Question
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 20,000 Accounts receivable,
The financial statements for Castile Products, Inc., are given below: |
Castile Products, Inc. Balance Sheet December 31 | ||||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 20,000 | ||||
Accounts receivable, net | 200,000 | |||||
Merchandise inventory | 390,000 | |||||
Prepaid expenses | 9,000 | |||||
Total current assets | 619,000 | |||||
Property and equipment, net | 890,000 | |||||
Total assets | $ | 1,509,000 | ||||
Liabilities and Stockholders' Equity | ||||||
Liabilities: | ||||||
Current liabilities | $ | 240,000 | ||||
Bonds payable, 8% | 400,000 | |||||
Total liabilities | 640,000 | |||||
Stockholders equity: | ||||||
Common stock, $10 par value | $ | 110,000 | ||||
Retained earnings | 759,000 | |||||
Total stockholders equity | 869,000 | |||||
Total liabilities and equity | $ | 1,509,000 | ||||
Castile Products, Inc. Income Statement For the Year Ended December 31 | |||
Sales | $ | 2,270,000 | |
Cost of goods sold | 1,160,000 | ||
Gross margin | 1,110,000 | ||
Selling and administrative expenses | 630,000 | ||
Net operating income | 480,000 | ||
Interest expense | 32,000 | ||
Net income before taxes | 448,000 | ||
Income taxes (30%) | 134,400 | ||
Net income | $ | 313,600 | |
Account balances at the beginning of the year were: accounts receivable, $240,000; and inventory, $330,000. All sales were on account. |
Assume that Castile Products, Inc., paid dividends of $2.15 per share during the year. Also assume that the companys common stock had a market price of $58 at the end of the year and there was no change in the number of outstanding shares of common stock during the year.
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