The financial statements for Armstrong and Blair companies for the current year are summarized below Statenent of Financial Position Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Other non-current assets 35,000 40,000 100,000 22,000 30,000 40,000 400,000 308,000 140,000 85,000 Total assets $ 800,000 $ 400,000 $ 100,000 60,000 150,000 30,000 Current liabilities %2. Long-term debt (10x) Share capital Contributed surplus Retained earnings 50,000 70,000 500,000 110,000 70,000 $ 800, e00 60, 000 Total liabilities and shareholders' equity $4 400,000 Statement of Earnings Sales revenue (1/3 on credit) Cost of sales Expenses (including interest and income tax) Net- $ 450,000 (245,000) (160,000) $ 45,000 $ 810,000 (405,000) (315,000) $ 90,000 Selected data from the financial statements for the previous year follows: Armstrong Blair Соmpany Company $ 20,000 92,000 60,000 $ 40,000 48,000 70,000 Accounts receivable (net) Inventory Long-term debt Other data: Share price year-end Income tax rate 18 15 30% $150,000 30% Dividends declared and paid Shares Outstanding 36,000 15,000 50,000

The financial statements for Armstrong and Blair companies for the current year are summarized below Statenent of Financial Position Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Other non-current assets 35,000 40,000 100,000 22,000 30,000 40,000 400,000 308,000 140,000 85,000 Total assets $ 800,000 $ 400,000 $ 100,000 60,000 150,000 30,000 Current liabilities %2. Long-term debt (10x) Share capital Contributed surplus Retained earnings 50,000 70,000 500,000 110,000 70,000 $ 800, e00 60, 000 Total liabilities and shareholders' equity $4 400,000 Statement of Earnings Sales revenue (1/3 on credit) Cost of sales Expenses (including interest and income tax) Net- $ 450,000 (245,000) (160,000) $ 45,000 $ 810,000 (405,000) (315,000) $ 90,000 Selected data from the financial statements for the previous year follows: Armstrong Blair Соmpany Company $ 20,000 92,000 60,000 $ 40,000 48,000 70,000 Accounts receivable (net) Inventory Long-term debt Other data: Share price year-end Income tax rate 18 15 30% $150,000 30% Dividends declared and paid Shares Outstanding 36,000 15,000 50,000

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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Condensed financial data are presented below for the Phoenix Corporation: 20X2 20X1 Accounts receivable $ 267,500 $ 230,000 Inventory 312,500 257,500 Total current assets 670,000 565,000 Intangible assets 50,000 60,000 Total assets 825,000 695,000 Current liabilities 252,500 200,000 Long-term liabilities 77,500 75,000 Sales 1,640,000 Cost of goods sold 982,500 Interest expense 10,000 Income tax expense 77,500 Net income 127,500 Cash flow from operations 71,000 Cash flow from investing activities (6,000 ) Cash flow from financing activities (62,500 ) Tax rate 30 % If there is no preferred stock, the return on common equity for 20X2 is (rounded): Multiple Choice 25.8% 27.9% 41.4% 43.4%
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