Please show work. Thank you. The following data are provided: December 31 2011 2
ID: 2385615 • Letter: P
Question
Please show work. Thank you.The following data are provided:
December 31
2011 2010
Cash $ 375,000 $ 250,000
Accounts receivable (net) 400,000 300,000
Inventories 650,000 550,000
Plant assets (net) 2,000,000 1,625,000
Accounts payable 275,000 200,000
Taxes payable 50,000 25,000
Bonds payable 350,000 350,000
10% Preferred stock, $50 par 500,000 500,000
Common stock, $10 par 600,000 450,000
Paid-in capital 400,000 325,000
Retained earnings 1,000,000 875,000
Net credit sales 3,200,000
Cost of goods sold 2,100,000
Operating expenses 725,000
Net income 375,000
Additional information: Depreciation included in cost of goods sold and operating expenses is $305,000. On May 1, 2011, 15,000 shares of common stock were issued. The preferred stock is cumulative. The preferred dividends were not declared during 2011.
The rate of return on common stock equity for 2011 is
A)325 ÷ 2,000.
B)325 ÷ 1,800.
C)375 ÷ 1,800.
D)375 ÷ 2,000.
Explanation / Answer
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