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Liberty BUSI 320 Connect Homework 1 Answers Complete Solutions
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Question 1
Given the following information, prepare an income statement for the Dental Drilling Company.
Question 2
Given the following information, prepare an income statement for Jonas Brothers Cough Drops.
Question 3
Stein Books Inc. sold 2,300 finance textbooks for $200 each to High Tuition University in 20X1. These books cost $170 to produce. Stein Books spent $12,100 (selling expense) to convince the university to buy its books.
Depreciation expense for the year was $15,700. In addition, Stein Books borrowed $104,000 on January 1, 20X1, on which the company paid 19 percent interest. Both the interest and principal of the loan were paid on December 31, 20X1. The publishing firm’s tax rate is 30 percent.
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Question 4
Arrange the following items in proper balance sheet presentation: (Amounts to be deducted should be indicated with parentheses or a minus sign.)
Question 5
Elite Trailer Parks has an operating profit of $285,000. Interest expense for the year was $30,500; preferred dividends paid were $28,900; and common dividends paid were $36,800. The tax was $68,500. The firm has 21,600 shares of common stock outstanding.
a. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks. (Round your answers to 2 decimal places.)
b. What was the increase in retained earnings for the year?
Question 6
Botox Facial Care had earnings after taxes of $292,000 in 20X1 with 200,000 shares of stock outstanding. The stock price was $45.80. In 20X2, earnings after taxes increased to $320,000 with the same 200,000 shares outstanding. The stock price was $74.00.
a. Compute earnings per share and the P/E ratio for 20X1. (The P/E ratio equals the stock price divided by earnings per share.) (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
b. Compute earnings per share and the P/E ratio for 20X2. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
c. Why did the P/E ratio change? (Do not round intemediate calculations. Input your answers as percents rounded to 2 decimal places.)
Question 7
The Rogers Corporation has a gross profit of $716,000 and $283,000 in depreciation expense. The Evans Corporation also has $716,000 in gross profit, with $47,000 in depreciation expense. Selling and administrative expense is $221,000 for each company.
a. Given that the tax rate is 40 percent, compute the cash flow for both companies.
b. Calculate the difference in cash flow between the two firms.
Question 8
The Holtzman Corporation has assets of $444,000, current liabilities of $51,000, and long-term liabilities of $71,000. There is $35,500 in preferred stock outstanding; 20,000 shares of common stock have been issued.
a. Compute book value (net worth) per share. (Round your answer to 2 decimal places.)
b. If there is $25,700 in earnings available to common stockholders, and Holtzman’s stock has a P/E of 19 times earnings per share, what is the current price of the stock? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
c. What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
