(Learning Objective 3, 6: Preparing a corporation’s balance sheet; measuring profitability) The following accounts and related balances of Kingston Appliances, Inc., are arranged in no particular order.
|
Dividends payable |
44,000 |
Accounts payable |
$ 31,000 |
|
Total assets, December 31, 20X6 |
$ 3,000 |
Retained earnings |
? |
|
Net income |
461,000 |
Common stock, $1 par; 100,000 shares authorized, 42,000 shares issued |
42,000 |
|
Common stockholders’ equity, December 31, 20X6 |
36,200 |
Inventory |
93,000 |
|
Interest expense |
283,000 |
Property, plant, and equipment, net |
181,000 |
|
Treasury stock, common, 1,600 shares at cost |
3,800 |
Goodwill |
6,000 |
|
Cash |
11,000 |
Preferred stock, 4%, $10 par, 25,000 shares authorized, 3,700 shares issued |
37,000 |
|
Prepaid expenses |
13,000 |
Additional paid in capital common |
140,000 |
|
Patent, net |
31,000 |
||
|
Accrued liabilities |
17,000 |
||
|
Long term note payable |
79,000 |
||
|
Accounts receivable, net |
71,000 |
Required
1. Prepare Kingston’s classified balance sheet in the account format at December 31, 20X7.
2. Compute rate of return on total assets and rate of return on common stockholders’ equity for the year ended December 31, 20X7.
3. Do these rates of return suggest strength, weakness, or a mid range? Give your reason.