Name: 26. The date on which a cash dividend becomes a binding legal obligation i

Question

Name: 26. The date on which a cash dividend becomes a binding legal obligation is on the a. b. c. d. date of record. declaration date. last day of the fiscal year end. payment date. 27. Using this data, answer the following questions; Sales, $905,000; cost of merchandise sold, S540,000; administrative expenses, $10,000; interest exp $20,000; rent revenue, $25,000; selling expenses, $90,000. How much is net income? a. 235,000 C. 365,000 d. 365,000 b. 270,000 -28. The classified balance sheet will have liabilities divided into the following subsections Current Liabilities and Long-Term Liabilities a. b. Current Liabilities and Other Liabilities Other Liabilities and Long-Term Liabilities d. c. Present Liabilities and Tomorrow's Liabilities Accounts payable Accounts receivable Accrued liabilities Cash Intangible assets Inventory Long-term investments Long-term liabilities Marketable securities Notes payable (short-term) Property, plant, and equipment Prepaid expenses $30,000 65,000 7,000 20,000 40,000 72,000 100,000 75,000 36,000 20,000 625,000 2,000 Based on the above data, what is the amount of working capital? a. $64,000 b. $138,000 c. $238,000 d. $178,000 29. 30. Based on the above data, what is the quick ratio, rounded to one decimal point? a. 2.1 d. 2.4

Explanation / Answer

26. Answer is option (b) Declaration date.

From date of declaration of dividend it becomes a binding legal obligation to the companies.

27. Answer is option (b) 2,70,000

(905000-540000-10000-20000+25000-90000)

28. Answer is option (a) Current liabilities and Long term Liabilities.

29. Answer is option (b) $1,38,000

(65000+20000+72000+36000+2000) - (30000+7000+20000)

30. Answer is option (a) 2.1

Quick Ration = Quick assets / Quick liabilities

= total of current assets except prepaid expenses and stock / total of CL except bank OD

=121000/57000

=1.12

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