CERVEZA CORPORATION Comparative Income Statement This Year Last Year Sales (all on account) ............................................ $452,000 $388,000 Less cost of goods sold ......................................... 260,000 221,000 Gross margin ......................................................... 192,000 167,000 Less operating expenses ........................................ 104,000 89,000 Net operating income ............................................ 88,000 78,000 Less interest expense ............................................. 8,000 8,000 Net income before taxes ........................................ 80,000 70,000 Less income taxes (30%) ...................................... 24,000 21,000 Net income ............................................................ $ 56,000 $ 49,000 CERVEZA CORPORATION Comparative Balance Sheet This Year Last Year Assets Current assets: Cash .................................................................... $ 42,000 $ 21,000 Marketable securities ......................................... 32,000 28,000 Accounts receivable, net .................................... 84,000 102,000 Inventory ............................................................ 96,000 70,000 Prepaid expenses ................................................ 11,000 9,000 Total current assets ................................................ 265,000 230,000 Plant and equipment, net ....................................... 410,000 380,000 Total assets ............................................................ $675,000 $610,000 Liabilities and Stockholders’ Equity Liabilities: ............................................................. Current liabilities ................................................ $115,000 $ 90,000 Bonds payable, 10% ........................................... 80,000 80,000 Total liabilities ...................................................... 195,000 170,000 Stockholders’ equity: Preferred stock, $100 par, 7% ............................ 100,000 100,000 Common stock, $5 par ....................................... 300,000 300,000 Retained earnings ............................................... 80,000 40,000 Total stockholders’ equity ..................................... 480,000 440,000 Total liabilities and stockholders’ equity .............. $675,000 $610,000 What is Cerveza’s ROI? Round if necessary)

CERVEZA CORPORATION Comparative Income Statement This Year Last Year Sales (all on account) ............................................ $452,000 $388,000 Less cost of goods sold ......................................... 260,000 221,000 Gross margin ......................................................... 192,000 167,000 Less operating expenses ........................................ 104,000 89,000 Net operating income ............................................ 88,000 78,000 Less interest expense ............................................. 8,000 8,000 Net income before taxes ........................................ 80,000 70,000 Less income taxes (30%) ...................................... 24,000 21,000 Net income ............................................................ $ 56,000 $ 49,000 CERVEZA CORPORATION Comparative Balance Sheet This Year Last Year Assets Current assets: Cash .................................................................... $ 42,000 $ 21,000 Marketable securities ......................................... 32,000 28,000 Accounts receivable, net .................................... 84,000 102,000 Inventory ............................................................ 96,000 70,000 Prepaid expenses ................................................ 11,000 9,000 Total current assets ................................................ 265,000 230,000 Plant and equipment, net ....................................... 410,000 380,000 Total assets ............................................................ $675,000 $610,000 Liabilities and Stockholders’ Equity Liabilities: ............................................................. Current liabilities ................................................ $115,000 $ 90,000 Bonds payable, 10% ........................................... 80,000 80,000 Total liabilities ...................................................... 195,000 170,000 Stockholders’ equity: Preferred stock, $100 par, 7% ............................ 100,000 100,000 Common stock, $5 par ....................................... 300,000 300,000 Retained earnings ............................................... 80,000 40,000 Total stockholders’ equity ..................................... 480,000 440,000 Total liabilities and stockholders’ equity .............. $675,000 $610,000 What is Cerveza’s ROI? Round if necessary)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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CERVEZA CORPORATION

Comparative Income Statement

This Year	Last Year
Sales (all on account) ............................................ $452,000	$388,000
Less cost of goods sold ......................................... 260,000	221,000
Gross margin ......................................................... 192,000	167,000
Less operating expenses ........................................ 104,000	89,000
Net operating income ............................................ 88,000	78,000
Less interest expense ............................................. 8,000	8,000
Net income before taxes ........................................ 80,000	70,000
Less income taxes (30%) ...................................... 24,000	21,000
Net income ............................................................ $ 56,000	$ 49,000
CERVEZA CORPORATION
Comparative Balance Sheet
	This Year	Last Year
Assets
Current assets:
Cash ....................................................................	$ 42,000	$ 21,000
Marketable securities .........................................	32,000	28,000
Accounts receivable, net ....................................	84,000	102,000
Inventory ............................................................	96,000	70,000
Prepaid expenses ................................................	11,000	9,000
Total current assets ................................................	265,000	230,000
Plant and equipment, net .......................................	410,000	380,000
Total assets ............................................................	$675,000	$610,000

Liabilities and Stockholders’ Equity
Liabilities: .............................................................
Current liabilities ................................................	$115,000	$ 90,000
Bonds payable, 10% ...........................................	80,000	80,000
Total liabilities ......................................................	195,000	170,000
Stockholders’ equity:
Preferred stock, $100 par, 7% ............................	100,000	100,000
Common stock, $5 par .......................................	300,000	300,000
Retained earnings ...............................................	80,000	40,000
Total stockholders’ equity .....................................	480,000	440,000
Total liabilities and stockholders’ equity ..............	$675,000	$610,000

What is Cerveza’s ROI? Round if necessary)

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