Solved by verified expert :Quesfions I to 20: Select the best answer to each question. Note that a question and its answers may be split across a pagebrealr, so be sure that you have seen the entire question and, all the answers before choosing an answer.L. Centerville Company’s debt-to-equity ratio is 0.60 Total assets are $320,000, current assets are$170,000, and working capital is $80,000. Centerville’s long-term liabilities must beA. $30,000.B. $90,000.c. $80,000.D. $120,000.Use the following information to answer this question.The most recent balance sheet and income statement of Teramoto Corporation appear below:Comparative Balance SheetAssets:Cash and cash equivalentsAccounts receivablelnventoryPlant and equipmentLess accumulated depreciationTotal assetsLiabilities and stockholders’ equityAccounts payableWages payableTaxes payableBonds payableDeferred taxesCommon stockRetained earningsTotal liabilities and stocktolders’ equityIncome StatementSalesCost of good soldGross marginSelling and administative expenseNet operating incomeIncome taxesEndingBalance$435373582301$4s0-$s72l152t205526r$450s89358730618911735BeginningBalance$355969490MW$481813202t50t97$367-Net incoineCash dividends were $18.2. The net cash provided by (used by) financing activities for the year wasA. ($18).B. ($12).c. $s.D. $1.3, A weakness of the intemal rate of retum method for screening invesfinent projects is that itA. implicitly as$unes that the company is able to reinvest cash flows from the project at the intemal rate of return.B. implicitly assumes that the company is able to reinvest cash flows from the project at the company’s discount rate.C. doesn’t consider the time value of money.D. doesnt take into account all of the cash flows from a project.4. (Ignore income tanes in this problem.) The following data pertain to an investnent:Cost of the inveshnent $18,955Life ofthe project 5 yearsAnnual cost savings $5,000Estimated salvage value $1,000Discount rate l0%The net present value of the proposed investment isA. s(3,430).B. $621.c. $3,355.D. $0.5. Which of the following would be classified as a financing activity on the statement of cash flows?A. Dividends paid to shareholders of the company on the company’s common stockB. Dividends received on invesfinents in another company’s common stockC. lnterest received on investnents in another company’s bondsD, Interest paid on bonds issued by the reporting company6. The net present value method assumes that the project’s cash flows are reinvested at theA. intemal rate of retum.B. simple rate of return.C. discount rate used in the net present value calculation.D. payback rate of return.Use the following information to answer this question.Financial statements for Larkins Company appear below:s82 &Larkins CompanyStatement of Financial PositionDecember 31, Year 2 and Year(dollars in thousands)Current assets:Cash and marketable securitiesAccounb receivable, netInventoryPrepaid expensesTotal current assetsNoncurrent assets:Plant & equipment, netTotal assetsCunent liabilities:Accounts payableAccrued liabilitiesNotes payable, short termTotal cunent liabilitiesNoncurrent liabilities:Bonds payableTotal liabilitiesStockholders’ equity:Preferred stoch $20 par, l0%Common stock, $10 parAdditional paid-in capital–common stockRetained earningsTotal stocktolders’ equityTotal liabilities & stockholders’ equityLarkins CompanyIncome StatementFor the Year Ended December 3l,Year 2(dollars in thousands)Sales (all on account)Cost of goods soldGross marginSelling and administative expenseNet operating incomeInterest expenseNet income before taxesIncome taxes (3fflo)Net incomeYear2$1802t0130505741.540$2,110Year I$180180120505301.480$2,010$13060120310500810120180244660L2A0s2.010$1006090250480730na1802408401.380$2.110$2,7601″93083033050050450135$3lsDividends during Year 2 totaled $135 thousand, of which $12 thousand were preferred dividends. Themarket price of a share of common stock on December 31, Year 2 was $150.7. Larkins Company’s dividend payout ratio for Year 2 was closest to:4.42.9%8. t4.8%c.40.6%D.24.6%8. Britfinan Corporation makes three products that use the current constraint-a particular type of machine.Data concerning those products appear below:Selling price per unitVariable cost per unitMinutes on the consfraintIP NI YD$183.57 92A7.74 $348.1ss144.42 $155.04 S26e.s02.90 3.40 5.s0Assume that suffrcient constaint time is available to satisS demand for all but the least profitable product.Up to how much should the company be willing to pay to acquire more of the consffained resource?A. $15.50 per minuteB. $13.50 per minuteC. $78.65 per unitD. $39.15 per unit9. Part N19 is used by Malouf Corporation to make one of its products. A total of 7,000 units of this partare produced and used every year. The companfs Accounting Deparfinent reports the following costs ofproducing the part at this level of activity:Psr UnitDirect materials $2.20Direct labor $8.50Variable manufacturing overhead $1.30Supervisor’s salary $5.80Depreciation of special equipment $7.20Allocated general overhead S4.60An outside supplier has offered to make the part and sell it to the company for $24.50 each. If this offer isaccepted, the supervisols salary and all of the variable costs, including the direct labor, can be avoided.The special equipment used to make the part was purchased many years ago and has no salvage value orother use. The allocated general overhead represents fixed costs of the entire company, none of whichwould be avoided if the part were purchased instead of produced internally. In addition, the space used tomake part N19 could be used to make more of one of the company’s other products, generating anadditional segment margin of $25,000 per year for that product. What would be the impact on thecompany’s overall net operating income of buying part N19 from the outside supplier?A- Net operating income would decline by $10,700 per year.B. Net operating income would decline by $60,700 per year.C. Net operating income would decline by $21,900 per year.D. Net operating income would increase by $25,000 per year.10. (Ignore income tares in this problem.) The Keego Company is planning a $200,000 equipmentinvestment that has an estimated five-year life with no estimated salvage value. The company has projectedthe following annual cash flows for the investment:2345Year Cash InflowsI $120,00060,00040,00040,00040.000Total 5300,000Assuming that the cash inflows occur evenly over the year, the payback period for the invesfinent isyears.A.4.91B.2.50c. 1.67D.0.7511. Cridwell Company’s selling and administrative expeffies for last year totaled $210,000. During the year,the company’s prepaid expense account balance increased by $18,000, and accrued liabilities increased by$12,000. Depreciation charges for the year were S24,000. Based on this information, selling andadminisfrative expenses adjusted to a cash basis under the direct method on the statement of cash flowswould beA. $192,000.B. $180,000.c. $240,000.r). $228,000.12. Degner Inc. has some material that originally cost $19,500. The material has a scrap value of $13,300as is, but if reworked at a cost of $2,100, it could be sold for $14,000. What would be the incrementaleffect on the company’s overall profit of reworking and selling the material rather than selling it as is asscrap?A. $11,900B. -$7,600c. -$1,400D. -$20,90013. An increase in the market price of a company’s common stock will immediately affect itsA. dividend payout ratio.B. debt-to-equity ratio.C. dividend yield ratio.D. earnings per share of common stock.14. Kava Inc, manufactures industial components. One of its products, which is used in the constructionof industrial air conditioners, is known as K65. Data concenring this product are given below:Per UnitSelling price $180Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadVariable selling expenseFixed selling and administrative expenseCurrent assets:Cash and mmketable securitiesAccounts receivable, netInventoryPrepaid expensesTotal current assetsNoncurrent assets:Plant & equipment netTotal assetsCunent liabilities:Accounts payableAccrued liabilitiesNotes payable, short tennTotal current liabilitiesNoncurrent liabilities :Bonds payableTotal liabilitiesStoc*holders’ equity:Preferred stock, $20 par, l0%Common stock, $10 par$29$s$4$21$2$17The above per unit data are based on annual production of 4,000 units of the component. Direct labor canbe considered to be a variable cost. (Source: CMA, adapted)The company has received a special, one-time-only order for 500 units of component K65. There wouldbe no variable selling expense on this special order, and the total fixed manufacturing overhead and fixedselling and adminisfrative expenses of the company wouldn’t be affected by the order. Assuming that Kavahas excess capacity and can fill the order without cutting back on the production of any product, what isthe minimum price per unit on the special order below which the company shouldn’t go?A. $38B. $78c. $59D. $180Use the following information to answer this question.Financial statements for Larkins Company appear below:Larkins CompanyStatement of Financial PositionDecember 31, Year 2 oadYear 1(dollars in thousands)Year2$180210130505701.540$2,110Year I$180180120i05301.480$2,010$13060120310$1006090250480730120180ru810120180Additional paid-in capital–common stock 240 240Retained earnings 840 660Total stockholders’equity 138q 1.?00Total liabilities & stoctholders’equity $2.110 $2.01QLarkins CompanyIncome StatementFor the Year Ended December 3l,Year 2(dollars in thousands)Sales (all on account)Cost of goods soldGross marginSelling and administrative expenseNet operating incomeInterest expenseNet income before taxeslncome taxes (30%)Net income$2,7601.9308303305005045015$3lsDividends during Year 2 totaled $135 thousand, of which $12 thousand were prefered dividends. Themarket price of a share of common stock on December 31, Year 2 was $150.15, Larkins Company’s price-earnings ratio on December 31, Year 2 was closest to:A.8.918.20.79c.8.57D.6.00Use the following information to answer this question.Financial statements for Larkins Company appear below:Larkins CompanyStatement of Financial PositionDecember 31, Year 2 andYear 1(dollars in thousands)Year 2 Year ICurrent assets:Cash and marketable securities $180 $180Accounts receivable, net 2lO 180Inventory 130 120Prepaidexpenses 5P 50Total current assets 570 530Noncurrent assets:Plant & equipmen! net 1.540 1.480Total assets $2,110 $2,010Current liabilities:Accounts payable $100 $130Accruedliabilities 60 60Notes payable, short term 90 120Total cunent liabilities 250 310Noncurrent liabilities:Bondspayable 480 500Total liabilities 730 810Stockholders’ equity:Preferredstock, $20par,10% 120 120Common stoclg $10 par 180 180Additional paid-in capital–common stock 240 240Retained earnings 840 66qTotal stockholders’equity 1.380 1.200Total liabilities & stockholders’equity $2.110 $2.010Larkins CompanyIncome StatementFor the Year Ended December 31, Year 2(dollars in thousands)Sales (all on account)Cost of goods soldGross marginSelling and administative sxp€nseNet operating incomeInterest expenseNet income before taxesIncome taxes (307o)Net incomes2,7601.93083031050050450135$315Dividends during Year 2 totaled $135 thousand, of which $12 thousand were preferred dividends. Themarket price of a share of common stock on December 31, Year 2 was $150.16. Larkins Company’s return on total assets for Year 2 was closest to:L. r53%.B.17.Oo/o.c.16.0%.D.l3.6Yo.. Use the following information to answer this question.Financial statements for Larkins Company appear below:Larkins CompanyStatement of Financial PositionDecember 31, Year 2 and Year 1(dollars in thousands)Year 2 Year ICurrent assets:Cash and marketable securities $180 $180Accounts receivable, net 2t0 180hventor]Prepaid expensesTotal current assetsNoncurrent assets:Plant & equipment netTotal assetsCurrent liabilities:Accounts payableAccrued liabilitiesNotes payable, short termTotal current liabilitiesNoncurrent liabilities:Bonds payableTotal liabilitiesStockholders’ equity:Preferred stock, $20 par, 10%Common stock, $10 parAdditional paid-in capital–common stockRetained earningsTotal stockholders’ equityTotal liabilities & stockfiolders’ equityLarkins Companylncome StatementFor the Year Ended December 31, Year 2(dollars in thousands)Sales (all on account)Cost of goods soldGross marginSelling and administrative expeilseNet operating incomeInterest expenseNet income before taxesIncome taxes (307o)Net income12050s30130505701.540$2,1101.480$2,010$10060902504807301201802408401″380$2.110$130601203105008101201802406601.200$2.010$2,7601.93083033050050450135$31sDividends furing Year 2 totaled $135 thousando of which S12 thousand were prefered dividends. Themarket price of a share of common stock on December 31, Year 2 was $150.17. Larkins Company’s return on corlmon stocl
