Question : 127.Use this information to answer the following question. Alcorn & Zeto : 1244345

127.Use this information to answer the following question.

 

Alcorn & Zeto Company

Income Statement

For the Year Ended December 31, 20×7

Revenues

 

Net sales

$100,000

 

 

Dividend income

     8,750

 

Total revenues

 

$108,750

Costs and expenses

 

Costs of goods sold

$ 33,500

 

 

Selling expenses

10,000

 

 

General and administrative expenses

10,250

 

 

Interest expense

     6,250

 

Total costs and expenses

 

   60,000

Income before income taxes

 

$ 48,750

Income taxes

 

   19,500

Net income

 

$ 29,250

 

If the income statement were prepared in a multistep form, operating expenses would be

 

a.

$50,250.

b.

$20,250.

c.

$40,000.

d.

$26,500.

 

 

 

128.The other revenues and expenses section of a multistep income statement could include all the following, except

 

a.

dividend income.

b.

insurance expense.

c.

interest expense.

d.

interest income.

 

 

 

129.Which of the following items is not shown on a single-step income statement?

 

a.

Selling expenses

b.

Gross margin

c.

Interest expense

d.

Cost of goods sold

 

 

 

130.The multistep income statement of a service company could contain all of the following, except

 

a.

cost of goods sold.

b.

income taxes.

c.

operating expenses.

d.

other revenues and expenses.

 

 

 

131.The debt to equity ratio equals

 

a.

current liabilities divided by average stockholders’ equity.

b.

total liabilities divided by stockholders’ equity.

c.

stockholders’ equity divided by total liabilities.

d.

stockholders’ equity divided by long-term liabilities.

 

 

 

132.The profit margin equals

 

a.

net income divided by gross margin.

b.

net income divided by net sales.

c.

net sales divided by net income.

d.

gross margin divided by net income.

 

 

 

133.Asset turnover equals

 

a.

net income divided by average total assets.

b.

average total assets divided by total liabilities.

c.

average total assets divided by net income.

d.

net sales divided by average total assets.

 

 

 

134.Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.

 

Abner Systems, Inc.

Balance Sheet

December 31, 20×7

Assets

Liabilities

Current assets

$ 7,000

Current liabilities

$ 4,000

Investments

1,000

Long-term liabilities

  1,000

Property, plant, and equipment

7,000

Total liabilities

$ 5,000

Intangible assets

  5,000

 

 

 

 

Stockholder’s Equity

 

 

Common stock

$ 10,000

 

 

Retained earnings

    5,000

 

 

Total stockholder’s equity

$ 15,000

 

 

Total liabilities and

 

Total assets

$ 20,000

   stockholder’s equity

$ 20,000

 

Abner Systems, Inc.

Income Statement

For the Year Ended December 31, 20×7

Net sales

$ 24,000

Costs of goods sold

     8,000

Gross margin

$ 16,000

Operating expenses

     8,000

Income before income taxes

$   8,000

Income taxes

     3,200

Net income

$   4,800

 

The total amount of working capital of Abner Systems, Inc. is

 

a.

$7,000.

b.

$11,000.

c.

$3,000.

d.

$0.

 

 

 

135.Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.

 

Abner Systems, Inc.

Balance Sheet

December 31, 20×7

Assets

Liabilities

Current assets

$ 10,000

Current liabilities

$ 4,000

Investments

1,000

Long-term liabilities

  1,000

Property, plant, and equipment

4,000

Total liabilities

$ 5,000

Intangible assets

  5,000

 

 

 

 

Stockholder’s Equity

 

 

Common stock

$ 10,000

 

 

Retained earnings

    5,000

 

 

Total stockholder’s equity

$ 15,000

 

 

Total liabilities and

 

Total assets

$ 20,000

   stockholder’s equity

$ 20,000

 

Abner Systems, Inc.

Income Statement

For the Year Ended December 31, 20×7

Net sales

$ 24,000

Costs of goods sold

     8,000

Gross margin

$ 16,000

Operating expenses

     8,000

Income before income taxes

$   8,000

Income taxes

     3,200

Net income

$   4,800

 

The current ratio for Abner Systems, Inc. is

 

a.

1.00.

b.

0.75.

c.

1.13.

d.

2.50.

 

 

 

 

 

 

 

 

 

 

136.Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.

 

 

 

The profit margin of Abner Systems, Inc. is

 

a.

12 percent.

b.

20 percent.

c.

60 percent.

d.

25 percent.

 

 

 

 

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