Use this information for Kellman Company to answer the questions that follow. The balance sheets at the end of each of the first two years of operations indicate the following: Kellman Company Year 2 Year 1 Total current assets $600,000 $560,000 Total investments 60,000 40,000 Total property, plant, and equipment 900,000 700,000 Total current liabilities 125,000 65,000 Total long-term liabilities 350,000 250,000 Preferred 9% stock, $100 par 100,000 100,000 Common stock, $10 par 600,000 600,000 Paid-in capital in excess of par—Common stock 75,000 75,000 Retained earnings 310,000 210,000 Using the balance sheets for Kellman Company, if net income is $150,000 and interest expense is $20,000 for Year 2, what is the return on stockholders' equity for Year 2? Group of answer choices 16.04% 6.9% 13.8% 14.5%
Use this information for Kellman Company to answer the questions that follow. The balance sheets at the end of each of the first two years of operations indicate the following: Kellman Company Year 2 Year 1 Total current assets $600,000 $560,000 Total investments 60,000 40,000 Total property, plant, and equipment 900,000 700,000 Total current liabilities 125,000 65,000 Total long-term liabilities 350,000 250,000 Preferred 9% stock, $100 par 100,000 100,000 Common stock, $10 par 600,000 600,000 Paid-in capital in excess of par—Common stock 75,000 75,000 Retained earnings 310,000 210,000 Using the balance sheets for Kellman Company, if net income is $150,000 and interest expense is $20,000 for Year 2, what is the return on stockholders' equity for Year 2? Group of answer choices 16.04% 6.9% 13.8% 14.5%
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 19P
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Question
Use this information for Kellman Company to answer the questions that follow.
The balance sheets at the end of each of the first two years of operations indicate the following:
Kellman Company | ||
Year 2 |
Year 1 |
|
Total current assets |
$600,000 |
$560,000 |
Total investments |
60,000 |
40,000 |
Total property, plant, and equipment |
900,000 |
700,000 |
Total current liabilities |
125,000 |
65,000 |
Total long-term liabilities |
350,000 |
250,000 |
100,000 |
100,000 |
|
Common stock, $10 par |
600,000 |
600,000 |
Paid-in capital in excess of par—Common stock |
75,000 |
75,000 |
Retained earnings |
310,000 |
210,000 |
Using the balance sheets for Kellman Company, if net income is $150,000 and interest expense is $20,000 for Year 2, what is the return on stockholders' equity for Year 2?
Group of answer choices
16.04%
6.9%
13.8%
14.5%
Expert Solution
Step 1
Particulars |
Year 2 |
Year 1 |
Preferred 9% stock, $100 par |
100,000 |
100,000 |
Common stock, $10 par |
600,000 |
600,000 |
Paid-in capital in excess of par—Common stock |
75,000 |
75,000 |
Retained earnings |
310,000 |
210,000 |
Stockholders' equity |
$1,085,000 |
$985,000 |
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