Exam 17: Understanding Corporate Annual Reports: Basic Financial Statements

In a period of rising prices a company pays dividends equal to its net income for the year. Which statement about this company is true?

Which of the following statements is incorrect with respect to creditors and equity investors?

Investments that the investor company intends to sell in the near future

A portion of stockholders' equity that shows all accumulated holding gains

Consolidated statements combine two or more in a single presentation.

The following information has been extracted from the books of the Salem's Lot Company: Currentassets: Currentliabilities: Cash $\quad \$ 86\quad$ Accts payable $\quad \$ 78$ Accounts receivable $\quad 130 \quad$ Wages payable $\quad \quad 68$ Inventory Taxes payable Total \ 356 Total \ 174 The current ratio for Salem's Lot Company is:

The following are the income statements and balance sheets for Coors Company: 20X2 Sales (only credit sales) \ 1,606.0 Less cost of goods sold Gross profit \ 544.0 Less op er ating expenses Operating income \ 222.0 Less other expense:Interest Income before tax \ 212.4 Less income tax expense Net income \ 127.4 The dividend- yield ratio for Coors Company in 20X2 is:

Company B has 40,000 shares of its common stock outstanding. Company A owns 35,000 shares of Company B stock. Company A should use to account for its investment in Company B.

Elway Company acquired 80% of the outstanding shares of Warner Company for $152 in cash. Elway Company's assets prior to the acquisition were $700. Warner Company's assets prior to the acquisition were $400. The total assets that would appear on the consolidated balance sheet prepared immediately after the acquisition of Warner Company's stock is:

Pretax operating rate of return on total assets can be decomposed into which of the following items? 1. operating income percentage on sales 2) return on sales 3) total asset turnover 4) total debt to total assets

Given below is the income statement of McMahon Company for the year ended December 31. Cost of goods sold Gross profit \ 614 Less operating expenses Operating inc ome \ 178 Less income tax expense Net income Required: Prepare a common- size income statement.

Operating income / sales

Below is a comparative income statement for Samson Company: Sams on Comp any Income Statement For the Years Ended December 31, 20X6 and 20X5 20X6 20X5 Sales \ 1,744 \ 1,562 Less: Cost of goods sold Gross profit \ 752 \ 756 Less op erating expenses: Wage expense \ 172 \ 160 Depreciation expense 28 26 Rent expens 36 36 Miscellaneous expense Total operating expenses \ 276 \ 292 Operating income \4 76 \4 64 Less other expenses: Interest Income before tax \ 456 \ 404 Less: Income tax expense Net income \ 274 \ 242 If a common- size income statement were prepared, would be attributable to the 20X5 wage expense of Samson Company.

An account that shows the outside stockholders' interest, as opposed to the parent's interest, in a subsidiary corporation

A company owning more than 50% of another business's stock

Below is the balance sheet for Triple H Company: $\text { Triple H Company Balance Sheet December 31, }$ 20X6 20X5 Current assets: Cash \ 380 \ 242 Accounts receivable 430 194 Inventory 238 388 Prep aid insurance Total current ass ets \ 1,080 \ 900 Long-term assets: Fixed ass ets \ 406 \ 452 Less: Accumulated depreciation Total long- term assets \ 134 \ 224 Total assets \ 1.124 Current liabilities: Accounts payable \ 176 \ 152 Wages payable 38 32 Total current liabilities \ 184 \1 84 Long-term liabilities: Notes payable Total liabilities \ 634 \ 604 Owners' equity: Common stock \ 190 \ 160 Retained income Total owners' equity \ 580 \ 520 Total liabilities and owners' \ 1,214 \ 1,124 equity If a common- size balance sheet were prepared, would be attributable to the 20X5 accounts payable of Triple H Company.

The following information pertains to Barnum Company: Balance Sheet At December $31,20X2$ Current assets \ 18,700 Current liabilities \ 7,600 Long-term ass ets Long- term liabilities 13,250 Stockholders' equity Total as sets \ 48,400 Total liabilities and s.e. \ 48,400 Barnum Company Income Statement For the Year Ended December $31,20 \times 2$ Sales \ 106,950 Less: Cost of goods sold Gross profit \ 45,150 Less: Operating expenses Operating income \ 13,450 Less other expenses: interest Income before taxes \ 12,150 Less: Income tax expense Net income \ 7,300 There were 1,000 shares of common stock outstanding with a market value of $75 as of December 31, 20X2. Dividends declared and paid was $5 per share. The earnings per share for 20X2 is:

Dollar measurements that are not restated for inflation

Presented below are the balance sheets of Monty Company and Hall Company at January 1, 20X6: Hall Company Balance Monty Company Balance Sheet Sheet January 1, 20X6 J anuary 1, 20X6 Cash \ 100 Cash \ 400 Net fixed assets Net fixed assets Total assets \ 500 Total assets \ 780 Accounts payable Long- \ 20 Accounts payable \ 120 term bonds Long- termbonds payable 220 payable 280 Stockholders' equity Stockholders' equity 380 Total liabilities and Total liabilities and stockholders' equity stockholders' equity \ 780 On January 1, 20X6, Monty Company acquired 100% of the outstanding common stock of Hall Company for $260 in cash. is the balance of liabilities on the consolidated balance sheet immediately after the acquisition of Hall's stock.

On January 1, 20X6, Meghan purchased 8,000 shares of Ping Company for $700,000. During 20X6, Ping Company had net income of $80,000, and declared and paid $24,000 in dividends. How much income from Ping Company would Meghan report if Meghan owns: