2024 – 1 Problem 2 1 Income statement LO1 Frantic Fast Foods had earnings after

Frantic Fast Foods had earnings after taxes of $1,200,000 in the year 2009 with 322,000 shares outstanding. On January 1, 2010, the firm issued 30,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 24 percent.

(a)

Compute earnings per share for the year 2009. (Round your answer to 2 decimal places. Omit the “$” sign in your response.)

  Earnings per share

(b)

Compute earnings per share for the year 2010. (Round your answer to 2 decimal places. Omit the “$” sign in your response.)

  Earnings per share

Hillary Swank Clothiers had sales of $428,000 and cost of goods sold of $260,000.

(a)

What is the gross profit margin (ratio of gross profit to sales)? (Round your answer to the nearest whole percentage. Omit the “%” sign in your response.)

  Gross profit margin

(b)

If the average firm in the clothing industry had a gross profit of 35 percent, how is the firm doing?

  The firm is .

A-Rod Fishing Supplies had sales of $2,160,000 and cost of goods sold of $1,550,000. Selling and administrative expenses represented 10 percent of sales. Depreciation was 6 percent of the total assets of $4,450,000.

What was the firm’s operating profit? (Omit the “$” sign in your response.)

  Operating profit

Given the following information, prepare an income statement for the Dental Drilling Company. (Input all amounts as positive values. Omit the “$” sign in your response.)

  Selling and administrative expense

$

72,000  

  Depreciation expense

71,000  

  Sales

536,000  

  Interest expense

45,000  

  Cost of goods sold

179,000  

  Taxes

53,000  

Given the following information, prepare an income statement for Jonas Brothers Cough Drops. (Input all amounts as positive values. Omit the “$” sign in your response.)

  Selling and administrative expense

$

326,000  

  Depreciation expense

196,000  

  Sales

1,600,000  

  Interest expense

124,000  

  Cost of goods sold

551,000  

  Taxes

167,000  

Stein Books, Inc., sold 2,300 finance textbooks for $200 each to High Tuition University in 2010. These books cost $170 to produce. Stein Books spent $12,300 (selling expense) to convince the university to buy its books.

     Depreciation expense for the year was $15,500. In addition, Stein Books borrowed $102,000 on January 1, 2010, on which the company paid 17 percent interest. Both the interest and principal of the loan were paid on December 31, 2010. The publishing firm’s tax rate is 30 percent.

Prepare an income statement for Stein Books. (Input all amounts as positive values. Omit the “$” sign in your response.)

Arrange the following items in proper balance sheet presentation (Be sure to list the assets in order of their liquidity. Input all amounts as positive values. Omit the “$” sign in your response):

  Accumulated depreciation

$

347,000  

  Retained earnings

46,000  

  Cash

14,000  

  Bonds payable

137,000  

  Accounts receivable

51,000  

  Plant and equipment—original cost

668,000  

  Accounts payable

38,000  

  Allowance for bad debts

6,000  

  Common stock, $1 par, 100,000 shares outstanding

100,000  

  Inventory

71,000  

  Preferred stock, $52 par, 1,000 shares outstanding

52,000  

  Marketable securities

28,000  

  Investments

24,000  

  Notes payable

39,000  

  Capital paid in excess of par (common stock)

91,000  

Okra Snack Delights, Inc., has an operating profit of $241,000. Interest expense for the year was $35,800; preferred dividends paid were $34,100; and common dividends paid were $39,600. The tax was $61,400. The firm has 23,700 shares of common stock outstanding.

(a)

Calculate the earnings per share and the common dividends per share. (Round your answers to 2 decimal places. Omit the “$” sign in your response.)

  Earnings per share

  Common dividends per share

(b)

What was the increase in retained earnings for the year? (Omit the “$” sign in your response.)

  Increase in retained earnings