WHICH ONE OF THE FOLLOWING IS A CURRENT LIABILITY?

13 Jun WHICH ONE OF THE FOLLOWING IS A CURRENT LIABILITY?

Which one of the following assets is generally the most liquid?

inventory

buildings

accounts receivable

equipment

patents

2.

It is easier to evaluate a firm using its financial statements when the firm:

is a conglomerate.

is global in nature.

uses the same accounting procedures as other firms in its industry.

has a different fiscal year than other firms in its industry.

tends to have one-time events such as asset sales and property acquisitions.

3.

Which one of the following is a current liability?

amount due to a supplier in 18 months

debt payable to a mortgage company in nine months

estimated taxes just paid

loan payment due in 13 months

amount due from a customer in 30 days

4.

Award: 1 out of 2.00 points

During 2015, Rainbow Umbrella Corp. had sales of $740,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $550,000, $90,000, and $95,000, respectively. In addition, the company had an interest expense of $94,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

a. What is the company’s net income for 2015? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

Net income $

b. What is its operating cash flow? (Do not round intermediate calculations.)

Operating cash flow $

During 2015, Rainbow Umbrella Corp. had sales of $740,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $550,000, $90,000, and $95,000, respectively. In addition, the company had an interest expense of $94,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)

a. What is the company’s net income for 2015? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

b. What is its operating cash flow? (Do not round intermediate calculations.)

5.

Which one of these is a correct definition?

Net working capital equals current assets plus current liabilities.

Current liabilities are debts that must be repaid in 18 months or less.

Current assets are assets with short lives, such as inventory.

Long-term debt is defined as a residual claim on a firm’s assets.

Tangible assets are fixed assets such as patents.

6.

Award: 10 out of 10.00 points

Sankey, Inc., has current assets of $5,125, net fixed assets of $25,600, current liabilities of $4,500, and long-term debt of $9,900. (Do not round intermediate calculations.)

What is the value of the shareholders’ equity account for this firm?

How much is net working capital?

Net working capital

Sankey, Inc., has current assets of $5,125, net fixed assets of $25,600, current liabilities of $4,500, and long-term debt of $9,900. (Do not round intermediate calculations.)

What is the value of the shareholders’ equity account for this firm?

Shareholders’ equity $

How much is net working capital?

Net working capital $

7.

Shelton, Inc., has sales of $390,000, costs of $178,000, depreciation expense of $43,000, interest expense of $24,000, and a tax rate of 40 percent. (Do not round intermediate calculations.)

What is the net income for the firm?

8.

During the year, the Senbet Discount Tire Company had gross sales of $1.25 million. The firm’s cost of goods sold and selling expenses were $544,000 and $234,000, respectively. The firm also had notes payable of $990,000. These notes carried an interest rate of 6 percent. Depreciation was $149,000. The firm’s tax rate was 30 percent.

a. What was the firm’s net income? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)

Net income

b. What was the firm’s operating cash flow? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)

Operating cash flow
References

WorksheetSection: 2.2 The Income StatementSection: 2.5 Cash Flow of the Firm

During the year, the Senbet Discount Tire Company had gross sales of $1.25 million. The firm’s cost of goods sold and selling expenses were $544,000 and $234,000, respectively. The firm also had notes payable of $990,000. These notes carried an interest rate of 6 percent. Depreciation was $149,000. The firm’s tax rate was 30 percent.

a. What was the firm’s net income? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)

Net income $

b. What was the firm’s operating cash flow? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)

Operating cash flow $
9.

Use the following information for Ingersoll, Inc., (assume the tax rate is 40 percent):

2014 2015
Sales $ 8,335 $ 8,909
Depreciation 1,175 1,176
Cost of goods sold 2,746 3,110
Other expenses 689 584
Interest 575 653
Cash 4,159 5,253
Accounts receivable 5,489 6,177
Short-term notes payable 844 796
Long-term debt 14,010 16,550
Net fixed assets 34,955 35,877
Accounts payable 4,416 4,235
Inventory 9,720 9,988
Dividends 1,006 1,101

Prepare an income statement for this company for 2014 and 2015. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)
Use the following information for Ingersoll, Inc., (assume the tax rate is 40 percent):

2014 2015
Sales $ 8,335 $ 8,909
Depreciation 1,175 1,176
Cost of goods sold 2,746 3,110
Other expenses 689 584
Interest 575 653
Cash 4,159 5,253
Accounts receivable 5,489 6,177
Short-term notes payable 844 796
Long-term debt 14,010 16,550
Net fixed assets 34,955 35,877
Accounts payable 4,416 4,235
Inventory 9,720 9,988
Dividends 1,006 1,101

Prepare an income statement for this company for 2014 and 2015. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.)

Prepare the balance sheet for this company for 2014 and 2015. (Do not round intermediate calculations. Be sure to list the accounts in order of their liquidity.)