Refer to the Jeanette Company information in Cornerstone Exercise 16-18.

Required:

Round answers to two decimal places.

1. Calculate the average common stockholders’ equity.

2. Calculate the return on stockholders’ equity.

Exercise 16-18

Transcribed Image Text:

Jeanette Company Income Statement For the Year Ended December 31, 2010 Amount Percent $ 8,281,989 (5,383,293) $ 2,898,696 (1,323,368) $ 1,575,328 (50,000) $ 1,525,328 (610,131) $ 915,197 Net sales 100.0% Less: Cost of goods sold Gross margin Less: Operating expenses Operating income Less: Interest expense 65.0 35.0 16.0 19.0 0.6 Net income before taxes 18.4 Less: Taxes (40%)* 7.4 Net income 11.0 * Includes both state and federal taxes. Jeanette Company Statement of Retained Earnings For the Year Ended December 31, 2010 $1,979,155 915,197 $2,894,352 Balance, beginning of period Net income Total Less: Preferred dividends (80,000) (201,887) $2,612,465 Dividends to common stockholders Balance, end of period