Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 880,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of this year was $22. All of the company’s sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 3,508 $ 4,340 Accounts receivable, net 15,200 10,150 Inventory 10,100 8,520 Prepaid expenses 1,880 2,260 Total current assets 30,688 25,270 Property and equipment: Land 6,800 6,800 Buildings and equipment, net 20,000 19,800 Total property and equipment 26,800 26,600 Total assets $ 57,488 $ 51,870 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 10,300 $ 8,700 Accrued liabilities 760 1,100 Notes payable, short term 380 380 Total current liabilities 11,440 10,180 Long-term liabilities: Bonds payable 8,750 8,750 Total liabilities 20,190 18,930 Stockholders' equity: Common stock 880 880 Additional paid-in capital 4,600 4,600 Total paid-in capital 5,480 5,480 Retained earnings 31,818 27,460 Total stockholders' equity 37,298 32,940 Total liabilities and stockholders' equity $ 57,488 $ 51,870 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 87,000 $ 82,000 Cost of goods sold 56,000 52,000 Gross margin 31,000 30,000 Selling and administrative expenses: Selling expenses 9,300 8,800 Administrative expenses 12,800 11,800 Total selling and administrative expenses 22,100 20,600 Net operating income 8,900 9,400 Interest expense 1,050 1,050 Net income before taxes 7,850 8,350 Income taxes 3,140 3,340 Net income 4,710 5,010 Dividends to common stockholders 352 704 Net income added to retained earnings 4,358 4,306 Beginning retained earnings 27,460 23,154 Ending retained earnings $ 31,818 $ 27,460 Required: Compute the following financial data for this year: 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 880,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company’s common stock at the end of this year was $22. All of the company’s sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 3,508 $ 4,340 Accounts receivable, net 15,200 10,150 Inventory 10,100 8,520 Prepaid expenses 1,880 2,260 Total current assets 30,688 25,270 Property and equipment: Land 6,800 6,800 Buildings and equipment, net 20,000 19,800 Total property and equipment 26,800 26,600 Total assets $ 57,488 $ 51,870 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 10,300 $ 8,700 Accrued liabilities 760 1,100 Notes payable, short term 380 380 Total current liabilities 11,440 10,180 Long-term liabilities: Bonds payable 8,750 8,750 Total liabilities 20,190 18,930 Stockholders' equity: Common stock 880 880 Additional paid-in capital 4,600 4,600 Total paid-in capital 5,480 5,480 Retained earnings 31,818 27,460 Total stockholders' equity 37,298 32,940 Total liabilities and stockholders' equity $ 57,488 $ 51,870 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 87,000 $ 82,000 Cost of goods sold 56,000 52,000 Gross margin 31,000 30,000 Selling and administrative expenses: Selling expenses 9,300 8,800 Administrative expenses 12,800 11,800 Total selling and administrative expenses 22,100 20,600 Net operating income 8,900 9,400 Interest expense 1,050 1,050 Net income before taxes 7,850 8,350 Income taxes 3,140 3,340 Net income 4,710 5,010 Dividends to common stockholders 352 704 Net income added to retained earnings 4,358 4,306 Beginning retained earnings 27,460 23,154 Ending retained earnings $ 31,818 $ 27,460 Required: Compute the following financial data for this year: 1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

	This Year	Last Year
Weller Corporation Comparative Balance Sheet (dollars in thousands)
Assets
Current assets:
Cash	$ 3,508	$ 4,340
Accounts receivable, net	15,200	10,150
Inventory	10,100	8,520
Prepaid expenses	1,880	2,260
Total current assets	30,688	25,270
Property and equipment:
Land	6,800	6,800
Buildings and equipment, net	20,000	19,800
Total property and equipment	26,800	26,600
Total assets	$ 57,488	$ 51,870
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 10,300	$ 8,700
Accrued liabilities	760	1,100
Notes payable, short term	380	380
Total current liabilities	11,440	10,180
Long-term liabilities:
Bonds payable	8,750	8,750
Total liabilities	20,190	18,930
Stockholders' equity:
Common stock	880	880
Additional paid-in capital	4,600	4,600
Total paid-in capital	5,480	5,480
Retained earnings	31,818	27,460
Total stockholders' equity	37,298	32,940
Total liabilities and stockholders' equity	$ 57,488	$ 51,870

	This Year	Last Year
Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
Sales	$ 87,000	$ 82,000
Cost of goods sold	56,000	52,000
Gross margin	31,000	30,000
Selling and administrative expenses:
Selling expenses	9,300	8,800
Administrative expenses	12,800	11,800
Total selling and administrative expenses	22,100	20,600
Net operating income	8,900	9,400
Interest expense	1,050	1,050
Net income before taxes	7,850	8,350
Income taxes	3,140	3,340
Net income	4,710	5,010
Dividends to common stockholders	352	704
Net income added to retained earnings	4,358	4,306
Beginning retained earnings	27,460	23,154
Ending retained earnings	$ 31,818	$ 27,460

Required:

Compute the following financial data for this year:

1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here