ACC305 Week 2 Assignment 1

ACC305 Week 2 Assignment 1 - Integrated Case 5-18 COVINGTON...

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Integrated Case 5-18 COVINGTON PIKE CORPORATION Balance Sheet At December 31, 2010 Assets Current assets: Cash $ 15,000 Accounts receivable, net 12,000 Inventories 29,993 Property, Plant, and Equipment 190,106 Total assets $ 217,106 Liabilities and Shareholders’ Equity Current liabilities $ 20,790 Note payable 5,000 Total current liabilities 25,790 Long-term liabilities: Bonds payable 40,033 Interest payable 1,283 Total long-term liabilities 41,316 Shareholders’ equity: Total shareholders’ equity 150,000 Total liabilities and shareholders’ equity $ 217,106 COVINGTON PIKE CORPORATION Income Statement At December 31, 2010 Net Sales $ 300,000 Cost of Good Sold 179,960 Goss Profit 120,040 Operating Expense 103,757 Interest Expense 1,283 Tax Expense 7,000 Net Income $ 15,000 Calculations (in thousands)
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a) Profit margin on sales = net income/sales = 5% Sales = $15/ 5% = $300 b) Return on assets = net income/total assets = 7.5% Total assets = $15/7.5% = $200 c) Gross profit margin = Gross profit/sales = 40%
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ACC305 Week 2 Assignment 1 - Integrated Case 5-18 COVINGTON...

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