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Exam 2: Financial Statements,Taxes,and Cash Flow

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Question 1

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Roscoe's fixed assets were purchased three years ago for $1.8 million.These assets can be sold to Stewart's today for $1.2 million.Roscoe's current balance sheet shows net fixed assets of $960,000,current liabilities of $348,000,and net working capital of $121,000.If all the current assets were liquidated today,the company would receive $518,000 cash.The book value of the firm's assets today is _____ and the market value is ____.

A) $1,081,000; $1,308,000
B) $1,081,000; $1,718,000
C) $1,307,000; $1,429,000
D) $1,429,000; $1,308,000
E) $1,429,000; $1,718,000

F) B) and E)
G) A) and D)

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Question 2

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Marcie's has sales of $179,600,depreciation of $14,900,costs of goods sold of $138,200,and other costs of $28,400.The tax rate is 35 percent.What is the net income?

A) -$1,235
B) $382
C) $1,204
D) $14,660
E) $13,665

F) B) and E)
G) B) and D)

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Question 3

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The Carpentry Shop has sales of $398,600,costs of $254,800,depreciation expense of $26,400,interest expense of $1,600,and a tax rate of 34 percent.What is the net income for this firm?

Which one of the following is included in the market value of a firm but not in the book value?

All else held constant,the book value of owners’ equity will decrease when:

Net working capital increases when:  

For Year 2016,Precision Masters had sales of $42,900,cost of goods sold of $26,800,depreciation expense of $1,900,interest expense of $1,300,and dividends paid of $1,000.At the beginning of the year,net fixed assets were $14,300,current assets were $8,700,and current liabilities were $6,600.At the end of the year,net fixed assets were $13,900,current assets were $9,200,and current liabilities were $7,400.The tax rate was 34 percent.What is the cash flow from assets for 2016?

The corporate tax structure in the U.S.is based on a:

Cash flow to creditors is defined as:

Suzette's Market had long-term debt of $638,100 at the beginning of the year compared to $574,600 at year-end.If the interest expense was $42,300,what was the firm's cash flow to creditors?

Holly Farms has sales of $509,600,costs of $448,150,depreciation expense of $36,100,and interest paid of $12,400.The tax rate is 28 percent.How much net income did the firm earn for the period?

Which one of the following is an intangible fixed asset?

Firms that compile financial statements according to GAAP:

Wes Motors has total assets of $98,300,net working capital of $11,300,owners' equity of $41,600,and long-term debt of $38,600.What is the value of the current assets?

Donut Delite has total assets of $31,300,long-term debt of $8,600,net fixed assets of $19,300,and owners' equity of $21,100.What is the value of the net working capital?

Andersen's Nursery has sales of $318,400,costs of $199,400,depreciation expense of $28,600,interest expense of $1,100,and a tax rate of 35 percent.The firm paid out $23,400 in dividends.What is the addition to retained earnings?

Donegal’s has compiled the following information: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 406,300 \\\hline \text { Interest paid } & 21,200 \\\hline \text { Long-term debt } & 248,700 \\\hline \text { Owners' equity } & 211,515 \\\hline \text { Depreciation } & 23,800 \\\hline \text { Accounts receivable } & 24,400 \\\hline \text { Other costs } & 38,600 \\\hline \text { Inventory } & 41,500 \\\hline \text { Accounts payable } & 22,600 \\\hline \text { Cost of goods sold } & 218,900 \\\hline \text { Cash } & 16,300 \\\hline \text { Taxes } & 34,100 \\\hline\end{array}$ What is the operating cash flow for the year?

The financial statements of Blue Fin Marina reflect depreciation expenses of $41,600 and interest expenses of $27,900 for the year.The current assets increased by $31,800 and the net fixed assets increased by $28,600.What is the amount of the net capital spending for the year?

W.S.Movers had $138,600 in net fixed assets at the beginning of the year.During the year,the company purchased $27,400 in new equipment.It also sold,at a price of $5,300,some old equipment that had a book value of $2,100.The depreciation expense for the year was $6,700.What is the net fixed asset balance at the end of the year?

The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the: