Measures of liquidity, Solvency and ProfitabilityThe comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was$119.70 on December 31, 20Y2.Stargel Inc.Comparative Retained Earnings StatementFor the Years Ended December 31, 20Y2 and 20Y120Y1Retained earnings, January 1 $5,375,000 $4,545,000$925,00020Y2Net income$900,000Dividends:On preferred stockOn common stock(45,000)(45,000)(50,000)$830,000Retained earnings, December 31 $6,180,000 $5,375,000(50,000)$805,000Increase in retained earningsStargel Inc.Comparative Income StatementFor the Years Ended December 31, 20oY2 and 20Y120Y220Y1Sales$10,000,000 $9,400,000Cost of goods sold(5,350,000) (4,950,000)$4,650,000 $4,450,000Gross profitSelling expenses$(2,000,000) $(1,880,000)Administrative expenses(1,500,000) (1,410,000)$(3,500,000) $(3,290,000)Total operating expensesOperating income$1,150,000 $1,160,000Other revenue and expense:Other revenue150,000140,000Other expense (interest)(170,000)(150,000)Income before income tax expense $1,130,000 $1,150,000(230,000)$900,000(225,000)$925,000Income tax expenseNet incomeStargel Inc.Comparative Balance SheetDecember 31, 20Y2 and 20Y120Y220Υ1AssetsCurrent assets:Cash$500,000 $400,000

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Measures of liquidity, Solvency and Profitability The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was $119.70 on December 31, 20Y2. Stargel Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Retained earnings, January 1 Net income Dividends: On preferred stock On common stock $5,375,000 $4,545,000 $900,000 $925,000 (45,000) (50,000) (45,000) (50,000) Increase in retained earnings $830,000 Retained earnings, December 31 $6,180,000 $5,375,000 $805,000

Measures of liquidity, Solvency and Profitability The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was $119.70 on December 31, 20Y2. Stargel Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Retained earnings, January 1 Net income Dividends: On preferred stock On common stock $5,375,000 $4,545,000 $900,000 $925,000 (45,000) (50,000) (45,000) (50,000) Increase in retained earnings $830,000 Retained earnings, December 31 $6,180,000 $5,375,000 $805,000

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 4PB

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