(Learning Objective 3, 6: Preparing a corporation’s balance sheet; measuring profitability) The following accounts and related balances of Bluebird Designers, Inc., as of December 31, 20X8, are arranged in no particular order.
|
Cash |
14,000 |
Interest expense |
$ 16,100 |
|
Accounts receivable, net |
$41,000 |
Property, plant, and equipment, net |
357,000 |
|
Paid in capital in excess of par common |
24,000 |
Common stock, $1 par, 500,000 shares authorized, 115,000 shares issued |
115,000 |
|
Accrued liabilities |
19,000 |
Prepaid expenses |
10,000 |
|
Long term note payable |
26,000 |
Common stockholders’ equity, December 31, 20X7 |
222,000 |
|
Inventory |
98,000 |
Net income |
31,000 |
|
Dividends payable |
99,000 |
Total assets, December 31, 20X7 |
494,000 |
|
Retained earnings |
9,000 |
Treasury stock, 18,000 shares at cost |
22,000 |
|
Accounts payable |
? |
||
|
Trademark, net |
131,000 |
||
|
Preferred stock, $0.50, no par, 10,000 shares authorized and issued |
9,000 |
||
|
Goodwill |
27,000 |
Required
1. Prepare the company’s classified balance sheet in the account format at December 31, 20X8.
2. Compute rate of return on total assets and rate of return on common stockholders’ equity for the year ended December 31, 20X8.
3. Do these rates of return suggest strength or weakness? Give your reason.