LR Enterprises Inc. had the following equity account balances at December 31, 2013: Preferred shares, $1.75, non-cumulative,
Question:
LR Enterprises Inc. had the following equity account balances at December 31, 2013:
Preferred shares, $1.75, non-cumulative,
Authorized: 100,000 shares
Issued and outstanding: 45,000 shares ......................................................... $ 675,000
Common shares,
Authorized: Unlimited
Issued and outstanding: 800,000 shares ....................................................... 1,320,000
Retained earnings............................................................................................. 645,000
Sales during 2014 totalled $1,560,000 and operating expenses were $998,000. Assume that income tax is accrued at year-end at the rate of 30% of annual operating income. On March 1, 2014, 200,000 of the common shares were repurchased at $1.70 each and then cancelled. The board of directors declared and paid the annual cash dividend on the preferred shares on December 1 and an 8% common share dividend was declared and distributed on the same day when the market price per common share was $1.80.
Required
Preparation Component:
Use the information provided to prepare:
1. An income statement for the year ended December 31, 2014, including appropriate earnings per share information.
2. A classified balance sheet at December 31, 2014, assuming the following adjusted account balances: Cash, $168,000; Accounts Receivable, $102,000; Allowance for Doubtful Accounts, $3,500; Prepaid Insurance, $36,000; Land, $1,000,000; Building, $500,000; Accumulated Depreciation, Building, $241,000; Machinery, $1,909,600; Accumulated Depreciation, Machinery, $653,850; Furniture, $78,000; Accumulated Depreciation, Furniture, $44,000; Accounts Payable, $41,000; Notes Payable (due March 2016), $27,000.
Analysis Component:
3. What percentage of the assets is financed by debt?
4. What percentage of the assets is financed by equity?
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
Fundamental Accounting Principles Volume II
ISBN: 978-1259066511
14th Canadian Edition
Authors: Larson Kermit, Jensen Tilly