Statement of retained earnings for the year ended december

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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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