LOGIC COMPANY Comparative Income Statement For Years Ended December 31, 2017 and 2018 2018 2017 Gross sales $ 22,400 $ 17,550 Sales returns and allowances 800 100 Net sales $ 21,600 $ 17,450 Cost of merchandise (goods) sold 11,150 7,900 Gross profit $ 10,450 $ 9,550 Operating expenses: Depreciation $ 1,040 $ 770 Selling and administrative 4,750 3,700 Research 890 670 Miscellaneous 700 470 Total operating expenses $ 7,380 $ 5,610 Income before interest and taxes $ 3,070 $ 3,940 Interest expense 900 670 Income before taxes $ 2,170 $ 3,270 Provision for taxes 868 1,308 Net income $ 1,302 $ 1,962 LOGIC COMPANY Comparative Balance Sheet December 31, 2017 and 2018 2018 2017 Assets Current assets: Cash $ 11,800 $ 8,800 Accounts receivable 16,300 12,300 Merchandise inventory 8,300 13,800 Prepaid expenses 23,800 9,800 Total current assets $ 60,200 $ 44,700 Plant and equipment: Building (net) $ 14,300 $ 10,900 Land 13,300 8,800 Total plant and equipment $ 27,600 $ 19,700 Total assets $ 87,800 $ 64,400 Liabilities Current liabilities: Accounts payable $ 12,800 $ 6,800 Salaries payable 6,800 4,800 Total current liabilities $ 19,600 $ 11,600 Long-term liabilities: Mortgage note payable 21,800 20,300 Total liabilities $ 41,400 $ 31,900 Stockholders’ Equity Common stock $ 20,800 $ 20,800 Retained earnings 25,600 11,700 Total stockholders’ equity $ 46,400 $ 32,500 Total liabilities and stockholders’ equity $ 87,800 $ 64,400 Calculate the return on equity (after tax) ratio. (Round your answers to the nearest hundredth.)

LOGIC COMPANY Comparative Income Statement For Years Ended December 31, 2017 and 2018 2018 2017 Gross sales $ 22,400 $ 17,550 Sales returns and allowances 800 100 Net sales $ 21,600 $ 17,450 Cost of merchandise (goods) sold 11,150 7,900 Gross profit $ 10,450 $ 9,550 Operating expenses: Depreciation $ 1,040 $ 770 Selling and administrative 4,750 3,700 Research 890 670 Miscellaneous 700 470 Total operating expenses $ 7,380 $ 5,610 Income before interest and taxes $ 3,070 $ 3,940 Interest expense 900 670 Income before taxes $ 2,170 $ 3,270 Provision for taxes 868 1,308 Net income $ 1,302 $ 1,962 LOGIC COMPANY Comparative Balance Sheet December 31, 2017 and 2018 2018 2017 Assets Current assets: Cash $ 11,800 $ 8,800 Accounts receivable 16,300 12,300 Merchandise inventory 8,300 13,800 Prepaid expenses 23,800 9,800 Total current assets $ 60,200 $ 44,700 Plant and equipment: Building (net) $ 14,300 $ 10,900 Land 13,300 8,800 Total plant and equipment $ 27,600 $ 19,700 Total assets $ 87,800 $ 64,400 Liabilities Current liabilities: Accounts payable $ 12,800 $ 6,800 Salaries payable 6,800 4,800 Total current liabilities $ 19,600 $ 11,600 Long-term liabilities: Mortgage note payable 21,800 20,300 Total liabilities $ 41,400 $ 31,900 Stockholders’ Equity Common stock $ 20,800 $ 20,800 Retained earnings 25,600 11,700 Total stockholders’ equity $ 46,400 $ 32,500 Total liabilities and stockholders’ equity $ 87,800 $ 64,400 Calculate the return on equity (after tax) ratio. (Round your answers to the nearest hundredth.)

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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LOGIC COMPANY
Comparative Income Statement
For Years Ended December 31, 2017 and 2018

	2018	2017
Gross sales	$	22,400	$	17,550
Sales returns and allowances		800		100
Net sales	$	21,600	$	17,450
Cost of merchandise (goods) sold		11,150		7,900
Gross profit	$	10,450	$	9,550
Operating expenses:
Depreciation	$	1,040	$	770
Selling and administrative		4,750		3,700
Research		890		670
Miscellaneous		700		470
Total operating expenses	$	7,380	$	5,610
Income before interest and taxes	$	3,070	$	3,940
Interest expense		900		670
Income before taxes	$	2,170	$	3,270
Provision for taxes		868		1,308
Net income	$	1,302	$	1,962

LOGIC COMPANY
Comparative Balance Sheet
December 31, 2017 and 2018

	2018	2017
Assets
Current assets:
Cash	$	11,800	$	8,800
Accounts receivable		16,300		12,300
Merchandise inventory		8,300		13,800
Prepaid expenses		23,800		9,800
Total current assets	$	60,200	$	44,700
Plant and equipment:
Building (net)	$	14,300	$	10,900
Land		13,300		8,800
Total plant and equipment	$	27,600	$	19,700
Total assets	$	87,800	$	64,400
Liabilities
Current liabilities:
Accounts payable	$	12,800	$	6,800
Salaries payable		6,800		4,800
Total current liabilities	$	19,600	$	11,600
Long-term liabilities:
Mortgage note payable		21,800		20,300
Total liabilities	$	41,400	$	31,900
Stockholders’ Equity
Common stock	$	20,800	$	20,800
Retained earnings		25,600		11,700
Total stockholders’ equity	$	46,400	$	32,500
Total liabilities and stockholders’ equity	$	87,800	$	64,400

Calculate the return on equity (after tax) ratio. (Round your answers to the nearest hundredth.)

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