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 the year was $20. 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 $ 1,100 $ 1,280 Accounts receivable, net 10,700 7,400 Inventory 12,800 10,800 Prepaid expenses 700 530 Total current assets 25,300 20,010 Property and equipment: Land 10,700 10,700 Buildings and equipment, net 49,184 41,192 Total property and equipment 59,884 51,892 Total assets $ 85,184 $ 71,902 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 19,600 $ 17,900 Accrued liabilities 930 900 Notes payable, short term 170 170 Total current liabilities 20,700 18,970 Long-term liabilities: Bonds payable 8,800 8,800 Total liabilities 29,500 27,770 Stockholders' equity: Common stock 700 700 Additional paid-in capital 4,000 4,000 Total paid-in capital 4,700 4,700 Retained earnings 50,984 39,432 Total stockholders' equity 55,684 44,132 Total liabilities and stockholders' equity $ 85,184 $ 71,902 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 73,000 $ 65,000 Cost of goods sold 34,000 33,000 Gross margin 39,000 32,000 Selling and administrative expenses: Selling expenses 11,000 10,700 Administrative expenses 6,700 6,100 Total selling and administrative expenses 17,700 16,800 Net operating income 21,300 15,200 Interest expense 880 880 Net income before taxes 20,420 14,320 Income taxes 8,168 5,728 Net income 12,252 8,592 Dividends to common stockholders 700 700 Net income added to retained earnings 11,552 7,892 Beginning retained earnings 39,432 31,540 Ending retained earnings $ 50,984 $ 39,432 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.) 1. Working capital 2. Current ratio 3. Acid-test ratio

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 the year was $20. 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 $ 1,100 $ 1,280 Accounts receivable, net 10,700 7,400 Inventory 12,800 10,800 Prepaid expenses 700 530 Total current assets 25,300 20,010 Property and equipment: Land 10,700 10,700 Buildings and equipment, net 49,184 41,192 Total property and equipment 59,884 51,892 Total assets $ 85,184 $ 71,902 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 19,600 $ 17,900 Accrued liabilities 930 900 Notes payable, short term 170 170 Total current liabilities 20,700 18,970 Long-term liabilities: Bonds payable 8,800 8,800 Total liabilities 29,500 27,770 Stockholders' equity: Common stock 700 700 Additional paid-in capital 4,000 4,000 Total paid-in capital 4,700 4,700 Retained earnings 50,984 39,432 Total stockholders' equity 55,684 44,132 Total liabilities and stockholders' equity $ 85,184 $ 71,902 Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 73,000 $ 65,000 Cost of goods sold 34,000 33,000 Gross margin 39,000 32,000 Selling and administrative expenses: Selling expenses 11,000 10,700 Administrative expenses 6,700 6,100 Total selling and administrative expenses 17,700 16,800 Net operating income 21,300 15,200 Interest expense 880 880 Net income before taxes 20,420 14,320 Income taxes 8,168 5,728 Net income 12,252 8,592 Dividends to common stockholders 700 700 Net income added to retained earnings 11,552 7,892 Beginning retained earnings 39,432 31,540 Ending retained earnings $ 50,984 $ 39,432 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.) 1. Working capital 2. Current ratio 3. Acid-test ratio

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Weller Corporation Comparative Balance Sheet (dollars in thousands)
	This Year	Last Year
Assets
Current assets:
Cash	$	1,100	$	1,280
Accounts receivable, net		10,700		7,400
Inventory		12,800		10,800
Prepaid expenses		700		530
Total current assets		25,300		20,010
Property and equipment:
Land		10,700		10,700
Buildings and equipment, net		49,184		41,192
Total property and equipment		59,884		51,892
Total assets	$	85,184	$	71,902
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	19,600	$	17,900
Accrued liabilities		930		900
Notes payable, short term		170		170
Total current liabilities		20,700		18,970
Long-term liabilities:
Bonds payable		8,800		8,800
Total liabilities		29,500		27,770
Stockholders' equity:
Common stock		700		700
Additional paid-in capital		4,000		4,000
Total paid-in capital		4,700		4,700
Retained earnings		50,984		39,432
Total stockholders' equity		55,684		44,132
Total liabilities and stockholders' equity	$	85,184	$	71,902

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year	Last Year
Sales	$	73,000	$	65,000
Cost of goods sold		34,000		33,000
Gross margin		39,000		32,000
Selling and administrative expenses:
Selling expenses		11,000		10,700
Administrative expenses		6,700		6,100
Total selling and administrative expenses		17,700		16,800
Net operating income		21,300		15,200
Interest expense		880		880
Net income before taxes		20,420		14,320
Income taxes		8,168		5,728
Net income		12,252		8,592
Dividends to common stockholders		700		700
Net income added to retained earnings		11,552		7,892
Beginning retained earnings		39,432		31,540
Ending retained earnings	$	50,984	$	39,432

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.)


1.	Working capital
2.	Current ratio
3.	Acid-test ratio

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