Income statement for the period ending Dec 31, 2013 net sales:Heckle-$12,560,000
ID: 2486987 • Letter: I
Question
Income statement for the period ending Dec 31, 2013 net sales:Heckle-$12,560,000, Jeckle- $25,210,000 Costs and expenses: cost of goods sold: Heckle- $6,142,000, Jeckle-$14,834,000 selling expenses:Heckle- $4,822,600, Jeckle-7108200 administrative expenses: Heckle- $986000, Jeckle-2,434,000 total costs and expenses:Heckle- 11950600, Jeckle- 24376200 income from operations: Heckle- 609400, Jeckle- 833800 interest expense: Heckle- 194000, Jeckle- 228000 income before income taxes: Heckle- 415400, Jeckle-605800 income taxes expense: Heckle- 200000, Jeckle- 300000 net income: Heckle- 215400, Jeckle- 305800 ------------------------------------------------------ Balance sheet Dec 31, 2013 Assets Cash: Heckle-80000, Jeckle-192400 Marketable securities at cost: Heckle- 203400, Jeckle-84600 accounts receivable,net: Heckle- 552800, Jeckle-985400 inventory: Heckle- 629800, Jeckle-1253400 prepaid expenses: Heckle- 54400, Jeckle-114000 property, plant, and equipment,net: Heckle- 2,913,600, Jeckle- 6,552,000 intangibles and other assets: Heckle- 553200, Jeckle-144800 total assets: Heckle- 4987200, Jeckle- 9326600 Liabilities and stockholder's equity Accounts Payable: Heckle- 344000, Jeckle- 572600 notes payable: Heckle- 150000, Jeckle- 400000 income taxes payable: Heckle-50200, Jeckle- 73400 bonds payable: Heckle- 2,000,000, Jeckle- 2,000,000 Common stock, $20 par: Heckle- 1,000,000, Jeckle- 600,000 Paid in Capital: Heckle- 609800, Jeckle- 3568600 retained earnings: Heckle- 833200, Jeckle- 2,112,000 total liabilities and stockholders equity: Heckle- 4987200, Jeckle- 9,326,600 During the year, Heckle paid a total of $50,000 in dividends. The market price per share of its stock is currently $60. In comparison, Jeckle paid a total of $114,000 in dividends, and the current market price of its stock is $76 per share. Heckle had net cash flows from operations of $271,500 and net capital expenditures of $625,000. Jeckle had net cash flows from operations of $492,500 and net capital expenditures of $1,050,000. Information for prior years is not readily available. Assume that all notes payable are current liabilities and all bonds payable are long term liabilities and that there is no change in inventory.
1.Which one is better off and why?
2. What are their similarities, differences, strengths, weaknesses, etc.?
3. Which one should JD Campbell and Associates invest in and why?
Explanation / Answer
Ans:
Preparation of income statement:
Particulars
Heckle
Amount
Jackle
Amounts
Sales
$ 125,60,000.00
$ 252,10,000.00
Cost of goods sold
$ 61,42,000.00
$ 148,34,000.00
Selling expenses
$ 48,22,600.00
$ 71,08,200.00
Administrative expenses
$ 9,86,000.00
$ 24,34,000.00
Total costs and expenses
$ 119,50,600.00
$ 243,76,200.00
income from operation
$ 6,09,400.00
$ 8,33,800.00
Interest expenses
$ 19,400.00
$ 2,28,000.00
Income tax expenses
$ 4,15,400.00
$ 6,05,800.00
Net income
$ 3,00,000.00
$ 3,05,800.00
Preparation of balance sheet:
Liabilities
Heckle
Amount
Jackle
Amount
Assets
Heckle
Amount
Jackle
Amount
stock holders equity
$ 34,400.00
$ 5,72,600.00
Cash
$ 80,000.00
$ 1,92,400.00
Payable
$ 1,50,000.00
$ 4,00,000.00
Marketable securities
$ 2,03,400.00
$ 84,600.00
Income tax payable
$ 50,200.00
$ 73,400.00
Account receivable
$ 5,52,800.00
$ 9,85,400.00
Bond paid
$ 20,00,000.00
$ 20,00,000.00
Inventory
$ 6,29,800.00
$ 12,53,400.00
Common stock
$ 10,00,000.00
$ 60,00,000.00
prepaid expenses
$ 54,400.00
$ 1,14,000.00
Paid in capital
$ 6,09,800.00
$ 35,68,600.00
Plant
$ 29,13,600.00
$ 65,52,000.00
Retained earnings
$ 8,33,200.00
$ 21,12,000.00
Intangible assets
$ 5,53,200.00
$ 1,44,800.00
Total liabilities
$ 49,87,200.00
$ 93,26,600.00
Total assets
$ 49,87,200.00
$ 93,26,600.00
(B)The similar difference between Heckle and Jeckle is that Net income, there is no much difference in Net income between this Heckle and Jeckle. The strengths between Heckle and Jeckle is that Heckle strength is Cost of goods sold, and Jeckle strength is income from operation. Heckle weakness is income from operation and Jeckle weakness is more expensive than Heckle.
(C) According to researcher understanding Heckle Ltd associated invest is better than the Jeckele Ltd. Because of their much difference between the assets and liabilities as well as between costs of goods sold, expenses. So good to Invest in Heckle Ltd.
Particulars
Heckle
Amount
Jackle
Amounts
Sales
$ 125,60,000.00
$ 252,10,000.00
Cost of goods sold
$ 61,42,000.00
$ 148,34,000.00
Selling expenses
$ 48,22,600.00
$ 71,08,200.00
Administrative expenses
$ 9,86,000.00
$ 24,34,000.00
Total costs and expenses
$ 119,50,600.00
$ 243,76,200.00
income from operation
$ 6,09,400.00
$ 8,33,800.00
Interest expenses
$ 19,400.00
$ 2,28,000.00
Income tax expenses
$ 4,15,400.00
$ 6,05,800.00
Net income
$ 3,00,000.00
$ 3,05,800.00