Question

6. In 2017, Alden Axle, Inc. had cash flows from investing activities of – $173,250, cash flows from financing activities of – $152,500 and cash flow from operations of $343,600. The balance in the firm's cash account was $104,500 at the beginning of 2017. What was the firm's balance in the cash account at the end of 2017?

A. less than $104,000

B. more than $104,000 but less than $112,900

C. more than $112,900 but less than $121,750

D. more than $121,750 but less than $129,500

E. more than $129,500

7. Bold Boxes, Inc. started the year with a balance of retained earnings of $1,850,000. The company reported sales of $1,425,600, gross profit of $986,400, net income for the year of $575,400, paid dividends of $43,500 to the preferred stock holders and $218,000 to common stock holders. What is end of year balance in retained earnings for Bold Boxes?

A. less than $1,938,000

B. more than $1,938,000 but less than $2,014,300

C. more than $2,014,300 but less than $2,096,400

D. more than $2,096,400 but less than $2,162,500

E. more than $2,162,500

8. Tougher Toys, Inc.'s 2014 income statement lists the following income and expenses: EBIT = $1,192,850, Interest expense = $164,325 and taxes = $298,365. Tougher Toys has no preferred stock outstanding and 228,500 shares of common stock outstanding. What are the firm’s 2014 earnings per share?
A. more than $3.18 but less than $3.24

B. more than $3.24 but less than $3.30

C. more than $3.30 but less than $3.36

D. more than $3.36 but less than $3.42

E. more than $3.42

13. In 2014, Red Fox Car Shop had sales of $892,350, cost of goods sold totaled $384,150, net income equaled $197,645, depreciation was $67,500, taxes were $58,726, and interest expense was $37,486. How much did the firm earn in operating profits for 2014?

14. Grey Machines, Inc. began the year 2016 with $735,800 in retained earnings. The firm earned net income of $352,450 in 2016. The firm paid $25,000 to its preferred stockholders and $186,500 to its common stockholders. What is the year-end 2016 balance in retained earnings for Grey Machines?

Answer 1

Answer to Question No. 6.

Cash Balance, Ending = Cash Balance, Beginning + Net Increase / (Decrease) in Cash from Activities
Net Increase / (Decrease) in Cash from Activities = Cash Flow from Operating Activities + Cash Flow from Investing Activities + Cash Flow from Financing Activities
Net Increase / (Decrease) in Cash from Activities = $343,600 + $(173,250) + $(152,500)
Net Increase in Cash from Activities = $17,850

Cash Balance, Ending = $104,500 + $17,850
Cash Balance, Ending = $122,350

Option D i.e. more than $121,750 but less than $129,500 is Correct

Answer to Question No. 7.

Retained Earnings, Ending = Retained Earnings + Net Income – Dividend
Dividend = $43,500 + $218,000
Dividend = $261,500

Retained Earnings, Ending = $1,850,000 + $575,400 - $261,500
Retained Earnings, Ending = $2,163,900

Option E i.e. more than $2,162,500 is Correct

Answer to Question No. 8.

Earnings per Share = Net Income / Common Stock Outstanding
Net Income = EBIT – Interest Expense – Taxes
Net Income = $1,192,850 - $164,325 - $298,365
Net Income = $730,160

Earnings per Share = $730,160 / 228,500
Earnings per Share = $3.20

Option A i.e. more than $3.18 but less than $3.24 is Correct

Answer to Question No. 13.

Operating Profit = Sales – Cost of Goods Sold – Depreciation
Operating Profit = $892,350 - $384,150 - $67,500
Operating Profit = $440,700

Answer to Question No. 14.

Retained Earnings, Ending = Retained Earnings + Net Income – Dividend
Dividend = $25,000 + $186,500
Dividend = $211,500

Retained Earnings, Ending = $735,800 + $352,450 - $211,500
Retained Earnings, Ending = $876,750