Exam 3: Understanding Financial Statements, Taxes, and Cash Flows

Goodwin Enterprises had a gross profit of $2,500,000 for the year. Operating expenses and interest expense incurred in that same year were $595,000 and $362,000, respectively. Goodwin had 200,000 shares of common stock and 180,000 shares of preferred stock outstanding. Management declared a $2.50 dividend per share on the common and a $1.50 dividend per share on the preferred. Securities purchased at a cost of $37,500 in a previous year were resold at a price of $50,500. Compute the taxable income and the resulting tax liability for Goodwin Enterprises for the year. Use the following tax rates: Income Tax rate $0-$50,000 15% $50,001-$75,000 25% $75,001-$100,000 34% $100,001-$335,000 39% over $335,001 34%

The highest marginal corporate tax rate is 35%.

On a balance sheet, equity equals

Use Shark Enterprise's financial statements shown above to determine Shark's gross profit margin in 2017.

The company's gross profit margin is EBIT divided by net sales.

Your firm has the following balance sheet statement items: total current liabilities of $805,000; total assets of $2,655,000; fixed and other assets of $1,770,000; and long-term debt of $200,000. What is the amount of the firm's total current assets?

The income statement shows a company's earnings since it has been in business.

On an accrual basis income statement, revenues and expenses always match the firm's cash flow.

The income statement describes the financial performance of a firm over a fixed period such as a quarter or a year.

Pearls, Inc. had sales in 2015 of $2.1 million. The common stockholders received $600,000 in cash dividends. Interest totaling $150,000 was paid on outstanding debts. Operating expenses totaled $300,000, and cost of goods sold was $500,000. What is the tax liability of Pearls, Inc.? 2013 U.S. Corporate tax rates are shown below:

Use Bird's financial statements to determine the total amount of Bird Industries' common stock dividend for 2017.

The historical cost principle requires that

Which of the following would NOT be included as an asset on a corporate balance sheet?

From the scrambled list of items presented in Table 4, prepare an income statement Dooley Sportswear Company. Not all items from Table 4 will be used.

The ratio of ________ to ________ is an indicator of the quality of a firm's earnings.

Grass Gadgets had sales of $30 million and net income of $2 million in 2015. Grass paid a dividend of $1.5 million. Assuming that their beginning balance for retained earnings was $3 million, calculate their ending balance for retained earnings.

The cash flow statement is an alternative term for the balance sheet.

The balance includes information about the company's assets and liabilities.

Total equity on the balance sheet increases as dividends paid increases.

2015 U.S. Corporate tax rates are shown below: Bouffard Co. has earnings before taxes of $100,000,000 in 2015. The company's tax expense will be