Solution-Statement of retained earnings for the year ended

Statement of retained earnings for the year ended december

Reference no: EM13327223

Problem

Given is the Income Statement for the year ended December 31, 2010, Statement of Retained Earnings for the year ended December 31, 2010 and Comparative Balance Sheets for 2009 and 2010 of Jeter Corporation:

JETER CORPORATION Income Statement For the Year Ended December 31, 2010
Sales	$	4,190,000
Cost of goods sold		2,820,000

Gross profits		1,370,000
Selling and administrative expense		685,000
Depreciation expense		319,000

Operating income		366,000
Interest expense		89,300

Earnings before taxes		276,700
Taxes		227,000

Earnings after taxes		49,700
Preferred stock dividends		10,000

Earnings available to common stockholders	$	39,700
Shares outstanding		150,000
Earnings per share	$	.26

Statement of Retained Earnings For the Year Ended December 31, 2010
Retained earnings, balance, January 1, 2010	$	45,900
Add: Earnings available to common stockholders, 2010		39,700
Deduct: Cash dividends declared and paid in 2010		25,000
Retained earnings, balance, December 31, 2010	$	60,600

Comparative Balance Sheets For 2009 and 2010
	Year-End 2009		Year-End 2010
Assets
Current assets:
Cash	$	173,000	$	60,000
Accounts receivable (net)		549,000		573,000
Inventory		645,000		686,000
Prepaid expenses		61,600		37,800

Total current assets		1,428,600		1,356,800
Investments (long-term securities)		90,100		84,700
Plant and equipment		2,240,000		2,930,000
Less: Accumulated depreciation		1,990,000		2,309,000

Net plant and equipment		250,000		621,000

Total assets	$	1,768,700	$	2,062,500

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	307,000	$	555,000
Notes payable		558,000		558,000
Accrued expenses		72,800		50,900

Total current liabilities		937,800		1,163,900
Long-term liabilities:
Bonds payable, 2015		195,000		248,000

Total liabilities		1,132,800		1,411,900
Stockholders' equity:
Preferred stock, $100 par value		90,000		90,000
Common stock, $1 par value		150,000		150,000
Capital paid in excess of par		350,000		350,000
Retained earnings		45,900		60,600

Total stockholders' equity		635,900		650,600

Total liabilities and stockholders' equity	$	1,768,700	$	2,062,500

If the market value of a share of common stock is 3.2 times book value for 2010, what is the firm's P/E ratio for 2010?

Reference no: EM13327223

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Statement of retained earnings for the year ended december

Reference no: EM13327223

Reference no: EM13327223

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