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 900,000 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 $23. All of the company's sales are on account.Required:Compute the following financial data for this year:1. Gross margin percentage. (Round your percentage answer to 1 decimal place.)2. Net profit margin percentage. (Round your percentage answer to 1 decimal place.)3. Return on total assets. (Round your percentage answer to 1 decimal place.)4. Return on equity. (Round your percentage answer to 2 decimal places.) Weller CorporationComparative Balance Sheet(dollars in thousands)This Year Last YearAssetsCurrent assets:Cash24051015,40010,2001,90027,740Accounts receivable, net10,2508,6002,300InventoryPrepaid expensesTotal current assets21,660Property and equipment:Land7,0007,00020,000Buildings and equipment, net20,200Total property and equipment27,20027,000Total assets$54,940$48,660Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable$10,500$ 8,800Accrued liabilities8001,200Notes payable, short term400400Total current liabilities11,70010,400Long-term liabilities:Bonds payable5,0005,000Total liabilities16,70015,400Stockholders' equity:Common stock900900Additionall paid-in capitalTotal paid-in capital4,7005,6004,7005,600Retained earnings32,64027,660Total stockholders' equity38,24033,260Total liabilities and stockholders' equity$54,940$48,660 Weller CorporationComparative Income Statement and Reconciliation(dollars in thousands)This Year Last Year$89,000Sales$84,000Cost of goods sold57,00053,000Gross margin32,00031,000Selling and administrative expenses:Selling expensesAdministrative expenses9,50013,0009,00012,00021,00010,00022,500Total selling and administrative expensesNet operating income9,500Interest expense600600Net income before taxes8,9003,5609,4003,7605,640Income taxes5,340360Net incomeDividends to common stockholdersNet income added to retained earnings7204,9204,98027,660Beginning retained earnings22,740Ending retained earnings$32,640$27,660

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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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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 900,000 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 $23. All of the company's sales are on account.

Required:
Compute the following financial data for this year:

1. Gross margin percentage. (Round your percentage answer to 1 decimal place.)
2. Net profit margin percentage. (Round your percentage answer to 1 decimal place.)
3. Return on total assets. (Round your percentage answer to 1 decimal place.)
4. Return on equity. (Round your percentage answer to 2 decimal places.)

Weller Corporation
Comparative Balance Sheet
(dollars in thousands)
This Year Last Year
Assets
Current assets:
Cash
240
510
15,400
10,200
1,900
27,740
Accounts receivable, net
10,250
8,600
2,300
Inventory
Prepaid expenses
Total current assets
21,660
Property and equipment:
Land
7,000
7,000
20,000
Buildings and equipment, net
20,200
Total property and equipment
27,200
27,000
Total assets
$54,940
$48,660
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$10,500
$ 8,800
Accrued liabilities
800
1,200
Notes payable, short term
400
400
Total current liabilities
11,700
10,400
Long-term liabilities:
Bonds payable
5,000
5,000
Total liabilities
16,700
15,400
Stockholders' equity:
Common stock
900
900
Additionall paid-in capital
Total paid-in capital
4,700
5,600
4,700
5,600
Retained earnings
32,640
27,660
Total stockholders' equity
38,240
33,260
Total liabilities and stockholders' equity
$54,940
$48,660

Weller Corporation
Comparative Income Statement and Reconciliation
(dollars in thousands)
This Year Last Year
$89,000
Sales
$84,000
Cost of goods sold
57,000
53,000
Gross margin
32,000
31,000
Selling and administrative expenses:
Selling expenses
Administrative expenses
9,500
13,000
9,000
12,000
21,000
10,000
22,500
Total selling and administrative expenses
Net operating income
9,500
Interest expense
600
600
Net income before taxes
8,900
3,560
9,400
3,760
5,640
Income taxes
5,340
360
Net income
Dividends to common stockholders
Net income added to retained earnings
720
4,920
4,980
27,660
Beginning retained earnings
22,740
Ending retained earnings
$32,640
$27,660

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