The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 66 on December 31, 20Y2. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Retained earnings, January 1 $2,208,550 $1,855,250 Net income 489,600 380,000 Dividends: On preferred stock (6,300) (6,300) On common stock (20,400) (20,400) Retained earnings, December 31 $2,671,450 $2,208,550 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $3,510,205 $3,234,090 Cost of merchandise sold 1,164,350 1,071,200 Gross profit $2,345,855 $2,162,890 Selling expenses $858,210 $1,028,620 Administrative expenses 731,065 604,110 Total operating expenses $1,589,275 $1,632,730 Income from operations $756,580 $530,160 Other revenue and expense: Other revenue 39,820 33,840 Other expense (interest) (240,000) (132,000) Income before income tax expense $556,400 $432,000 Income tax expense 66,800 52,000 Net income $489,600 $380,000 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $856,850 $484,770 Marketable securities 1,296,860 803,340 Accounts receivable (net) 613,200 576,700 Inventories 452,600 350,400 Prepaid expenses 162,113 96,950 Total current assets $3,381,623 $2,312,160 Long-term investments 944,422 357,250 Property, plant, and equipment (net) 3,300,000 2,970,000 Total assets $7,626,045 $5,639,410 Liabilities Current liabilities $994,595 $820,860 Long-term liabilities: Mortgage note payable, 8% $1,350,000 $0 Bonds payable, 8% 1,650,000 1,650,000 Total long-term liabilities $3,000,000 $1,650,000 Total liabilities $3,994,595 $2,470,860 Stockholders' Equity Preferred $0.70 stock, $50 par $450,000 $450,000 Common stock, $10 par 510,000 510,000 Retained earnings 2,671,450 2,208,550 Total stockholders' equity $3,631,450 $3,168,550 Total liabilities and stockholders' equity $7,626,045 $5,639,410 Required: Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year. 12. Return on total assets fill in the blank 12 % 14. Return on common stockholders’ equity fill in the blank 14 % 12. Divide the sum of net income plus interest expense by average total assets. Average total assets = (Beginning total assets + Ending total assets) ÷ 2. 14. Divide net income minus preferred dividends from the retained earnings statement by average common stockholders' equity. Common stockholders' equity = Common stock + Retained earnings. Average common stockholders' equity = (Beginning common stockholders' equity + Ending common stockholders' equity) ÷ 2.

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 66 on December 31, 20Y2. Marshall Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Retained earnings, January 1 $2,208,550 $1,855,250 Net income 489,600 380,000 Dividends: On preferred stock (6,300) (6,300) On common stock (20,400) (20,400) Retained earnings, December 31 $2,671,450 $2,208,550 Marshall Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $3,510,205 $3,234,090 Cost of merchandise sold 1,164,350 1,071,200 Gross profit $2,345,855 $2,162,890 Selling expenses $858,210 $1,028,620 Administrative expenses 731,065 604,110 Total operating expenses $1,589,275 $1,632,730 Income from operations $756,580 $530,160 Other revenue and expense: Other revenue 39,820 33,840 Other expense (interest) (240,000) (132,000) Income before income tax expense $556,400 $432,000 Income tax expense 66,800 52,000 Net income $489,600 $380,000 Marshall Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $856,850 $484,770 Marketable securities 1,296,860 803,340 Accounts receivable (net) 613,200 576,700 Inventories 452,600 350,400 Prepaid expenses 162,113 96,950 Total current assets $3,381,623 $2,312,160 Long-term investments 944,422 357,250 Property, plant, and equipment (net) 3,300,000 2,970,000 Total assets $7,626,045 $5,639,410 Liabilities Current liabilities $994,595 $820,860 Long-term liabilities: Mortgage note payable, 8% $1,350,000 $0 Bonds payable, 8% 1,650,000 1,650,000 Total long-term liabilities $3,000,000 $1,650,000 Total liabilities $3,994,595 $2,470,860 Stockholders' Equity Preferred $0.70 stock, $50 par $450,000 $450,000 Common stock, $10 par 510,000 510,000 Retained earnings 2,671,450 2,208,550 Total stockholders' equity $3,631,450 $3,168,550 Total liabilities and stockholders' equity $7,626,045 $5,639,410 Required: Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year. 12. Return on total assets fill in the blank 12 % 14. Return on common stockholders’ equity fill in the blank 14 % 12. Divide the sum of net income plus interest expense by average total assets. Average total assets = (Beginning total assets + Ending total assets) ÷ 2. 14. Divide net income minus preferred dividends from the retained earnings statement by average common stockholders' equity. Common stockholders' equity = Common stock + Retained earnings. Average common stockholders' equity = (Beginning common stockholders' equity + Ending common stockholders' equity) ÷ 2.

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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Question

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 66 on December 31, 20Y2.

Marshall Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Retained earnings, January 1	$2,208,550		$1,855,250
Net income	489,600		380,000
Dividends:
	On preferred stock	(6,300)		(6,300)
	On common stock	(20,400)		(20,400)
Retained earnings, December 31	$2,671,450		$2,208,550

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$3,510,205		$3,234,090
Cost of merchandise sold	1,164,350		1,071,200
Gross profit	$2,345,855		$2,162,890
Selling expenses	$858,210		$1,028,620
Administrative expenses	731,065		604,110
Total operating expenses	$1,589,275		$1,632,730
Income from operations	$756,580		$530,160
Other revenue and expense:
Other revenue	39,820		33,840
Other expense (interest)	(240,000)		(132,000)
Income before income tax expense	$556,400		$432,000
Income tax expense	66,800		52,000
Net income	$489,600		$380,000

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets:
	Cash	$856,850		$484,770
	Marketable securities	1,296,860		803,340
	Accounts receivable (net)	613,200		576,700
	Inventories	452,600		350,400
	Prepaid expenses	162,113		96,950
		Total current assets	$3,381,623		$2,312,160
Long-term investments	944,422		357,250
Property, plant, and equipment (net)	3,300,000		2,970,000
Total assets	$7,626,045		$5,639,410
Liabilities
Current liabilities	$994,595		$820,860
Long-term liabilities:
	Mortgage note payable, 8%	$1,350,000		$0
	Bonds payable, 8%	1,650,000		1,650,000
		Total long-term liabilities	$3,000,000		$1,650,000
Total liabilities	$3,994,595		$2,470,860
Stockholders' Equity
Preferred $0.70 stock, $50 par	$450,000		$450,000
Common stock, $10 par	510,000		510,000
Retained earnings	2,671,450		2,208,550
Total stockholders' equity	$3,631,450		$3,168,550
Total liabilities and stockholders' equity	$7,626,045		$5,639,410

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

12. Return on total assets	fill in the blank 12	%
14. Return on common stockholders’ equity	fill in the blank 14	%

12. Divide the sum of net income plus interest expense by average total assets. Average total assets = (Beginning total assets + Ending total assets) ÷ 2.

14. Divide net income minus preferred dividends from the retained earnings statement by average common stockholders' equity. Common stockholders' equity = Common stock + Retained earnings. Average common stockholders' equity = (Beginning common stockholders' equity + Ending common stockholders' equity) ÷ 2.

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