1.) Megna Company’s net income last year was $188,000. Changes in the company’s balance sheet accounts for the year appear below:
| Increases (Decreases) |
|
| Asset and Contra Assets Accounts: | |
| Cash | $4,500 |
| Accounts receivable | $6,500 |
| Inventory | $(9,500) |
| Prepaid expenses | $12,000 |
| Long term investments | $88,500 |
| Property, plant and equipment | $79,500 |
| Accumulated depreciation | $86,500 |
| Liability and Equity Accounts: | |
| Accounts payable | $21,500 |
| Accrued liabilities | $13,500 |
| Income taxes payable | $(30,500) |
| Bonds payable | $(62,500) |
| Common stock | $37,500 |
| Retained earnings | $116,500 |
The company paid a cash dividend and it did not dispose of any long term investments or property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following question pertain to the company’s statement of cash flows.
The net cash provided by (used in) operating activities last year was:
(PLEASE SHOW WORK FOR RATING)
A. $180,500
B. $188,000
C. $270,000
D. $274,500
2.) Financial statements for Marcell Company appear below:
| Marcell Company Statement of Financial Position December 31, Year 2 and Year 1 (dollars in thousands) |
||
| Year 2 | Year 1 | |
| Current assets: | ||
| Cash and marketable securities | $190 | $180 |
| Accounts receivable, net | 140 | 140 |
| Inventory | 270 | 270 |
| Prepaid expenses |
50 |
50 |
| Total current assets | 650 | 640 |
| Noncurrent assets: | ||
| Plant & equipment, net |
1,940 |
1,920 |
| Total assets |
$2,590 |
$2,560 |
| Current liabilities: | ||
| Accounts payable | $140 | $180 |
| Accured liabilities | 60 | 60 |
| Notes payable, short term |
310 |
350 |
| Total current liabilities | 510 | 590 |
| Noncurrent liabilities: | ||
| Bonds payable |
540 |
560 |
| Total liabilities |
$1,050 |
$1,150 |
| Stockholders’ equity: | ||
| Preferred stock, $10 par, 8% | 160 | 160 |
| Common stock, $5 par | 200 | 200 |
| Additional paid in capital common stock | 370 | 370 |
| Retained earnings |
810 |
680 |
| Total stockholders equity |
1,540 |
1,410 |
| Total liabilites & stockholders equity |
$2,590 |
$2,560 |
| Marcell Company Income Statement For the Year Ended December 31, Year 2 (dollars in thousands) |
|
| Sales (all on account) | $4,400 |
| Cost of goods sold |
3,080 |
| Gross margin | 1,320 |
| Selling and administrative expense |
520 |
| Net operating income | 800 |
| Interest expense |
80 |
| Net income before taxes | 720 |
| Income taxes (30%) |
216 |
| Net income |
$504 |
Marcell Company’s current ratio at the end of Year 2 was closest to:
(PLEASE SHOW WORK FOR RATING)
A. 1.27
B. 0.90
C. 0.63
D. 1.17