CERVEZA CORPORATION Comparative Income Statement   This Year Last Year   Sales (all on account) ............................................ $452,000 $388,000   Less cost of goods sold .........................................  260,000 221,000   Gross margin ......................................................... 192,000 167,000   Less operating expenses ........................................  104,000 89,000   Net operating income ............................................ 88,000 78,000   Less interest expense .............................................      8,000 8,000   Net income before taxes ........................................ 80,000 70,000   Less income taxes (30%) ......................................    24,000 21,000   Net income ............................................................ $  56,000 $  49,000   CERVEZA CORPORATION     Comparative Balance Sheet       This Year Last Year   Assets       Current assets:       Cash .................................................................... $  42,000 $  21,000   Marketable securities ......................................... 32,000 28,000   Accounts receivable, net .................................... 84,000 102,000   Inventory ............................................................ 96,000 70,000   Prepaid expenses ................................................ 11,000 9,000   Total current assets ................................................ 265,000 230,000   Plant and equipment, net ....................................... 410,000 380,000   Total assets ............................................................ $675,000 $610,000           Liabilities and Stockholders’ Equity       Liabilities: .............................................................       Current liabilities ................................................ $115,000 $  90,000   Bonds payable, 10% ........................................... 80,000 80,000   Total liabilities ...................................................... 195,000 170,000   Stockholders’ equity:       Preferred stock, $100 par, 7% ............................ 100,000 100,000   Common stock, $5 par ....................................... 300,000 300,000   Retained earnings ............................................... 80,000 40,000   Total stockholders’ equity ..................................... 480,000 440,000   Total liabilities and stockholders’ equity .............. $675,000 $610,000           Additional information: * In addition to the preferred dividends, dividends of $0.15 per share were declared and paid on the common stock this year. 66.If a vertical analysis was done on Cerveza's financial statements, what percent would be shown for retained earnings at the end of this year? (rounded if necessary) A)9.3% B)11.9% C)16.7%   D) 17.7%

Intermediate Accounting: Reporting And Analysis
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ISBN:9781337788281
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Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
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CERVEZA CORPORATION

Comparative Income Statement

 

This Year

Last Year

 

Sales (all on account) ............................................ $452,000

$388,000

 

Less cost of goods sold .........................................  260,000

221,000

 

Gross margin ......................................................... 192,000

167,000

 

Less operating expenses ........................................  104,000

89,000

 

Net operating income ............................................ 88,000

78,000

 

Less interest expense .............................................      8,000

8,000

 

Net income before taxes ........................................ 80,000

70,000

 

Less income taxes (30%) ......................................    24,000

21,000

 

Net income ............................................................ $  56,000

$  49,000

 

CERVEZA CORPORATION

 

 

Comparative Balance Sheet

 

 

 

This Year

Last Year

 

Assets

 

 

 

Current assets:

 

 

 

Cash ....................................................................

$  42,000

$  21,000

 

Marketable securities .........................................

32,000

28,000

 

Accounts receivable, net ....................................

84,000

102,000

 

Inventory ............................................................

96,000

70,000

 

Prepaid expenses ................................................

11,000

9,000

 

Total current assets ................................................

265,000

230,000

 

Plant and equipment, net .......................................

410,000

380,000

 

Total assets ............................................................

$675,000

$610,000

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Liabilities: .............................................................

 

 

 

Current liabilities ................................................

$115,000

$  90,000

 

Bonds payable, 10% ...........................................

80,000

80,000

 

Total liabilities ......................................................

195,000

170,000

 

Stockholders’ equity:

 

 

 

Preferred stock, $100 par, 7% ............................

100,000

100,000

 

Common stock, $5 par .......................................

300,000

300,000

 

Retained earnings ...............................................

80,000

40,000

 

Total stockholders’ equity .....................................

480,000

440,000

 

Total liabilities and stockholders’ equity ..............

$675,000

$610,000

       

 

Additional information:

* In addition to the preferred dividends, dividends of $0.15 per share were declared and paid on the common stock this year.

66.If a vertical analysis was done on Cerveza's financial statements, what percent would be shown for retained earnings at the end of this year? (rounded if necessary)

A)9.3%

B)11.9%

C)16.7%   D) 17.7%

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