Pratt Company
Statement of Financial Position
December 31, Year 2 and Year 1
(dollars in thousands)
Year 2 Year 1
Current assets:
Cash and marketable securities $ 140 $ 140
Accounts receivable, net 190 180
Inventory 150 150
Prepaid expenses 70 70
Total current assets 550 540
Noncurrent assets:
Plant & equipment, net 1,490 1,420
Total assets $2,040 $1,960
Current liabilities:
Accounts payable $ 160 $ 160
Accrued liabilities 50 60
Notes payable, short term 230 250
Total current liabilities 440 470
Noncurrent liabilities:
Bonds payable 300 300
Total liabilities 740 770
Stockholders’ equity:
Preferred stock, $5 par, 10% 120 120
Common stock, $5 par 180 180
Additional paid-in capital–common stock 210 210
Retained earnings 790 680
Total stockholders’ equity 1,300 1,190
Total liabilities & stockholders’ equity $2,040 $1,960
Pratt Company
Income Statement
For the Year Ended December 31, Year 2
(dollars in thousands)
Sales (all on account) $2,000
Cost of goods sold 1,400
Gross margin 600
Selling and administrative expense 240
Net operating income 360
Interest expense 30
Net income before taxes 330
Income taxes (30%) 99
Net income $ 231
Dividends during Year 2 totaled $121 thousand, of which $12 thousand were preferred dividends. The
market price of a share of common stock on December 31, Year 2 was $80.
