Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 500,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $1.00 last year and $0.65 this year. The market value of the company's common stock at the end of the year was $29. All of the company's sales are on account.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year
ending December 31 appear below. The company did not issue any new common stock during the year. A
total of 500,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold
at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock
was $1.00 last year and $0.65 this year. The market value of the company's common stock at the end of
the year was $29. All of the company's sales are on account.
Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
$ 1,230
9,200
13,200
$ 1,290
8,.400
Cash
Accounts receivable, net
Inventory
Prepaid expenses
11,800
690
770
Total current assets
24,400
22,180
Property and equipment:
Land
9,100
45,013
9,100
41,444
Buildings and equipment, net
Total property and equipment
54,113
50,544
Total assets
$78,513
$72,724
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Accrued liabilities
$19,900
1,080
150
$19,200
730
Notes payable, short term
150
Total current liabilities
21,130
20,080
Long-term liabilities:
Bonds payable
9,600
9,600
Total liabilities
30,730
29,680
Stockholders' equity:
Common stock
500
500
Additional paid-in capital
4,000
4,000
Total paid-in capital
Retained earnings
4,500
4,500
38,544
43,283
Total stockholders' equity
47,783
43,044
Total liabilities and stockholders' equity
$78,513
$72,724
Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
Sales
$69,000
$64.000
Cost of goods sold
41,000
33,000
Gross margin
28,000
31,000
Selling and administrative expenses:
Selling expenses
Administrative expenses
11,300
7,300
10,700
6,000
Total selling and administrative expenses
18,600
16,700
Net operating income
Interest expense
9,400
960
14,300
960
8,440
3,376
13,340
5,336
Net income before taxes
Income taxes
Net income
5,064
325
8,004
500
Dividends to common stockholders
Net income added to retained earnings
Beginning retained earnings
4,739
38,544
7,504
31,040
Ending retained earnings
$43,283
$38,544
Transcribed Image Text:Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 500,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 10%. The income tax rate was 40% and the dividend per share of common stock was $1.00 last year and $0.65 this year. The market value of the company's common stock at the end of the year was $29. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: $ 1,230 9,200 13,200 $ 1,290 8,.400 Cash Accounts receivable, net Inventory Prepaid expenses 11,800 690 770 Total current assets 24,400 22,180 Property and equipment: Land 9,100 45,013 9,100 41,444 Buildings and equipment, net Total property and equipment 54,113 50,544 Total assets $78,513 $72,724 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities $19,900 1,080 150 $19,200 730 Notes payable, short term 150 Total current liabilities 21,130 20,080 Long-term liabilities: Bonds payable 9,600 9,600 Total liabilities 30,730 29,680 Stockholders' equity: Common stock 500 500 Additional paid-in capital 4,000 4,000 Total paid-in capital Retained earnings 4,500 4,500 38,544 43,283 Total stockholders' equity 47,783 43,044 Total liabilities and stockholders' equity $78,513 $72,724 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $69,000 $64.000 Cost of goods sold 41,000 33,000 Gross margin 28,000 31,000 Selling and administrative expenses: Selling expenses Administrative expenses 11,300 7,300 10,700 6,000 Total selling and administrative expenses 18,600 16,700 Net operating income Interest expense 9,400 960 14,300 960 8,440 3,376 13,340 5,336 Net income before taxes Income taxes Net income 5,064 325 8,004 500 Dividends to common stockholders Net income added to retained earnings Beginning retained earnings 4,739 38,544 7,504 31,040 Ending retained earnings $43,283 $38,544
Required:
Compute the following financial data and ratios for this year.
1. Working capital. (Enter your answer in thousands)
Working capital
2. Current ratio. (Round your answer to 2 decimal places.)
Current ratio
3. Acid-test ratio. (Round your answer to 2 decimal places.)
Acid-test ratio
Transcribed Image Text:Required: Compute the following financial data and ratios for this year. 1. Working capital. (Enter your answer in thousands) Working capital 2. Current ratio. (Round your answer to 2 decimal places.) Current ratio 3. Acid-test ratio. (Round your answer to 2 decimal places.) Acid-test ratio
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