Q1. Kohl Co. provides warranties for many of its products. The January 1, 2016, balance of the Estimated Warranty Liability account was $35,200. Based on the analysis of warranty claims during the past several years, this year's warranty provision was established at 0.4% of sales. During 2016, the actual cost of servicing products under warranty was $15,600, and sales were $3,600,000.
Required:
a. What amount of Warranty Expense will appear on Kohl Co.'s income statement for the year ended December 31, 2016?
b. What amount will be reported in the Estimated Warranty Liability account on the December 31, 2016, balance sheet?
Q2. On April 15. 2016, Powell, Inc., obtained a six-month working caFotta I loan from its bank. The face amount of the note signed by the treasurer was 51200.000. The interest rate charged by the bank was 9%. The bank made the loan on a discount basis.
Calculate the amount of interest expense applicable to this loan during the fiscal year ended June 30, 2016.
Q3. The balance sheet caption for common stock is the following:
Common stock without par value 1,500,000 shares authorized 500,000 shares issued and 540,000 shares outstanding $8,700,000
Required:
a. Calculate the average price at which the shares were issued.
b. If these shares had been assigned a stated value of $1 each, show how the caption here would be different?
c. If a cash dividend of $1.20 per share were declared, calculate the total amount of cash that would be paid to stockholders.
Q4. Calculate the cash dividends required to be pad for each of the following preferred stock sues:
Required:
a. The semiannual dividend on 9% cumulative preferred, $50 par value, 30,000 shares authorized, issued, and outstanding.
b. The annual dividend on $6.20 cumulative preferred, 500,003 shares authorized, 160,000 shares issued, 127,400 shares outstanding. Last year's dividend has not been paid.
c. The quarterly dividend on.6.5% cumulative preferred, $100 stated value, $103 liquidating value, 200,000 shares authorized, 168,000 shares issued and outstanding. No dividends are in arrears.
Q5. Refer to the following mentioned data.
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(In millions)
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2014
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2013
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2012
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Net revenues
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$8,268
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$8,052
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$7,175
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Cost of Product sold
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5,370
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5,140
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4,365
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Gross margin
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$2,898
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$2,912
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$2,810
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Required:
a. Calculate the gross profit ratio for each of the past three years.
b. Assume that Campbell's net sales for the first four months of 2015 totaled $2.7 billion. Calculate an estimated cost of goods sold and gross profit for the four months, using the gross profit ratio for 2014.
Q6. Ringmeup, Inc., had net income of 5223:925 for the year ended December 31: 2016. At the beginning of the year: 20.000 shares of common stock were outstanding. On May 1, an additional 5:000 shares were issued. On December 1 the company purchased 2:500 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup, Inc., paid the annual dividend on the 16,000 shares of 7%, $100 par value preferred stock that were outstanding the entire year.
Required: Calculate basic earnings per share of common stock for the year ended December 31, 2016.
Q7. Presented here are summarized data from balance sheets and income statement of Wiper. Inc.,
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WIPER, INC, Condensed Balance Sheets December 31, 2017, 2016, 2015 (in millions)
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2017
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2016
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2015
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Current assets
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$650
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$900
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$700
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Other assets
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2,750
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2,050
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1,750
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Total assets
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$3,400
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$2,950
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$2,450
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Current liabilities
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$500
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$800
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$700
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Long-term liabilities
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1,500
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1,000
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800
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Stockholder's equity
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1,400
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1,150
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950
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Total liabilities and stockholders' equity
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$3,400
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$2,950
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$2,450
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WIPER, INC Selected income Statement and Other Data For the year Ended December 31, 2017 and 2016 (in millions)
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2017
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2016
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Income statement data:
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Sales
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$3,300
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$2,900
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Operating income
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380
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300
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Interest expense
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80
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70
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Net income
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300
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230
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Other data:
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Average number of common shares outstanding
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44
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42
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Total dividends paid
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$50
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$30
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Required:
a. Calculate return on investment, based on net income and average total assets, for 2017 and 2016. Show both margin and turnover in your calculation.
b. Calculate return on equity for 2017 and 2016.
c. Calculate working capital and the current ratio for each of the past three years.
d. Calculate earnings per share for 2017 and 2016.
e. If Wiper's stock had a price/earnings ratio of 13 at the end of 2017, what was the market price of the stock?
f. Calculate the cash dividend per share for 2017 and the dividend yield based on the market price calculated in part e.
g. Calculate the dividend payout ratio for 2017.