Question 30 of 37
Bevington Studio reported the following income statement and balance sheet amounts on December 31, 2007.
Net sales revenue (all credit)$950,000
Cost of goods sold630,000
Selling and general expenses230,000
Total assets – 12/31$525,000$500,000
Common stockholders equity – 12/31395,000275,000
Total liabilities and stockholders’ equity$525,000$500,000
Inventory and prepaid expenses account for $20,000 of the 2007 current assets.
Average inventory for 2007 is $15,000.
Average net accounts receivable for 2007 is $30,000.
Average one-day sales are $3,150.
There are 7,000 shares of common stock outstanding.
Total dividends paid during 2007 were $140,000.
The market price per share of common stock is $21.
Refer to Case 17.5. What is the company’s earnings per share?
Question 31 of 37
The statement of cash flows is designed to fulfill all of the following purposes, except to:
evaluate management decisions.
show the relationship of net income to changes in the company’s cash.
assess the collectability of accounts receivable.
help predict future cash flows.
Question 32 of 37
The declaration of dividends by the board of directors would be reported on a statement of cash flows as:
a cash inflow under the financing activities.
a cash outflow under the investing activities.
a cash outflow under the financing activities.
nothing-this activity would not be reported on a statement of cash flows.
Question 33 of 37
Which of the following would be reported on a statement of cash flows as a financing activity?
Interest paid on bonds payable
Purchase of treasury stock
Distribution of stock dividend
All of the above
Question 34 of 37
Under the indirect method of preparing a statement of cash flows, cash disbursed for the acquisition of a plant asset is:
added in the investing activities section.
subtracted in the investing activities section.
added in the financing activities section.
subtracted in the operating activities section.
Question 35 of 37
Porter Business Products acquired equipment on January 1, 2008 for $470,000. The equipment has an estimated useful life of 5 years and an estimated residual value of $30,000. The equipment is expected to produce 150,000 units. During 2008, the equipment produced 24,000 units and during 2009, the equipment produced 60,000 units. Calculate depreciation expense for 2008 and 2009 using the straight-line method.
Straight-line Double-decllining balance Units-of-production
Question 36 of 37
Perform a horizontal analysis of current liabilities on the following company’s balance sheet. Which of the following is the correct answer if both the amount and the percentage of change are calculated.
Account20072006 Amount Percent
$-15,500 and -14.1%
$13,500 and 27.0%
$-13,500 and -27.0%
$21,000 and 21.0%
Question 37 of 37
The following data is provided for last year: Net income was $210,000. Current receivables and prepaid expenses increased by $10,000 and $2,000, respectively. Current payables decreased by $8,000. Under the indirect method, the cash flows from operating activities would be: