Question

Rock Hard Software and Hardware reports the following amounts at the end of the year (all amounts in $000): Cash $23,430 Depreciation Expense $4,100 Taxes Payable $712 Mortgage Payable $43,500 Land $62,000 Treasury Stock $2,210 Sales Discounts and Returns $1,258 Accounts Receivable $5,292 Supplies Expenses $355 Bonds Payable $38,000 Accumulated Depreciation $17,250 Income Tax Expense $780 Equipment $29,300 Interest Expense $2,900 Notes Payable $11,000 Cost of Goods Sold $18,344 Current Portion of Bonds Payable $6,200 Current Portion of Mortgage Payable $2,350 Product Sales (Gross) $56,145 Utilities Expense $950 Inventory $12,500 Discount of Bonds Payable $970 Salaries Expense $14,100 Revenues from Software Licenses $1,050 Buildings $52,000 Goodwill $350 Advertising Expenses $5,340 Sales Expenses $7,200 Salaries Payable $412 Marketable Securities $3,450 Accounts Payable $5,340 PrePaid Expenses $750 Deferred Revenues $1,920 In addition, the company had common stock of $42,000 at the beginning of the year and issued an additional $3,500 during the year. The company also had retained earnings of $19,700 at the beginning of the year and declared dividends of $1,500 during the year. Using the account information above develop a Balance Sheet and Income Statement, then answer the next seven questions. The list of accounts is complete so your balance sheet should balance if you have performed the work correctly.

Cash	$23,430	Depreciation Expense	$4,100	Taxes Payable	$712
Mortgage Payable	$43,500	Land	$62,000	Treasury Stock	$2,210
Sales Discounts and Returns	$1,258	Accounts Receivable	$5,292	Supplies Expenses	$355
Bonds Payable	$38,000	Accumulated Depreciation	$17,250	Income Tax Expense	$780
Equipment	$29,300	Interest Expense	$2,900	Notes Payable	$11,000
Cost of Goods Sold	$18,344	Current Portion of Bonds Payable	$6,200	Current Portion of Mortgage Payable	$2,350
Product Sales (Gross)	$56,145	Utilities Expense	$950	Inventory	$12,500
Discount of Bonds Payable	$970	Salaries Expense	$14,100	Revenues from Software Licenses	$1,050
Buildings	$52,000	Goodwill	$350	Advertising Expenses	$5,340
Sales Expenses	$7,200	Salaries Payable	$412	Marketable Securities	$3,450
Accounts Payable	$5,340	PrePaid Expenses	$750	Deferred Revenues	$1,920

Question #1: Calculate the Net Income After Interest and Taxes

Question #2: Calculate the Total Amount of Current Assets

Question #3: Calculate the Total Amount of Current Liabilities.

Question #4: Calculate the Total Assets for Rock Hard.

Question #5: What is the total amount of the stockholders equity for Rock Hard Software and Hardware.

Question #6Continuing with Rock Hard, what is the amount of Long-Term Liabilities.

Question #7: What is Rock Hard Software and Hardware's Return on Equity (ROE). Chose the best answer from the choices below.

Answer 1

1)
Statement of Income
Sales	56145
Less:
Sales Discount and Returns	-1258
Net Sales	54887
Revenue from Software Licenses	1050
Gross Revenue	55937
Less:
Cost of Goods sold	-18344
Gross Profit	37593
Less:
Discount of bonds	970
Sales Expenses	7200
Depreciation Expense	4100
Utilities Expense	950
Salaries Expense	14100
Prepaid Expenses	0
Supplies expense	355
Advertising Expense	5340
Total Expenses	33015
Earning before Interest and Taxes	4578
Less
Interest	2900
Taxes	780
Total	3680
Earning after Interest and Taxes	898

2)
Current Assets
Cash	23430
Account receivable	5292
Prepaid Expense	750
Inventory	12500
Marketable Securities	3450
Total	45422

3)
Current Liabilities
Current Portion of Mortgage	2350
Account payable	5340
Salaries Payable	412
Taxes payable	712
Notes payable	11000
Deferred Revenue	1920
Accumulated Depreciation	17250
Current portion of bond	6200
Total	45184

4)
Assets
Current Assets
Cash	23430
Account receivable	5292
Prepaid Expense	750
Inventory	12500
Marketable Securities	3450
Total (A)	45422
Non Current Assets
Equipment	29300
Building	52000
Land	62000
Goodwill	350
Total (B)	143650
Total (A+B)	189072

5)
Shareholders funds
Common Stock (A)	42000
Additional Equity (B)	3500
Retained Earnings
Balance Opening	19700
Net Profit	898
Less: Dividend	-1500
Closing Retained Earnings ( C)	19098
Less: Treasury Stock (D)	-2210
Total (A+B+C-D)	62388

6)
Long Term Liabilities
Mortgage Payable	43500
Bonds Payable	38000
Total	81500

7)
Return on Equity
Net Income	898
Shareholders Funds	62388
	1.4393794%