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Posts: 122
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9 months ago
Macmillan Corporation has provided the following financial data: | Balance Sheet | | December 31, Year 2 and Year 1 | | Year 2 | Year 1 |
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| Assets | | |
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| Current assets: | | |
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| Cash | $ 156,000 | $ 120,000 |
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| Accounts receivable, net | 268,000 | 280,000 |
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| Inventory | 146,000 | 130,000 |
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| Prepaid expenses | 20,000 | 20,000 |
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| Total current assets | 590,000 | 550,000 |
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| Plant and equipment, net | 732,000 | 760,000 |
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| Total assets | $ 1,322,000 | $ 1,310,000 |
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| Liabilities and Stockholders' Equity | | |
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| Current liabilities: | | |
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| Accounts payable | $ 175,000 | $ 180,000 |
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| Accrued liabilities | 46,000 | 50,000 |
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| Notes payable, short term | 80,000 | 80,000 |
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| Total current liabilities | 301,000 | 310,000 |
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| Bonds payable | 190,000 | 190,000 |
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| Total liabilities | 491,000 | 500,000 |
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| Stockholders' equity: | | |
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| Common stock, $5 par value | 450,000 | 450,000 |
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| Additional paid-in capital | 70,000 | 70,000 |
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| Retained earnings | 311,000 | 290,000 |
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| Total stockholders' equity | 831,000 | 810,000 |
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| Total liabilities & stockholders' equity | $ 1,322,000 | $ 1,310,000 |
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| Income Statement—Year 2 | | For the Year Ended December 31, Year 2 | | Sales (all on account) | $ 1,390,000 |
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| Cost of goods sold | 830,000 |
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| Gross margin | 560,000 |
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| Operating expenses | 500,615 |
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| Net operating income | 59,385 |
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| Interest expense | 16,000 |
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| Net income before taxes | 43,385 |
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| Income taxes (35%) | 15,185 |
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| Net income | $ 28,200 |
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Dividends on common stock during Year 2 totaled $7,200. The market price of common stock at the end of Year 2 was $3.69 per share. The company’s working capital at the end of Year 2 is: ▸ $732,000 ▸ $831,000 ▸ $289,000 ▸ $590,000
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