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Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 700,000 shares of common stock were outstanding. The Interest rate on the bond payable was 10%, the Income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of this year was $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: $ 1,150 10,200 $ 1,280 12,600 7,000 12,300 730 590 24,680 21,170 Land 10,800 10,800 Buildings and equipment, net 43,663 39,694 Total property and equipment 54,463 50,494 Total assets $ 79,143 $ 71,664 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities $ 18,700 1,100 $ 18,200 880 Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 300 300 20,100 19,380 9,600 9,600 29,700 28,980 700 700 4,000 4,000 4,700 44,743 4,700 37,984 49,443 42,684 $ 79,143 $ 71,664 Total liabilities and stockholders' equity Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales Cost of goods sold $ 69,000 38,000 Last Year $ 65,000 35,000 Gross margin 31,000 30,000 Selling and administrative expenses: Selling expenses 10,700 10,900 Administrative expenses 7,200 6,100 Total selling and administrative expenses 17,900 17,000 Net operating income 13,100 13,000 Interest expense 960 960 Net income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings Required: Compute the following financial data and ratios for this year. 1. Working capital. (Enter your answer in thousands.) 2. Current ratio. (Round your answer to 2 decimal places.) 3. Acid-test ratio. (Round your answer to 2 decimal places.) 12,140 4,856 7,284 525 6,759 37,984 $ 44,743 7,224 280 6,944 31,040 $ 37,984 12,040 4,816 1. Working capital $ 4,270 2. Current ratio 1.21 3. Acid-test ratio 0.55

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 700,000 shares of common stock were outstanding. The Interest rate on the bond payable was 10%, the Income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of this year was $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: $ 1,150 10,200 $ 1,280 12,600 7,000 12,300 730 590 24,680 21,170 Land 10,800 10,800 Buildings and equipment, net 43,663 39,694 Total property and equipment 54,463 50,494 Total assets $ 79,143 $ 71,664 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities $ 18,700 1,100 $ 18,200 880 Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 300 300 20,100 19,380 9,600 9,600 29,700 28,980 700 700 4,000 4,000 4,700 44,743 4,700 37,984 49,443 42,684 $ 79,143 $ 71,664 Total liabilities and stockholders' equity Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales Cost of goods sold $ 69,000 38,000 Last Year $ 65,000 35,000 Gross margin 31,000 30,000 Selling and administrative expenses: Selling expenses 10,700 10,900 Administrative expenses 7,200 6,100 Total selling and administrative expenses 17,900 17,000 Net operating income 13,100 13,000 Interest expense 960 960 Net income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings Required: Compute the following financial data and ratios for this year. 1. Working capital. (Enter your answer in thousands.) 2. Current ratio. (Round your answer to 2 decimal places.) 3. Acid-test ratio. (Round your answer to 2 decimal places.) 12,140 4,856 7,284 525 6,759 37,984 $ 44,743 7,224 280 6,944 31,040 $ 37,984 12,040 4,816 1. Working capital $ 4,270 2. Current ratio 1.21 3. Acid-test ratio 0.55

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 21E
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Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 700,000 shares of common stock were outstanding. The Interest rate on the bond payable was 10%, the Income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of this year was $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: $ 1,150 10,200 $ 1,280 12,600 7,000 12,300 730 590 24,680 21,170 Land 10,800 10,800 Buildings and equipment, net 43,663 39,694 Total property and equipment 54,463 50,494 Total assets $ 79,143 $ 71,664 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities $ 18,700 1,100 $ 18,200 880 Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 300 300 20,100 19,380 9,600 9,600 29,700 28,980 700 700 4,000 4,000 4,700 44,743 4,700 37,984 49,443 42,684 $ 79,143 $ 71,664 Total liabilities and stockholders' equity Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales Cost of goods sold $ 69,000 38,000 Last Year $ 65,000 35,000 Gross margin 31,000 30,000 Selling and administrative expenses: Selling expenses 10,700 10,900 Administrative expenses 7,200 6,100 Total selling and administrative expenses 17,900 17,000 Net operating income 13,100 13,000 Interest expense 960 960 Net income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings Required: Compute the following financial data and ratios for this year. 1. Working capital. (Enter your answer in thousands.) 2. Current ratio. (Round your answer to 2 decimal places.) 3. Acid-test ratio. (Round your answer to 2 decimal places.) 12,140 4,856 7,284 525 6,759 37,984 $ 44,743 7,224 280 6,944 31,040 $ 37,984 12,040 4,816 1. Working capital $ 4,270 2. Current ratio 1.21 3. Acid-test ratio 0.55
Transcribed Image Text:Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 700,000 shares of common stock were outstanding. The Interest rate on the bond payable was 10%, the Income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of this year was $27. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Property and equipment: $ 1,150 10,200 $ 1,280 12,600 7,000 12,300 730 590 24,680 21,170 Land 10,800 10,800 Buildings and equipment, net 43,663 39,694 Total property and equipment 54,463 50,494 Total assets $ 79,143 $ 71,664 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities $ 18,700 1,100 $ 18,200 880 Notes payable, short term Total current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders' equity: Common stock Additional paid-in capital Total paid-in capital Retained earnings Total stockholders' equity 300 300 20,100 19,380 9,600 9,600 29,700 28,980 700 700 4,000 4,000 4,700 44,743 4,700 37,984 49,443 42,684 $ 79,143 $ 71,664 Total liabilities and stockholders' equity Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Sales Cost of goods sold $ 69,000 38,000 Last Year $ 65,000 35,000 Gross margin 31,000 30,000 Selling and administrative expenses: Selling expenses 10,700 10,900 Administrative expenses 7,200 6,100 Total selling and administrative expenses 17,900 17,000 Net operating income 13,100 13,000 Interest expense 960 960 Net income before taxes Income taxes Net income Dividends to common stockholders Net income added to retained earnings Beginning retained earnings Ending retained earnings Required: Compute the following financial data and ratios for this year. 1. Working capital. (Enter your answer in thousands.) 2. Current ratio. (Round your answer to 2 decimal places.) 3. Acid-test ratio. (Round your answer to 2 decimal places.) 12,140 4,856 7,284 525 6,759 37,984 $ 44,743 7,224 280 6,944 31,040 $ 37,984 12,040 4,816 1. Working capital $ 4,270 2. Current ratio 1.21 3. Acid-test ratio 0.55
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