (2018) | $33,700 (2017)
**Total Liabilities and Stockholders’ Equity:** $90,000 (2018) | $66,800 (2017)
---
Calculate the return on equity (after tax) ratio. *(Round your answers to the nearest hundredth.)*
- **Return on
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