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May I ask for a solution and explanation to the problem for a better understanding. Thank you! 16. Compute for the return on shareholders' equity using Bittergourd Company data.   a. 15% b. 16% c. 17% d. 18%

May I ask for a solution and explanation to the problem for a better understanding. Thank you! 16. Compute for the return on shareholders' equity using Bittergourd Company data.   a. 15% b. 16% c. 17% d. 18%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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May I ask for a solution and explanation to the problem for a better understanding. Thank you!

16. Compute for the return on shareholders' equity using Bittergourd Company data.
 
a. 15%
b. 16%
c. 17%
d. 18%
BITTERGOURD Company Income Statement For the Year Ended December 31, 2014 (in thousands of pesos) P 2,000 (1,400) P 600 (240) Р 360 (50) P 310 (93) P 217 Sales (all on account). Cost of goods sold.. Gross margin.. Operating expenses.. Net operating income.. Interest expense. Net income before taxes. Income taxes (30%).. Net income. BITTERGOURD Company Statement of Financial Position December 31, 2014 and 2013 (in thousands of pesos) Assets 2014 2013 Current assets: Р 140 Р 130 Cash and Cash equivalents.. Accounts receivable, net. 120 110 110 Inventory.. Prepaid expenses. 100 50 40 Total current assets. P 410 P 390 Noncurrent assets: Plant & equipment, net. 1,840 1,830 Total assets.. P2,250 P2,220 Liabilities and Shareholders' Equity Current liabilities: Accounts payable. P 100 P 100 Accrued liabilities. Notes payable, short term. 80 80 210 P 390 230 Total current liabilities.. P 410 Noncurrent liabilities: Bonds payable . 460 500 Total liabilities . P 850 P 910 Shareholders' equity: Preference share capital,P5 par, 5%. Ordinary share capital, P10 par Share premium - ordinary.. Accumulated profits. Total shareholders' equity.. Total liabilities & shareholders' equity. Р 100 P 100 200 200 260 260 840 750 P1,400 P2,250 P1,310 P2,220 Dividends during 2014 totaled P127,000, of which P5,000 were preference dividends. The market price of an ordinary share on December 31, 2014 was P140.
Transcribed Image Text:BITTERGOURD Company Income Statement For the Year Ended December 31, 2014 (in thousands of pesos) P 2,000 (1,400) P 600 (240) Р 360 (50) P 310 (93) P 217 Sales (all on account). Cost of goods sold.. Gross margin.. Operating expenses.. Net operating income.. Interest expense. Net income before taxes. Income taxes (30%).. Net income. BITTERGOURD Company Statement of Financial Position December 31, 2014 and 2013 (in thousands of pesos) Assets 2014 2013 Current assets: Р 140 Р 130 Cash and Cash equivalents.. Accounts receivable, net. 120 110 110 Inventory.. Prepaid expenses. 100 50 40 Total current assets. P 410 P 390 Noncurrent assets: Plant & equipment, net. 1,840 1,830 Total assets.. P2,250 P2,220 Liabilities and Shareholders' Equity Current liabilities: Accounts payable. P 100 P 100 Accrued liabilities. Notes payable, short term. 80 80 210 P 390 230 Total current liabilities.. P 410 Noncurrent liabilities: Bonds payable . 460 500 Total liabilities . P 850 P 910 Shareholders' equity: Preference share capital,P5 par, 5%. Ordinary share capital, P10 par Share premium - ordinary.. Accumulated profits. Total shareholders' equity.. Total liabilities & shareholders' equity. Р 100 P 100 200 200 260 260 840 750 P1,400 P2,250 P1,310 P2,220 Dividends during 2014 totaled P127,000, of which P5,000 were preference dividends. The market price of an ordinary share on December 31, 2014 was P140.
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