Complete the Year 2 income statement data for Cold Goose, then answer the questions that follow. Round each dollar value to the nearest whole dollar. Cold Goose Metal Works Inc. Income Statement Years Ending December 31 Net sales Fixed operating costs, except depreciation and amortization Depreciation and amortization expenses Net operating income (or EBIT) Interest Earnings before taxes (or EBT) Taxes (40%) Net Income Preferred dividends Earnings available to common stockholders (EAC) Common dividends Addition to retained earnings Year 2 (Forecasted) $ (800,000) $2,121,050 Year 1 $20,000,000 ) (14,000,000) (800,000) $5,200,000 (520,000) $4,680,000 (1,872,000) $2,808,000 (100,000) $2,708,000 (982,800) $1,725,200
Complete the Year 2 income statement data for Cold Goose, then answer the questions that follow. Round each dollar value to the nearest whole dollar. Cold Goose Metal Works Inc. Income Statement Years Ending December 31 Net sales Fixed operating costs, except depreciation and amortization Depreciation and amortization expenses Net operating income (or EBIT) Interest Earnings before taxes (or EBT) Taxes (40%) Net Income Preferred dividends Earnings available to common stockholders (EAC) Common dividends Addition to retained earnings Year 2 (Forecasted) $ (800,000) $2,121,050 Year 1 $20,000,000 ) (14,000,000) (800,000) $5,200,000 (520,000) $4,680,000 (1,872,000) $2,808,000 (100,000) $2,708,000 (982,800) $1,725,200
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 39E: Cuneo Companys income statements for the last 3 years are as follows: Refer to the information for...
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Cold Goose Metal Works Inc.’s income statement reports data for its first year of operation. The firm’s CEO would like sales to increase by 25% next year.
1. | Cold Goose is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT). |
2. | The company’s operating costs (excluding depreciation and amortization) remain at 70.00% of net sales, and its depreciation and amortization expenses remain constant from year to year. |
3. | The company’s tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT). |
4. | In Year 2, Cold Goose expects to pay $100,000 and $1,195,950 of preferred and common stock dividends, respectively. |
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