The 2016 Income Statement of Kellyson Enterprises Shows Operating Revenues

question 212

Essay

The 2016 income statement of Kellyson Enterprises shows operating revenues of $120,500, selling expenses of $35,200, general and administrative expenses of $29,900, interest expense of $1,500, and income tax expense of $10,520.Kellyson's stockholders' equity was $280,000 at the beginning of the year and $320,000 at the end of the year.The company has 20,000 shares of stock outstanding at December 31, 2016.
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Required: Compute Kellyson's profit margin.What other information would you need in order to comment on whether this ratio is favorable?

Understand the concept and accounting treatment of goodwill in business combinations.

Recognize the importance of fair value measurement in the recognition and measurement of assets and liabilities acquired in a business combination.

Understand the role and determination of the acquisition date in a business combination.

Define a business combination and identify the acquiring and acquired parties.

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Definitions:

Uncollectible

Refers to accounts receivable that a company considers to be uncollectible from debtors and is likely to be written off as a bad debt expense.

Credit Sales

Sales where the payment is not received at the time of sale but is promised to be paid at a later date.

Cash Expected

The amount of money a business anticipates receiving over a specified period, often used in budgeting and planning.

Minimum Cash Balance

The lowest amount of cash that a company aims to hold in its accounts to ensure financial stability and meet its operational needs.