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chapter 14

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 700,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75 last year and $0.40 this year. The market value of the companys common stock at the end of this year was $28. All of the companys sales are on account.

Weller Corporation Comparative Balance Sheet (dollars in thousands)
	This Year	Last Year
Assets
Current assets:
Cash	$ 1,090	$ 1,310
Accounts receivable, net	10,800	7,400
Inventory	13,500	11,400
Prepaid expenses	710	660
Total current assets	26,100	20,770
Property and equipment:
Land	10,100	10,100
Buildings and equipment, net	44,913	36,354
Total property and equipment	55,013	46,454
Total assets	$ 81,113	$ 67,224
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 18,700	$ 18,100
Accrued liabilities	1,070	810
Notes payable, short term	120	120
Total current liabilities	19,890	19,030
Long-term liabilities:
Bonds payable	9,100	9,100
Total liabilities	28,990	28,130
Stockholders' equity:
Common stock	700	700
Additional paid-in capital	4,000	4,000
Total paid-in capital	4,700	4,700
Retained earnings	47,423	34,394
Total stockholders' equity	52,123	39,094
Total liabilities and stockholders' equity	$ 81,113	$ 67,224

Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)
	This Year	Last Year
Sales	$ 75,000	$ 65,000
Cost of goods sold	34,000	40,000
Gross margin	41,000	25,000
Selling and administrative expenses:
Selling expenses	10,900	11,000
Administrative expenses	6,600	6,700
Total selling and administrative expenses	17,500	17,700
Net operating income	23,500	7,300
Interest expense	910	910
Net income before taxes	22,590	6,390
Income taxes	9,036	2,556
Net income	13,554	3,834
Dividends to common stockholders	525	280
Net income added to retained earnings	13,029	3,554
Beginning retained earnings	34,394	30,840
Ending retained earnings	$ 47,423	$ 34,394

Required:

Compute the following financial data and ratios for this year:

1. Working capital. (Enter your answer in thousands.)

2. Current ratio. (Round your answer to 2 decimal places.)

3. Acid-test ratio. (Round your answer to 2 decimal places.)

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