Question : 45.Sovereign Foods suffered a $1,500,000 loss (net of tax) when : 1259488

 

 

45.Sovereign Foods suffered a $1,500,000 loss (net of tax) when the FDA prohibited the sale of food products containing red dye no. 3. On its other products, Sovereign Foods had net sales of $6,580,000 and costs and other expenses of $6,505,000. Which of the following statements is not true? (Ignore taxes)   

A. Sovereign Foods reports a net loss of $1,425,000 for the current year.

 

B. Sovereign Foods reports income before extraordinary items of $75,000.

 

C. Sovereign Foods combines the $1,500,000 loss with its other costs and expenses of $6,505,000, since this item does not qualify for any special disclosure.

 

D. Sovereign Foods shows the $1,500,000 loss in a separate section of the income statement as an extraordinary item.

 

 

 

 

46.Corona Corporation’s financial statements for the current year include the following:  On the basis of this information, net income for the current year is:   

A. $1,359,600.

 

B. $818,400.

 

C. $1,485,000.

 

D. $1,234,200.

 

 

 

47.During the year 2015, Tosco Corporation suffered an $800,000 loss when its factory was destroyed in a flood. Assuming the corporate income tax rate is 36%, what amount will Tosco report as an extraordinary loss on its income statement for 2015? Assume floods are not common in this area.   

A. $800,000.

 

B. $512,000.

 

C. $288,000.

 

D. Nothing, since this does not qualify as an extraordinary item.

 

 

 

48.Colfax Corporation’s financial statements for the current year include the following:  On the basis of this information, net income for the current year is:   

A. $1,251,200.

 

B. $696,400.

 

C. $570,600.

 

D. $1,439,600.

 

 

 

49.During the year 2015, Torino Corporation suffered a $1,200,000 loss when its factory was severely damaged in an earthquake. Assuming the corporate income tax rate is 30%, what amount will Torino report as an extraordinary loss on its income statement for 2015? Assume earthquakes are not common in this area.   

A. $1,200,000.

 

B. $840,000.

 

C. $360,000.

 

D. Nothing, since this does not qualify as an extraordinary item.

 

 

 

50.A company had 125,000 shares of common stock outstanding on January 1 and then sold 35,000 additional shares on March 30. Net income for the year was $594,750. What are earnings per share?   

A. $4.73.

 

B. $4.58.

 

C. $3.93.

 

D. $6.61.

 

 

 

51.The price-earnings ratio is the:   

A. Book value of a share of common stock divided by EPS.

 

B. Market price of a share of common stock divided by EPS.

 

C. Par value of a share of common stock divided by EPS.

 

D. Market price divided by book value of a share of stock.

 

 

 

 

52.In computing earnings per share, the number of shares used is:   

A. The year-end number of shares outstanding.

 

B. The beginning of the year number of shares outstanding.

 

C. The average of the beginning and the year-end number of shares outstanding.

 

D. The weighted average of shares outstanding for the year.

 

 

 

 

53.The amount of earnings per share is usually computed:   

A. For both preferred and common stock.

 

B. For common stock by deducting the dividends on preferred stock from net income and dividing the remaining amount by the weighted average number of common shares outstanding.

 

C. By dividing net income by the combined number of preferred and common shares.

 

D. On the basis of the number of shares outstanding at year-end, regardless of changes in the number of shares during the year.

 

 

 

 

54.Which of the following statistics is generally computed for both common and preferred stock?   

A. Earnings per share.

 

B. Price-earnings ratio (p/e ratio).

 

C. Annual dividend per share.

 

D. Retained earnings per share.