Question
Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new
Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal 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. The market value of the companys common stock at the end of the year was $29. All of the companys sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 1,080 $ 1,220 Accounts receivable, net 9,900 8,000 Inventory 12,100 11,200 Prepaid expenses 650 670 Total current assets 23,730 21,090 Property and equipment: Land 9,300 9,300 Buildings and equipment, net 57,595 42,853 Total property and equipment 66,895 52,153 Total assets $ 90,625 $ 73,243 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 19,000 $ 17,500 Accrued liabilities 1,020 720 Notes payable, short term 250 250 Total current liabilities 20,270 18,470 Long-term liabilities: Bonds payable 9,700 9,700 Total liabilities 29,970 28,170 Stockholders' equity: Common stock 700 700 Additional paid-in capital 4,000 4,000 Total paid-in capital 4,700 4,700 Retained earnings 55,955 40,373 Total stockholders' equity 60,655 45,073 Total liabilities and stockholders' equity $ 90,625 $ 73,243 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 85,025 $ 66,000 Cost of goods sold 39,610 32,000 Gross margin 45,415 34,000 Selling and administrative expenses: Selling expenses 11,200 10,600 Administrative expenses 6,400 6,500 Total selling and administrative expenses 17,600 17,100 Net operating income 27,815 16,900 Interest expense 970 970 Net income before taxes 26,845 15,930 Income taxes 10,738 6,372 Net income 16,107 9,558 Dividends to common stockholders 525 525 Net income added to retained earnings 15,582 9,033 Beginning retained earnings 40,373 31,340 Ending retained earnings $ 55,955 $ 40,373
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