Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665975c75fbd5_886665975c6d91b3.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665975c7edb19_887665975c78f0ad.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665975c87d573_888665975c82df9f.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665975c9188f7_888665975c8b05f1.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/665975c999393_889665975c94ce5d.jpg)
Transcribed Image Text:
Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $600,000 long-term loan from Gulfport State Bank, $150,000 of which will be used to bolster the Cash account and $450,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow: Sabin Electronics Comparative Balance Sheet This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 110,000 $ 250,000 0 28,000 607,000 1,045,000 30,000 1,792,000 1,946,400 $ 3,738,400 $ 850,000 750,000 1,600,000 790,000 1,348,400 2,138,400 $ 3,738,400 400,000 695,000 32,000 1,405,000 1,470,000 $ 2,875,000 $ 400,000 750,000 1,150,000 790,000 935,000 1,725,000 $ 2,875,000 Sales Sabin Electronics Comparative Income Statement and Reconciliation Cost of goods sold This Year $ 5,500,000 3,975,000 1,525,000 673,000 Last Year $ 4,650,000 3,550,000 1,100,000 568,000 Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income Common dividends Net income retained Beginning retained earnings Ending retained earnings 852,000 532,000 90,000 90,000 762,000 442,000 228,600 132,600 533,400 309,400 120,000 99,000 413,400 210,400 935,000 724,600 $ 1,348,400 $ 935,000 During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 2/10, n/30. All sales are on account. Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured patents. Although the company has been fairly profitable, it is now experiencing a severe cash shortage. For this reason, it is requesting a $600,000 long-term loan from Gulfport State Bank, $150,000 of which will be used to bolster the Cash account and $450,000 of which will be used to modernize equipment. The company's financial statements for the two most recent years follow: Sabin Electronics Comparative Balance Sheet This Year Last Year Assets Current assets: Cash Marketable securities Accounts receivable, net Inventory Prepaid expenses Total current assets Plant and equipment, net Total assets Liabilities and Stockholders Equity Liabilities: Current liabilities Bonds payable, 12% Total liabilities Stockholders' equity: Common stock, $15 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 110,000 $ 250,000 0 28,000 607,000 1,045,000 30,000 1,792,000 1,946,400 $ 3,738,400 $ 850,000 750,000 1,600,000 790,000 1,348,400 2,138,400 $ 3,738,400 400,000 695,000 32,000 1,405,000 1,470,000 $ 2,875,000 $ 400,000 750,000 1,150,000 790,000 935,000 1,725,000 $ 2,875,000 Sales Sabin Electronics Comparative Income Statement and Reconciliation Cost of goods sold This Year $ 5,500,000 3,975,000 1,525,000 673,000 Last Year $ 4,650,000 3,550,000 1,100,000 568,000 Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income Common dividends Net income retained Beginning retained earnings Ending retained earnings 852,000 532,000 90,000 90,000 762,000 442,000 228,600 132,600 533,400 309,400 120,000 99,000 413,400 210,400 935,000 724,600 $ 1,348,400 $ 935,000 During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 2/10, n/30. All sales are on account.
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Geoffrey Canada, who served as president and CEO of Harlem Children's Zone (HCZ) from 1990 to 2014, is one of the country's best-known social entrepreneurs. The New York Times Magazine called HCZ one...
-
Clark sold securities for a $50,000 short-term capital loss during the current year, but he has no personal capital gains to recognize. The C&L General Partnership, in which Clark has a 50% capital,...
-
E11-4 (Algo) Calculating Accounting Rate of Return, Payback Period, Net Present Value, Estimating Internal Rate of Return [LO 11-1, 11-2, 11-3, 11-4] Linda's Luxury Travel (LLT) is considering the...
-
W Data table Net Sales Revenue Cost of Goods Sold Gross Profit One Stop, Inc. Income Statement Year Ended December 31, 2024 $ 438,000 203,200 234,800 ea Operating Expenses: Salaries Expense $ 78,400...
-
How can process technology enable better coordination between different supply chain partners?
-
How would you bring up exercise and what would you recommend for Maria? What types of exercise would you be likely to discuss? What would be the goals of her treatment?
-
How can the effective implementation of Just-in-Time (JIT) and lean production principles contribute to improved operational efficiency, cost reduction, and customer satisfaction in a manufacturing...
-
How the black panthers showed leadership in the black community and held themselves accountability for the down fall?
-
Multiply and simplify completely: (5 +4)2
-
Required: 1 What are the balances that will be impacted if the company decides to convert to IFRS? 2 What are the journal entries that the company would have to record to make the adjustment to...
-
Spare Parts was organized on May 1, 2005, and made its first purchase of merchandise on May 3. The purchase was for 1,000 units at a price of \($10\) per unit. On May 5, Spare Parts sold 600 of the...
-
Refer to Exercise 5-4 and prepare the appropriate journal entries for DeSoto Co. to record the May 5 purchase and each of the three separate transactions a through c. DeSoto is a retailer that uses a...
-
On May 11, Smythe Co. accepts delivery of \($30,000\) of merchandise it purchases for resale from Hope Corporation. With the merchandise is an invoice dated May 11, with terms of 3/10, n/90, FOB ship...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App