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Yumma: Income Statement and Return on Common Stock Equity

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In 2010 Yumma Corporation had net sales of $600,000 and cost of goods sold of $360,000. Operating expenses were $153,000 and interest expense was $7,500. The corporation's tax rate is 30%. The corporation declared preferred dividends of $15,000 in 2010, and its average common stockholders' equity during the year was $200,000.

a) Prepare an income statement for Yumma Corporation.
b) Compute Yumma Corporation's return on common stockholders' equity for 2010.

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Solution Summary

This response provides guidelines for creating an income statement for Yumma Corporation and how to calculate their 2010 return on common stockholders' equity.

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