21. Using the following information, what is the amount of income from operation
ID: 2525118 • Letter: 2
Question
21. Using the following information, what is the amount of income from operations?
?
Purchases
$32,000
?
Selling expense
$ 960
Merchandise inventory, September 1
5,700
?
Merchandise inventory,
September 30
6,370
Administrative expense
910
?
Sales
63,000
Rent revenue
1,200
?
Interest expense
1,040
?
a.
$31,670
b.
$29,960
c.
$28,760
d.
$29,800
59. Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.
Date
Blankets
Units
Cost
May 3
Purchase
5
$20
10
Sale
3
17
Purchase
10
$24
20
Sale
6
23
Sale
3
30
Purchase
10
$30
a.
$108
b.
$120
c.
$72
d.
$180
The balance sheets at the end of each of the first two years of operations indicate the following:
?
Year 2
Year 1
Total current assets
$600,000
$560,000
Total investments
60,000
40,000
Total property, plant, and equipment
900,000
700,000
Total current liabilities
125,000
65,000
Total long-term liabilities
350,000
250,000
Preferred 9% stock, $100 par
100,000
100,000
Common stock, $10 par
600,000
600,000
Paid-in capital in excess of par—Common stock
75,000
75,000
Retained earnings
310,000
210,000
118. If net income is $150,000 and interest expense is $20,000 for Year 2, what is the rate earned on total assets for the year?
a.
10.4%
b.
11.9%
c.
10.5%
d.
8.4%
119. If net income is $150,000 and interest expense is $20,000 for Year 2, what is the rate earned on stockholders' equity for Year 2?
a.
6.9%
b.
14.5%
c.
16.04%
d.
13.8%
120. If net income is $250,000 and interest expense is $30,000 for Year 2, what are the earnings per share on common stock for Year 2?
a.
$4.16
b.
$4.32
c.
$4.02
d.
$2.49
122. A company reports the following:
Net income
$160,000
Preferred dividends
$10,000
Shares of common stock outstanding
20,000
Market price per share of common stock
$35
?
The company’s earnings per share on common stock is
a.
$13.33
b.
$8.50
c.
$7.50
d.
$35.00
Purchases
$32,000
?
Selling expense
$ 960
Merchandise inventory, September 1
5,700
?
Merchandise inventory,
September 30
6,370
Administrative expense
910
?
Sales
63,000
Rent revenue
1,200
?
Interest expense
1,040
Explanation / Answer
11.
Calculate the amount of net income as follows:
Net income is $29,960.
Therefore, the correct answer is option b.
Sales 63000 Less cost of goods sold: Merchandise inventory, September 1 5700 Add: Purchases 32000 Less: Merchandise inventory, September 30 6370 Cost of goods sold 31330 Gross profit 31670 Less operating expenses: Selling expense 960 Administrative expense 910 Total operating expenses 1870 Operating income 29800 Other income and expenses: Rent revenue 1200 Interest expense -1040 Other revenue, net of other expenses 160 Net income 29960Related Questions
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