Homework Answers
a). Rate of return on common stock equity = net income available for common stockholder/ common stockholders' equity
= 218080/(792000+368000) = 18.80%
rate of interest paid on bonds payable = interest/bonds payable = 120400/860000 = 14%
b). Yes, Bonita Plastics Inc is trading on equity successfully, as return on equity is higher than rate of interest paid on the bonds.
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Exercise 15-20 Presented below is information from the annual report of Bonita Plastics, Inc. Operating income...
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Exercise 15-20
Presented below is information from the annual report of Blue
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Operating income
$583,200
Bond interest expense
134,930
448,270
Income taxes
268,427
Net income
$179,843
Bonds payable
$1,030,000
Common stock
837,000
Retained earnings
370,000
(a) Compute the return on common stockholders’
equity and the rate of interest paid on bonds. (Assume balances for
debt and equity accounts approximate averages for the year.)
(Round answers to 1 decimal place, e.g.
16.8%.)
Rate of return on common stock equity...
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Presented below are a number of balance sheet items for Flint, Inc., for the current year,...
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The following information is taken from the 2020 annual report of Wildhorse, Inc. Wildhorse’s fiscal year...
The following information is
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December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
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Total assets
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Liabilities
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discount)
$1,426
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equity
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Retained earnings
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stockholders’ equity
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Note X:...
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The following information is taken from the 2020 annual report of Wildhorse, Inc. Wildhorse’s fiscal year...
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year. Wildhorse’s December 31, 2020, balance sheet is as
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Wildhorse, Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of discount)
$1,426
Stockholders’ equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
The following information is taken from the 2020 annual report of Wildhorse, Inc. Wildhorse’s fiscal year...
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of Wildhorse, Inc. Wildhorse’s fiscal year ends December 31 of each
year. Wildhorse’s December 31, 2020, balance sheet is as
follows.
Wildhorse, Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of discount)
$1,426
Stockholders’ equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
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Exercise 15-20
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Plastics, Inc.
Operating income
$583,200
Bond interest expense
134,930
448,270
Income taxes
268,427
Net income
$179,843
Bonds payable
$1,030,000
Common stock
837,000
Retained earnings
370,000
(a) Compute the return on common stockholders’
equity and the rate of interest paid on bonds. (Assume balances for
debt and equity accounts approximate averages for the year.)
(Round answers to 1 decimal place, e.g.
16.8%.)
Rate of return on common stock equity...
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The following information is
taken from the 2020 annual report of Wildhorse, Inc. Wildhorse’s
fiscal year ends December 31 of each year. Wildhorse’s December 31,
2020, balance sheet is as follows.
Wildhorse,
Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of
discount)
$1,426
Stockholders’
equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
The following information is taken from the 2017 annual report of Metlock, Inc. Metlock's fiscal year ends December 31 of each year, Metlock's December 31, 2017, balance sheet is as follows 3490 Metlock Inc Balance sheet December 31, 2017 Assets Cash Inventory Total current assets Plant and equipment Accumulated depreciation Total assets Liabilities Bonds payable (net of discount) Stockholders' equity Common stock Retained earnings Total liabilities and stockholders' equity 1.700 2.190 2.000 (1601 4,030 $1.426, $4.030 Note X: Long Term...
The following information is taken from the 2020 annual report
of Wildhorse, Inc. Wildhorse’s fiscal year ends December 31 of each
year. Wildhorse’s December 31, 2020, balance sheet is as
follows.
Wildhorse, Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of discount)
$1,426
Stockholders’ equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
The following information is taken from the 2020 annual report
of Wildhorse, Inc. Wildhorse’s fiscal year ends December 31 of each
year. Wildhorse’s December 31, 2020, balance sheet is as
follows.
Wildhorse, Inc.
Balance Sheet
December 31, 2020
Assets
Cash
$420
Inventory
1,770
Total current assets
2,190
Plant and equipment
1,800
Accumulated depreciation
(144)
Total assets
3,846
Liabilities
Bonds payable (net of discount)
$1,426
Stockholders’ equity
Common stock
1,500
Retained earnings
920
Total liabilities and
stockholders’ equity
$3,846
Note X:...
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