FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The financial statements for Castile Products, Inc., are given below: |
| Castile Products, Inc. December 31 |
||||||
| Assets | ||||||
| Current assets: | ||||||
| Cash | $ | 19,000 | ||||
| |
220,000 | |||||
| Merchandise inventory | 370,000 | |||||
| Prepaid expenses | 8,000 | |||||
| Total current assets | 617,000 | |||||
| Property and equipment, net | 810,000 | |||||
| Total assets | $ | 1,427,000 | ||||
| Liabilities and |
||||||
| Liabilities: | ||||||
| Current liabilities | $ | 230,000 | ||||
| Bonds payable, 11% | 310,000 | |||||
| Total liabilities | 540,000 | |||||
| Stockholders’ equity: | ||||||
| Common stock, $5 par value | $ | 170,000 | ||||
| |
717,000 | |||||
| Total stockholders’ equity | 887,000 | |||||
| Total liabilities and stockholders' equity | $ | 1,427,000 | ||||
| Castile Products, Inc. Income Statement For the Year Ended December 31 |
|||
| Sales | $ | 2,220,000 | |
| Cost of goods sold | 1,180,000 | ||
| Gross margin | 1,040,000 | ||
| Selling and administrative expenses | 640,000 | ||
| Net operating income | 400,000 | ||
| Interest expense | 34,100 | ||
| Net income before taxes | 365,900 | ||
| Income taxes (30%) | 109,770 | ||
| Net income | $ | 256,130 | |
|
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $340,000. All sales were on account. Assets at the beginning of the year totaled $1,070,000, and the stockholders’ equity totaled $655,000. |
| Required: |
| Compute the following: |
| 1. |
Gross margin percentage. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) |
| 2. |
Net profit margin percentage. (Round your answer to the nearest whole percentage place (i.e., 0.1234 should be entered as 12%).) |
| 3. |
Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| 4. |
Return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) |
| 5. | Was financial leverage positive or negative for the year? | ||||
|
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