The comparative financial statements prepared at December 31 for Golden Corporat
ID: 2587888 • Letter: T
Question
The comparative financial statements prepared at December 31 for Golden Corporation showed the following summarized data Current Previous Income Statement Sales revenue Cost of goods sold $180,000 $165,000 10,000 100,000 Gross proft Operating expenses Interest expense 70,000 65,000 53,300 50,400 2,700 2,600 Income before income taxes Income tax expense 14,000 12.000 4,000 3,000 Net income S 10,000 $ 9,000 Balance Sheet Cash Accounts receivable (net) Inventory Property and equipment (net) $ 4,000 $ 8,000 19,000 23,000 40,000 35.000 45,000 38,000 $108,000 $104,000 Current liabilities Note payable (long-term) Common stock (par $5) Additional paid-in capital Retained earnings* $ 16,000 $ 19,000 45.000 45.000 30,000 30,000 5,000 12,000 5,000 5,000 $108,000 $104,000 During the current year, cash dividends of $3,000 were declared and paid. Required: 1-a. Compute the gross profit percentage for the current and previous years. (Round your answers to 1 decimal place.) ss Profit Percentage Current Year Previous Year 1-b. Are the current year results better, or worse, than those for the previous year? O Better O Worse 2-a. Compute the net profit margin for the current and previous years. (Round your answers to 1 decimal place.) Net Proft Margin Current Year Previous YearExplanation / Answer
1a)
1b)Worse ,as profit margin has declined from previous year
2a)
5.6%
2b)
Better as Result has improved from previou year
3a)Number of shares outstanding =COmmon shares/ par value
= 30000/5 = 6000 shares
3b)Better ,as EPS has increased
4a)Current year equity =30000+5000+12000=47000
last year equity = 30000+5000+5000=40000
10000/43500
23%
9000/35000
25.7%
4b)Worse ,as ROE has decreased from last year
Formula current year previous Gross profit % Gross profit /sales 70000/180000 65000/165000 38.9% 39.4%