Wednesday, November 13, 2019

The 2010 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940

The 2010 balance sheet of Global Tours showed current assets of $1,360 and current liabilities of $940. The 2011 balance sheet showed current assets of $1,640 and current liabilities of $1,140. What was the change in net working capital for 2011? 
 
A. 
$80

B. 
$170

C. 
$190

D. 
$880

E. 
$920
Change in net working capital = ($1,640 - $1,140) - ($1,360 - $940) = $80



91.
The 2010 balance sheet of The Beach Shoppe showed long-term debt of $2.1 million, and the 2011 balance sheet showed long-term debt of $2.3 million. The 2011 income statement showed an interest expense of $250,000. What was the cash flow to creditors for 2011? 
 
A. 
-$200,000

B. 
-$150,000

C. 
$50,000

D. 
$200,000

E. 
$450,000
Cash flow to creditors = $250,000 - ($2,300,000 - $2,100,000) = $50,000



92.
The 2010 balance sheet of The Sports Store showed $800,000 in the common stock account and $6.7 million in the additional paid-in surplus account. The 2011 balance sheet showed $872,000 and $8 million in the same two accounts, respectively. The company paid out $600,000 in cash dividends during 2011. What is the cash flow to stockholders for 2011? 
 
A. 
-$1,372,000

B. 
-$772,000

C. 
-$628,000

D. 
$372,000

E. 
$1,972,000
Cash flow to stockholders = $600,000 - [($872,000 + $8,000,000) - ($800,000 + $6,700,000) = -$772,000



93.
Suppose you are given the following information for Bayside Bakery: sales = $30,000; costs = $15,000; addition to retained earnings = $4,221; dividends paid = $469; interest expense = $1,300; tax rate = 30 percent. What is the amount of the depreciation expense? 
 
A. 
$4,820

B. 
$5,500

C. 
$7,000

D. 
$8,180

E. 
$9,500
Net income = $469 + $4,221 = $4,690
Earnings before taxes = $4,690/(1 - .30) = $6,700
Earnings before interest and taxes = $6,700 + $1,300 = $8,000
Depreciation = $30,000 - $15,000 - $8,000 = $7,000

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