he comparative financial statements prepared at December 31, 2015, for Prince Co

ID: 2521591 • Letter: H

Question

he comparative financial statements prepared at December 31, 2015, for Prince Company showed the following summarized data:

2015 2014 Income statement: Sales revenue $ 190,300 * $ 167,400 Cost of goods sold 112,500 100,600 Gross profit 77,800 66,800 Operating expenses and interest expense 57,000 54,000 Pretax income 20,800 12,800 Income tax 6,240 3,840 Net income $ 14,560 $ 8,960 Balance sheet: Cash $ 5,100 $ 5,500 Accounts receivable (net) 15,000 17,900 Inventory 40,400 32,500 Operational assets (net) 46,600 36,100 $ 107,100 $ 92,000 Current liabilities (no interest) $ 14,700 $ 15,700 Long-term liabilities (10% interest) 44,300 44,300 Common stock (par $5) 28,200 28,200 Retained earnings 19,900 3,800 $ 107,100 $ 92,000

Explanation / Answer

All amounts are in $.

Working capital computation:

Years

2015

2014

Current assets:

Cash

5100

5500

Accounts receivable (Net)

15000

17900

Inventory

40400

32500

(A): Total current assets

62515

57914

Current liabilities:

Current liabilities (No interest)

14700

15700

(B): Total current liabilities

14700

15700

Working capital (A - B)

47815

42214

Change in working capital

Working capital of 2014

42214

Working capital of 2015

47815

Increase in working capital (47815 - 42214)

5601