Question

Exercise 14-13 a-b In 2020, Crane Corporation had net sales of $606,000 and cost of goods sold of $356,000. Operating expenses were $148,000, and interest expense was $8,000. The corporation’s tax rate is 31%. The corporation declared preferred dividends of $14,000 in 2020, and its average common stockholders’ equity during the year was $195,000. Your answer is partially correct. Try again. Prepare an income statement for Crane Corporation. CRANE CORPORATION Income Statement For the Year Ended December 31, 2020December 31, 2020For the Quarter Ended December 31, 2020 Income Tax ExpenseExpensesGross Profit / (Loss)Total ExpensesNet Income / (Loss)Retained Earnings, December 31Operating ExpensesCost of Goods SoldIncome before Income TaxesRetained Earnings, January 1Net SalesIncome from OperationsTotal RevenuesDividendsInterest Expense $ Retained Earnings, December 31Income Tax ExpenseDividendsTotal RevenuesIncome before Income TaxesRetained Earnings, January 1ExpensesNet SalesOperating ExpensesGross Profit / (Loss)Interest ExpenseIncome from OperationsNet Income / (Loss)Total ExpensesCost of Goods Sold Gross Profit / (Loss)Operating ExpensesCost of Goods SoldRetained Earnings, December 31Total RevenuesNet SalesRetained Earnings, January 1DividendsExpensesInterest ExpenseIncome before Income TaxesTotal ExpensesIncome from OperationsIncome Tax ExpenseNet Income / (Loss) Cost of Goods SoldInterest ExpenseGross Profit / (Loss)Total RevenuesRetained Earnings, January 1Net Income / (Loss)DividendsTotal ExpensesIncome Tax ExpenseRetained Earnings, December 31ExpensesIncome before Income TaxesIncome from OperationsOperating ExpensesNet Sales Cost of Goods SoldNet SalesIncome Tax ExpenseExpensesNet Income / (Loss)Gross Profit / (Loss)Operating ExpensesTotal ExpensesDividendsRetained Earnings, December 31Total RevenuesIncome before Income TaxesIncome from OperationsInterest ExpenseRetained Earnings, January 1 Income Tax ExpenseExpensesDividendsTotal ExpensesCost of Goods SoldRetained Earnings, January 1Income before Income TaxesOperating ExpensesIncome from OperationsNet SalesGross Profit / (Loss)Total RevenuesInterest ExpenseNet Income / (Loss)Retained Earnings, December 31 Operating ExpensesNet Income / (Loss)Income from OperationsIncome Tax ExpenseGross Profit / (Loss)Retained Earnings, January 1Interest ExpenseCost of Goods SoldRetained Earnings, December 31Total ExpensesDividendsNet SalesTotal RevenuesExpensesIncome before Income Taxes Income Tax ExpenseInterest ExpenseIncome before Income TaxesGross Profit / (Loss)Net Income / (Loss)Retained Earnings, December 31Operating ExpensesTotal RevenuesRetained Earnings, January 1ExpensesNet SalesTotal ExpensesIncome from OperationsCost of Goods SoldDividends Retained Earnings, January 1Net SalesNet Income / (Loss)DividendsOperating ExpensesIncome before Income TaxesRetained Earnings, December 31Income from OperationsTotal ExpensesIncome Tax ExpenseInterest ExpenseTotal RevenuesCost of Goods SoldExpensesGross Profit / (Loss) $ LINK TO TEXT LINK TO TEXT Your answer is incorrect. Try again. Compute Crane Corporation’s return on common stockholders’ equity for 2020. (Round answer to 1 decimal place, e.g. 10.5%.) Return on common stockholders’ equity % Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT LINK TO TEXT Question Attempts: 1 of 5 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

CRANE CORPORATION
Income statement
For the year ended December 31
Net sales	$ 606,000
Less: Cost of goods sold	$ 356,000
Gross profit	$ 250,000
Operating expenses	$ 148,000
Income from operations	$ 102,000
Interest expenses	$ 8,000
Income before income taxes	$ 94,000
Income tax expenses @ 31%	$ 29,140
Net income	$ 64,860

Net income	$ 64,860
Less: Preferred dividend	-$ 14,000
	$ 50,860
Divide: Average common stockholders' equity	$ 195,000
Return on common stockholders' equity	26.1%