Zheng Sen's chinese take out had earnings before interest and taxes of 4,000,000

Zheng Sen's chinese take out had earnings before interest and taxes of 4,000,000 last year. The firm has a marginal tax rate of 40% and currently has the following capital structure:

Long term debt at 12% with an amount of 8,000,000 and total capital percentage of 25% Preferred stock at 14% with an amount of 800,000 and total capital percentage of 25% Common stock equity 2000000 shares outstanding for an amount of 16,000,000 and tot cap percentage of 50

Questions

a. Calculate the firm's after tax ROE and EPS.
b. If the firm retires 4,000,000 of preferred stock using the proceeds from an equal increase in long term debt, what would have been the after tax ROE and EPS?
c. If the firm retires 4,000,000 of preferred stock using the proceeds from the sale of 500,000 shares of common stock, what would have been the after tax ROE and EPS?
 

SOLUTION PREVIEW

a)

	Amount
Earnings befor interest and taxes	4,000,000
Less Interest (8,000,000 x 12%)	-960000
Earnings before taxes	3,040,000
Less Taxes (40%)	-1216000
Earnings after taxes	1,824,000

File name Zheng Sens.xls File type: xls  PRICE:$12

The ledger of Duggan Rental Agency on March 31

E3-5 The ledger of Duggan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.  Debit Credit Prepaid Insurance $3,600 Supplies 2,800 Equipment 25,000 Accumulated Depreciation - Equipment $8,400 Notes Payable 20,000 Unearned Rent Revenue 9,300 Rent Revenue 60,000 Interest Expense 0 Salaries and Wage Expense 14,000 Totals: $45,400 $97,700 An analysis of the accounts shows the following: 1. The equipment depreciation $250 per month is: 2. One-third of the unearned rent was earned during the quarter. 3. Interest of $500 is accrued for the month on notes payable is: 4. Supplies on hand total $850 5. insurance expires at the rate of $300 per month Instructions Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, Supplies Expense. (Omit explanations.) TUTORIAL PREVIEW Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, Supplies Expense. (Omit explanations.) 1 Depreciation Expense ($250 per month × 3 months) 750 Accumulated Depreciation - Equipment 750 End of quarter adjusting entry - Depreciation Expense / Equipment  File name E3-5 Duggan Rental.xls  File type: xls  PRICE:$5

Indicate how each of the following would shift the (1) marginal cost curve

Indicate how each of the following would shift the

(1) marginal cost curve,

(2) average- variable cost curve,

(3) average fixed cost curve, and

(4) average- total cost curve of a manufacturing firm. In each case specify the direction of the shift.

 

A reduction in business property taxes

An increase in the nominal wages of production workers.

A decrease in the price of electricity.

An increase in insurance rates on plant and equipment.

An increase in transportation costs.

 

TUTORIAL PREVIEW

	Nature of the transaction	marginal cost curve	average- variable cost curve	average fixed cost curve	average- total cost curve
A reduction in business property taxes	Fixed Cost	No Change	No Change	Shift down	Shift down

File name Indicate how each.doc File type: doc  PRICE:$5

E13-8 and E14-3 TAGUCHI COMPANY and Conard Corporation

ACC 291 week8 E13-8 and E14-3

 

 

E13-8 Here are comparative balance sheets for Taguchi Company.

 

                                              TAGUCHI COMPANY

                                          Comparative Balance Sheets

31-Dec

Assets                                                                         2011                2010

Cash                                                                            $73,000            $22,000

Accounts receivable                                                    85,000             76,000

Inventories 170,000 189,000                                       170,000           189,000

Land 75,000 100,000                                                  75,000             100,000

Equipment 260,000 200,000                                       260,000           200,000

Accumulated depreciation                                           (66000)           (32000)

Total                                                                            $597,000         $555,000

Liabilities and Stockholders’ Equity               

Accounts payable                                                        $39,000           $47,000

Bonds payable                                                             150,000           200,000

Common stock ($1 par)                                               216,000          174,000

Retained earnings                                                       192,000          134,000

Total                                                                            $597,000         $555,000

 

 Additional information:

1. Net income for 2011 was $103,000.

2. Cash dividends of $45,000 were declared and paid.

3. Bonds payable amounting to $50,000 were redeemed for cash $50,000.

4. Common stock was issued for $42,000 cash.

5. No equipment was sold during 2011, but land was sold at cost.

 

Instructions

Prepare a statement of cash flows for 2011 using the indirect method.

 

 

E14-3 The comparative condensed balance sheets of Conard Corporation are presented below.

 

                                                    CONARD CORPORATION

                                            Comparative Condensed Balance Sheets 

                                                                                                            31-Dec

                                                                                                 2012                2011

Assets

Current assets                                                                            74,000           $80,000

Property, plant, and equipment (net)                                        99,000            90,000

Intangibles                                                                               27,000             40,000

Total assets                                                                              $200,000         $210,000

Liabilities and stockholders’ equity    

Current liabilities                                                                     $42,000           $48,000

Long-term liabilities                                                                 143,000          150,000

Stockholders’ equity                                                                15,000             12,000

Total liabilities and stockholders’ equity                                  $200,000       $210,000

 

Instructions

(a) Prepare a horizontal analysis of the balance sheet data for Conard Corporation using 2011 as a base.

(b) Prepare a vertical analysis of the balance sheet data for Conard Corporation in columnar form for 2012.

 

TUTORIAL PREVIEW

TAGUCHI COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2011
Cash flows from operating activities :
Net income		$103,000
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation expense	$34,000
Increase in accounts receivable	-9,000

 

File name ACC 291 week 8 E13-8 E14-3.xlsx File type: xlsx  PRICE:$15