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frozen [14]
3 years ago
11

Diusitech Inc. Income Statement For the Year Ending on December 31 (Millions of dollars)

Business
1 answer:
JulsSmile [24]3 years ago
3 0

Answer:

<u>Year 1</u>

Profit Margin = Net Income / Net Sales

Profit Margin = $751 / $2,500

Profit Margin = 0.3004

Profit Margin = 30.04%

Basic Earning Power = Operating Income / Total Assets

Basic Earning Power = EBIT * Return on Total Asset / Net Income

Basic Earning Power = $1,360 * 17.18%/751

Basic Earning Power = 0.311115846

Basic Earning Power = 31.11%

<u>Year 2</u>

Operating Margin = Operating Income / Net Sales

Operating Margin = $1,896 / $3,175

Operating Margin = 0.5971653543307087

Operating Margin = 59.72%

Return on Total Assets = Basic Earning power * Net Income/EBIT

Return on Total Assets = 26.13% * $984/$1,896

Return on Total Assets = 0.1356113924050633

Return on Total Assets = 13.56%

Return on Common Equity = Net Income / Total Common Equity

Return on Common Equity = $984 / ($751/32.30%)

Return on Common Equity = $984 / $2325.08

Return on Common Equity = 0.42321124

Return on Common Equity = 42.32%

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Bonds Payable amount reflected in balance sheet = $2192890

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Maturity Period = 10 years

Number of compounding = 2

Interest = $2000000 * 10% * 6/12 = $100000

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Market Interest Rate semiannually = 0.085 / 2 = 0.0425

Market Value = Present Value of Future Cash Flows

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Since market value is greater than face value, we can say that bonds are issued at a premium.

Premium = $2199415 - $2000000 = $199415

Journal Entry to record the issuance of bonds:

Cash a/c                                               Dr          $2199415

     To Bonds Payable a/c                                 $2000000                            

     To Premium on the issue of bonds            $199415

Bonds Payable amount is a liability account that carries the quantity owed to bondholders by way of the company. This account usually seems in the lengthy-term liabilities section of the stability sheet, on account that bonds usually mature in more than one year.

Learn more about Bonds Payable amount here: brainly.com/question/7158291

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6 0
2 years ago
Say the reserve requirement is 20 percent. If you pay back a loan of $10,000 a bank had previously made to you, the act of payin
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Answer:

a. adds $10,000 in bank reserves.

Explanation:

Given that

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Answer:

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