Question :
121. King Products CorporationKing Products CorporationStatement of Financial Position(in thousands)
: 1230590
121. King Products CorporationKing Products CorporationStatement of Financial Position(in thousands)
June 30
Year 6
Year 5
Cash
$ 60
$ 50
Marketable securities (at market)
40
30
Accounts receivable (net)
90
60
Inventories (at lower of cost or market)
120
100
Prepaid items
30
40
Total current assets
$ 340
$280
Long-term investments (at cost)
50
40
Land (at cost)
150
150
Building (net)
160
180
Equipment (net)
190
200
Patents (net)
70
34
Goodwill (net)
40
26
Total long-term assets
$ 660
$630
Total assets
$1,000
$910
Notes payable
$ 46
$ 24
Accounts payable
94
56
Accrued interest
30
30
Total current liabilities
$ 170
$110
Notes payable, 10% due 12/31/Year 12
20
20
Bonds payable, 12% due 6/30/Year 15
30
30
Total long-term debt
$ 50
$ 50
Total liabilities
$ 220
$160
Preferred stock-5% cumulative, $100 par, non-participating, authorized, issued and outstanding, 2,000 shares
200
200
Common stock-$10 par, 40,000 shares authorized, 30,000 shares issued and outstanding
300
300
Additional paid-in capital–common
150
150
Retained earnings
130
100
Total shareholders’ equity
$ 780
$750
Total liabilities and shareholders’ equity
$1,000
$910
King Products CorporationIncome StatementFor the year ended June 30(in thousands)
Year 6
Net sales
$600
Costs and expenses
Cost of goods sold
440
Selling, general, and administrative
60
Interest expense
10
Income before taxes
$ 90
Income taxes
45
Net income
$ 45
(CMA adapted, Dec 96 #16) Refer to the King Products Corporation example. King Products Corporation’s accounts receivable turnover for the fiscal year ended at June 30, Year 6, was A. 4.9B. 5.9C. 6.7D. 8.0E. none of the above
122. King Products CorporationKing Products CorporationStatement of Financial Position(in thousands)
June 30
Year 6
Year 5
Cash
$ 60
$ 50
Marketable securities (at market)
40
30
Accounts receivable (net)
90
60
Inventories (at lower of cost or market)
120
100
Prepaid items
30
40
Total current assets
$ 340
$280
Long-term investments (at cost)
50
40
Land (at cost)
150
150
Building (net)
160
180
Equipment (net)
190
200
Patents (net)
70
34
Goodwill (net)
40
26
Total long-term assets
$ 660
$630
Total assets
$1,000
$910
Notes payable
$ 46
$ 24
Accounts payable
94
56
Accrued interest
30
30
Total current liabilities
$ 170
$110
Notes payable, 10% due 12/31/Year 12
20
20
Bonds payable, 12% due 6/30/Year 15
30
30
Total long-term debt
$ 50
$ 50
Total liabilities
$ 220
$160
Preferred stock-5% cumulative, $100 par, non-participating, authorized, issued and outstanding, 2,000 shares
200
200
Common stock-$10 par, 40,000 shares authorized, 30,000 shares issued and outstanding
300
300
Additional paid-in capital–common
150
150
Retained earnings
130
100
Total shareholders’ equity
$ 780
$750
Total liabilities and shareholders’ equity
$1,000
$910
King Products CorporationIncome StatementFor the year ended June 30(in thousands)
Year 6
Net sales
$600
Costs and expenses
Cost of goods sold
440
Selling, general, and administrative
60
Interest expense
10
Income before taxes
$ 90
Income taxes
45
Net income
$ 45
(CMA adapted, Dec 96 #17) Refer to the King Products Corporation example. King Products Corporation’s average collection period for the fiscal year ended at June 30, Year 6, using a 360-day year, was. A. 36 daysB. 45 daysC. 54 daysD. 61 daysE. none of the above
123. King Products CorporationKing Products CorporationStatement of Financial Position(in thousands)
June 30
Year 6
Year 5
Cash
$ 60
$ 50
Marketable securities (at market)
40
30
Accounts receivable (net)
90
60
Inventories (at lower of cost or market)
120
100
Prepaid items
30
40
Total current assets
$ 340
$280
Long-term investments (at cost)
50
40
Land (at cost)
150
150
Building (net)
160
180
Equipment (net)
190
200
Patents (net)
70
34
Goodwill (net)
40
26
Total long-term assets
$ 660
$630
Total assets
$1,000
$910
Notes payable
$ 46
$ 24
Accounts payable
94
56
Accrued interest
30
30
Total current liabilities
$ 170
$110
Notes payable, 10% due 12/31/Year 12
20
20
Bonds payable, 12% due 6/30/Year 15
30
30
Total long-term debt
$ 50
$ 50
Total liabilities
$ 220
$160
Preferred stock-5% cumulative, $100 par, non-participating, authorized, issued and outstanding, 2,000 shares
200
200
Common stock-$10 par, 40,000 shares authorized, 30,000 shares issued and outstanding
300
300
Additional paid-in capital–common
150
150
Retained earnings
130
100
Total shareholders’ equity
$ 780
$750
Total liabilities and shareholders’ equity
$1,000
$910
King Products CorporationIncome StatementFor the year ended June 30(in thousands)
Year 6
Net sales
$600
Costs and expenses
Cost of goods sold
440
Selling, general, and administrative
60
Interest expense
10
Income before taxes
$ 90
Income taxes
45
Net income
$ 45
(CMA adapted, Dec 96 #18) Refer to the King Products Corporation example. King Products Corporation’s quick (acid test) ratio at June 30, Year 6, was A. 0.6B. 1.1 C. 1.8D. 2.0E. none of the above
124. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Year 7
Year 6
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
22
30
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
80
45
Total assets
$748
$691
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
15
16
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
3
2
Total liabilities
$163
$117
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
96
129
Total shareholders’ equity
$585
$574
Total liabilities and shareholders’ equity
$748
$691
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Year 7
Year 6
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
8
9
Income before taxes
$ 90
$ 85
Income taxes
36
34
Net income
$ 54
$ 51
(CMA adapted, Jun 97 #13) Refer to the Devlin Company example. Devlin Company’s acid-test ratio at May 31, Year 7, was A. 0.60 to 1B. 0.90 to 1C. 1.14 to 1D. 1.86 to 1E. 2.14 to 1
125. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Year 7
Year 6
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
22
30
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
80
45
Total assets
$748
$691
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
15
16
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
3
2
Total liabilities
$163
$117
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
96
129
Total shareholders’ equity
$585
$574
Total liabilities and shareholders’ equity
$748
$691
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Year 7
Year 6
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
8
9
Income before taxes
$ 90
$ 85
Income taxes
36
34
Net income
$ 54
$ 51
(CMA adapted, Jun 97 #14) Refer to the Devlin Company example. Assuming there are no preferred stock dividends in arrears, Devlin Company’s return on common shareholders’ equity for the year ended May 31, Year 7, was A. 6.3 percentB. 7.5 percentC. 7.8 percentD. 10.5 percent E. 15.5 percent
126. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Year 7
Year 6
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
22
30
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
80
45
Total assets
$748
$691
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
15
16
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
3
2
Total liabilities
$163
$117
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
96
129
Total shareholders’ equity
$585
$574
Total liabilities and shareholders’ equity
$748
$691
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Year 7
Year 6
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
8
9
Income before taxes
$ 90
$ 85
Income taxes
36
34
Net income
$ 54
$ 51
(CMA adapted, Jun 97 #18) Refer to the Devlin Company example. Devlin Company’s times interest earned for the year ended May 31, Year 7, was A. 6.75 timesB. 11.25 timesC. 12.25 timesD. 18.75 timesE. 20.75 times
127. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Year 7
Year 6
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
22
30
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
80
45
Total assets
$748
$691
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
15
16
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
3
2
Total liabilities
$163
$117
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
96
129
Total shareholders’ equity
$585
$574
Total liabilities and shareholders’ equity
$748
$691
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Year 7
Year 6
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
8
9
Income before taxes
$ 90
$ 85
Income taxes
36
34
Net income
$ 54
$ 51
(CMA adapted, Jun 97 #15) Refer to the Devlin Company example. Devlin Company’s inventory turnover for the year ended May 31, Year 7, was A. 3.67 timesB. 3.88 timesC. 5.33 timesD. 5.65 timesE. 5.95 times
128. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Year 7
Year 6
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
22
30
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
80
45
Total assets
$748
$691
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
15
16
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
3
2
Total liabilities
$163
$117
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
96
129
Total shareholders’ equity
$585
$574
Total liabilities and shareholders’ equity
$748
$691
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Year 7
Year 6
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
8
9
Income before taxes
$ 90
$ 85
Income taxes
36
34
Net income
$ 54
$ 51
(CMA adapted, Jun 97 #16) Refer to the Devlin Company example. Devlin Company’s asset turnover for the year ended May 31, Year 7, was A. 0.08 timesB. 0.46 timesC. 0.67 timesD. 0.73 timesE. 0.93 times
129. Devlin Company
Devlin CompanyStatement of Financial Positionas of May 31(in thousands)
Assets
Year 7
Year 6
Current assets
Cash
$ 45
$ 38
Trading securities
30
20
Accounts receivable (net)
68
48
Inventories
90
80
Prepaid expenses
22
30
Total current assets
$255
$216
Investments, at equity
38
30
Property, plant, and equipment (net)
375
400
Intangible assets (net)
80
45
Total assets
$748
$691
Liabilities and shareholders’ equity
Current liabilities
Notes payable
$ 35
$ 18
Accounts payable
70
42
Accrued expenses
5
4
Income taxes payable
15
16
Total current liabilities
125
80
Long-term debt
35
35
Deferred taxes
3
2
Total liabilities
$163
$117
Shareholders’ equity
Preferred stock, 6%, $100 par value, cumulative
150
150
Common stock, $10 par value
225
195
Additional paid-in capital-common stock
114
100
Retained earnings
96
129
Total shareholders’ equity
$585
$574
Total liabilities and shareholders’ equity
$748
$691
Devlin CompanyIncome StatementFor the year ended May 31(in thousands)
Year 7
Year 6
Net sales
$480
$460
Costs and expenses
Cost of goods sold
330
315
Selling, general, and administrative
52
51
Interest expense
8
9
Income before taxes
$ 90
$ 85
Income taxes
36
34
Net income
$ 54
$ 51
(CMA adapted, Jun 97 #17) Refer to the Devlin Company example. Devlin Company’s rate of return on assets for the year ended May 31, Year 7, was A. 7.2 percentB. 7.5 percentC. 8.2 percentD. 11.2 percentE. 11.9 percent
130. (CMA adapted, Jun 96 #18) The book value per share calculation of a corporation is usually significantly different from the market value of the stock’s selling price due to the A. use of accrual accounting in preparing financial statementsB. use of the matching principle in preparing financial statementsC. omission of the number of preferred shares outstanding at year end in the calculationD. use of historical costs in preparing financial statementsE. none of the above
