Markus Company’s common stock sold for $2.50 per share at the end of this year. The company paid preferred stock dividends totaling $4,400 and a common stock dividend of $0.42 per share this year. It also provided the following data excerpts from this year’s financial statements: EndingBalanceBeginning Balance Cash$31,500 $47,800 Accounts receivable$56,000 $46,300 Inventory$50,800 $56,000 Current assets$138,300 $150,100 Total assets$417,000 $405,300 Current liabilities$57,000 $39,000 Total liabilities$117,000 $105,300 Preferred stock$38,000 $38,000 Common stock, $1 par value$76,000 $76,000 Total stockholders’ equity$300,000 $300,000 Total liabilities and stockholders’ equity$417,000 $405,300 This Year Sales (all on account)$650,000 Cost of goods sold$377,000 Gross margin$273,000 Net operating income$120,750 Interest expense$7,000 Net income$76,600 Required:What is the return on common stockholders’ equity? (Round your answer to 2 decimal places.)

Answered: Markus Company’s common stock sold for…

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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Markus Company’s common stock sold for $2.50 per share at the end of this year. The company paid preferred stock dividends totaling $4,400 and a common stock dividend of $0.42 per share this year. It also provided the following data excerpts from this year’s financial statements:

	Ending Balance	Beginning Balance
Cash	$	31,500	$	47,800
Accounts receivable	$	56,000	$	46,300
Inventory	$	50,800	$	56,000
Current assets	$	138,300	$	150,100
Total assets	$	417,000	$	405,300
Current liabilities	$	57,000	$	39,000
Total liabilities	$	117,000	$	105,300
Preferred stock	$	38,000	$	38,000
Common stock, $1 par value	$	76,000	$	76,000
Total stockholders’ equity	$	300,000	$	300,000
Total liabilities and stockholders’ equity	$	417,000	$	405,300

	This Year
Sales (all on account)	$	650,000
Cost of goods sold	$	377,000
Gross margin	$	273,000
Net operating income	$	120,750
Interest expense	$	7,000
Net income	$	76,600

Required:

What is the return on common stockholders’ equity? (Round your answer to 2 decimal places.)

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The return on stockholders' equity shows the percentage of net income held in hands of the common stockholders after deducting the preference dividend.

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