P18-7C Presented below is an incomplete income statement and incomplete comparativebalance sheets of Hines Corporation.

68 Chapter 18 Financial Statement Analysis

Compute missing informationgiven a set of ratios.

(SO 5) HINES CORPORATIONIncome Statement

For the Year Ended December 31, 2011

Sales $12,000,000Cost of goods sold ?

Gross profit ?Operating expenses 2,665,000

Income from operations ?Other expenses and losses

Interest expense ?

Income before income taxes ?Income tax expense 580,000

Net income $ ?

HINES CORPORATIONBalance SheetsDecember 31

Assets 2011 2010Current assets

Cash $ 440,000 $ 375,000Accounts receivable (net) ? 950,000Inventory ? 1,720,000

Total current assets ? 3,045,000

Plant assets (net) 4,550,000 3,955,000

Total assets $ ? $7,000,000

Liabilities and Stockholders EquityCurrent liabilities $ ? $ 825,000Long-term notes payable ? 2,800,000

Total liabilities ? 3,625,000

Common stock, $1 par 3,000,000 3,000,000Retained earnings 400,000 375,000

Total stockholders equity 3,400,000 3,375,000

Total liabilities and stockholders equity $ ? $7,000,000

Additional information:

1. The receivables turnover for 2011 is 10 times.2. All sales are on account.3. The profit margin for 2011 is 15%.4. Return on assets is 25% for 2011.5. The current ratio on December 31, 2011, is 3.0.6. The inventory turnover for 2011 is 5 times.

InstructionsCompute the missing information given the ratios above. Show computations. (Note: Start withone ratio and derive as much information as possible from it before trying another ratio. List allmissing amounts under the ratio used to find the information.)

P18-8C Lindsey Corporation owns a number of cruise ships and a chain of hotels. The hotels,which have not been profitable, were discontinued on September 1, 2010. The 2010 operatingresults for the company were as follows.

Operating revenues $12,700,000Operating expenses 8,700,000

Operating income $ 4,000,000

Prepare income statement withdiscontinued operations andextraordinary loss.

(SO 6)