The income statement , statement of retained earnings and balance sheet of Somerville Company are as follows: Somerville Company Income Statement For the Year Ended December 31, 2019 Amount Percent Net sales 8,281,989 100.0% Less: Cost of goods sold Gross margin (5,383,293) 2,898,696 (1,323,368) 1,575,328 (50,000) 1,525,328 65.0 35.0 Less: Operating expenses Operating income Less: Interest expense 16.0 19.0 0.6 Income before taxes 18.4 Less: Income taxes (40%) (610,131) 915.197 7.4 Net income 11.0 Somerville Company Statement of Retained Earnings For the Year Ended December 31, 2019 Balance, beginning of period 1,979,155 Net income 915,197 Total 2,894,352 Less: Preferred dividends (80,000) Dividends to common stockholders (201,887) 2.612.465 Balance, end of period

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Е.
The income statement , statement of retained earnings and balance sheet of Somerville
Company are as follows:
Somerville Company
Income Statement
For the Year Ended December 31, 2019
Amount
Percent
Net sales
8,281,989
100.0%
Less: Cost of goods sold
Gross margin
Less: Operating expenses
Operating income
(5,383,293)
2,898,696
(1,323,368)
1,575,328
(50,000)
1,525,328
65.0
35.0
16.0
19.0
Less: Interest expense
Income before taxes
0.6
18.4
Less: Income taxes (40%)
(610,131)
915.197
7.4
Net income
11.0
Somerville Company
Statement of Retained Earnings
For the Year Ended December 31, 2019
Balance, beginning of period
1,979,155
Net income
915,197
Total
2,894,352
(80,000)
(201,887)
2.612.465
Less: Preferred dividends
Dividends to common stockholders
Balance, end of period
Transcribed Image Text:Е. The income statement , statement of retained earnings and balance sheet of Somerville Company are as follows: Somerville Company Income Statement For the Year Ended December 31, 2019 Amount Percent Net sales 8,281,989 100.0% Less: Cost of goods sold Gross margin Less: Operating expenses Operating income (5,383,293) 2,898,696 (1,323,368) 1,575,328 (50,000) 1,525,328 65.0 35.0 16.0 19.0 Less: Interest expense Income before taxes 0.6 18.4 Less: Income taxes (40%) (610,131) 915.197 7.4 Net income 11.0 Somerville Company Statement of Retained Earnings For the Year Ended December 31, 2019 Balance, beginning of period 1,979,155 Net income 915,197 Total 2,894,352 (80,000) (201,887) 2.612.465 Less: Preferred dividends Dividends to common stockholders Balance, end of period
Somerville Company
Comparative Balance Sheets
At December 31, 2018, 2019
2018
2019
Assets
Current Assets
2,875,000
800,000
939,776
490,000
2,580,000
700,000
690,000
260,000
Cash
Marketable securities
Accounts receivable (net)
Inventories
93,000
5,197,776
74,261
4,304,261
Other
Total current assets
Property, Plant and Equipment
Land
Building and equipment (net)
Total long-term assets
1,575,000
1,348,800
2,923,800
1,067,315
1,150,000
2,217,315
Total Assets
8,121,576
6,521,576
Liabilities and Stockholders' Equity
Current liabilities
Notes, payable, short term
Accounts payable
Current maturity of long-term debt
Accrued payables
1,170,127
298,484
3,000
200,000
1,671,611
543,641
101,500
2,000
57,780
704,921
Total current liabilities
Long -term liabilities
Bonds Payable, 10%
500,000
2,171,611
500,000
1,204,921
Total Liabilities
Stockholders' Equity
Preferred stock, P25 par 8%
Common stock, P1.50 par
Additional paid in capital
Retained earnings
Total Stockholders' Equity
1,000,000
337,500
2,000,000
2,612,465
5,949,965
1,000,000
337,500
2,000,000
1,979,155
5,316,655
Total Liabilities and Stockholders' Eauitv
8.121.576
6.521.576
Calculate the following:
1. Return on Sales
2. Average Total Assets and Return on Assets. Assume a tax rate of 40%.
3. Return on stockholders' equity
||
Transcribed Image Text:Somerville Company Comparative Balance Sheets At December 31, 2018, 2019 2018 2019 Assets Current Assets 2,875,000 800,000 939,776 490,000 2,580,000 700,000 690,000 260,000 Cash Marketable securities Accounts receivable (net) Inventories 93,000 5,197,776 74,261 4,304,261 Other Total current assets Property, Plant and Equipment Land Building and equipment (net) Total long-term assets 1,575,000 1,348,800 2,923,800 1,067,315 1,150,000 2,217,315 Total Assets 8,121,576 6,521,576 Liabilities and Stockholders' Equity Current liabilities Notes, payable, short term Accounts payable Current maturity of long-term debt Accrued payables 1,170,127 298,484 3,000 200,000 1,671,611 543,641 101,500 2,000 57,780 704,921 Total current liabilities Long -term liabilities Bonds Payable, 10% 500,000 2,171,611 500,000 1,204,921 Total Liabilities Stockholders' Equity Preferred stock, P25 par 8% Common stock, P1.50 par Additional paid in capital Retained earnings Total Stockholders' Equity 1,000,000 337,500 2,000,000 2,612,465 5,949,965 1,000,000 337,500 2,000,000 1,979,155 5,316,655 Total Liabilities and Stockholders' Eauitv 8.121.576 6.521.576 Calculate the following: 1. Return on Sales 2. Average Total Assets and Return on Assets. Assume a tax rate of 40%. 3. Return on stockholders' equity ||
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