Retained earnings Total liabilities and stockholders' equity 410,000 $1,000,000 MARNI COMPANY Income Statement For the year ended December 31 Sales (all on credit) Cost of goods sold Gross profit Sales and administrative expenses $2,000,000 1,750,000 $250,000 30,000 10,000 60,000 $ 150,000 25,000 $ 125,000 50,000 $4 Fixed lease expenses Depreciation Operating profit Interest expense Profit before taxes Taxes (40%) Net income 75,000 Refer to the tables above. Fixed charge coverage for Marni Company is

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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## MARNI COMPANY
### Income Statement
#### For the year ended December 31

| Item                                   | Amount ($)    | 
|----------------------------------------|---------------|
| Sales (all on credit)                  | 2,000,000     |
| Cost of goods sold                     | 1,750,000     |
| **Gross profit**                       | 250,000       |
| Sales and administrative expenses      | 30,000        |
| Fixed lease expenses                   | 10,000        |
| Depreciation                           | 60,000        |
| **Operating profit**                   | 150,000       |
| Interest expense                       | 25,000        |
| **Profit before taxes**                | 125,000       |
| Taxes (40%)                            | 50,000        |
| **Net income**                         | 75,000        |

Refer to the tables above. Fixed charge coverage for Marni Company is _____.
Transcribed Image Text:## MARNI COMPANY ### Income Statement #### For the year ended December 31 | Item | Amount ($) | |----------------------------------------|---------------| | Sales (all on credit) | 2,000,000 | | Cost of goods sold | 1,750,000 | | **Gross profit** | 250,000 | | Sales and administrative expenses | 30,000 | | Fixed lease expenses | 10,000 | | Depreciation | 60,000 | | **Operating profit** | 150,000 | | Interest expense | 25,000 | | **Profit before taxes** | 125,000 | | Taxes (40%) | 50,000 | | **Net income** | 75,000 | Refer to the tables above. Fixed charge coverage for Marni Company is _____.
# Marni Company Financial Reports

Below are the financial statements for Marni Company as of December 31. The reports include a Balance Sheet and an Income Statement, providing a detailed view of the company's financial position and performance.

## Marni Company Balance Sheet
**As of December 31**

### Assets
1. **Cash**: $50,000
2. **Accounts Receivable**: $100,000
3. **Inventory**: $200,000
4. **Net Plant and Equipment**: $650,000   
**Total Assets**: $1,000,000

### Liabilities and Stockholders' Equity
1. **Accounts Payable**: $100,000
2. **Accrued Expenses**: $90,000
3. **Long-term Debt**: $250,000
4. **Common Stock**: $100,000
5. **Paid-in Capital**: $50,000
6. **Retained Earnings**: $410,000   
**Total Liabilities and Stockholders' Equity**: $1,000,000

---

## Marni Company Income Statement
**For the Year Ended December 31**

### Revenue
1. **Sales (all on credit)**: $2,000,000

### Costs and Expenses
1. **Cost of Goods Sold**: $1,750,000   
**Gross Profit**: $250,000

2. **Sales and Administrative Expenses**: $30,000
3. **Fixed Lease Expenses**: $10,000

The balance sheet above illustrates Marni Company's financial position, showing that the total assets are equal to the total liabilities and stockholders' equity, confirming the accounting equation (Assets = Liabilities + Equity).

The income statement shows the profitability of the company, with a gross profit of $250,000 after subtracting the cost of goods sold from the total sales, and additional expenses related to sales and administrative activities and fixed lease costs.
Transcribed Image Text:# Marni Company Financial Reports Below are the financial statements for Marni Company as of December 31. The reports include a Balance Sheet and an Income Statement, providing a detailed view of the company's financial position and performance. ## Marni Company Balance Sheet **As of December 31** ### Assets 1. **Cash**: $50,000 2. **Accounts Receivable**: $100,000 3. **Inventory**: $200,000 4. **Net Plant and Equipment**: $650,000 **Total Assets**: $1,000,000 ### Liabilities and Stockholders' Equity 1. **Accounts Payable**: $100,000 2. **Accrued Expenses**: $90,000 3. **Long-term Debt**: $250,000 4. **Common Stock**: $100,000 5. **Paid-in Capital**: $50,000 6. **Retained Earnings**: $410,000 **Total Liabilities and Stockholders' Equity**: $1,000,000 --- ## Marni Company Income Statement **For the Year Ended December 31** ### Revenue 1. **Sales (all on credit)**: $2,000,000 ### Costs and Expenses 1. **Cost of Goods Sold**: $1,750,000 **Gross Profit**: $250,000 2. **Sales and Administrative Expenses**: $30,000 3. **Fixed Lease Expenses**: $10,000 The balance sheet above illustrates Marni Company's financial position, showing that the total assets are equal to the total liabilities and stockholders' equity, confirming the accounting equation (Assets = Liabilities + Equity). The income statement shows the profitability of the company, with a gross profit of $250,000 after subtracting the cost of goods sold from the total sales, and additional expenses related to sales and administrative activities and fixed lease costs.
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