Question

Which of the following most likely would be classified as restructuring costs?

Multiple Choice

• Acquisition fees associated with the purchase of land and buildings.

• Brokerage fees from the issuance of additional shares of stock.

• Advertising costs to sell a product recently developed by a company.

• Severance pay for employee layoffs associated with facility closings.

Excerpts from Dowling Company's December 31, 2021 and 2020, financial statements and key ratios are presented below (all numbers are in millions):

	2021				2020
Accounts receivable (net)	$	20			$	31
Net sales	$	130			$	115
Cost of goods sold	$	75			$	70
Net income	$	20			$	32
Inventory turnover		5.95
Return on assets		12.00	%
Equity multiplier		2.51

Dowling's 2021 profit margin is: (Round your answer to 1 decimal place.)

Multiple Choice

• 31.1%.

• 15.3%.

• 14.2%.

• 15.4%.

On November 1, 2021, Jamison Inc. adopted a plan to discontinue its barge division, which qualifies as a separate component of the business according to GAAP regarding discontinued operations. The disposal of the division was expected to be concluded by April 30, 2022. On December 31, 2021, the company's year-end, the following information relative to the discontinued division was accumulated:

Operating loss Jan. 1–Dec. 31, 2021	$	85	million
Estimated operating losses, Jan. 1 to April 30, 2022		84	million
Excess of fair value, less costs to sell, over book value at Dec. 31, 2021		21	million

In its income statement for the year ended December 31, 2021, Jamison would report a before-tax loss on discontinued operations of:

Multiple Choice

• $85 million.

• $169 million.

• $148 million.

• $64 million.

Martel Co. had supplies of $44,000 and $60,000 at the end of 2020 and 2021, respectively. During 2021, Howard paid $168,000 for supplies. Supplies expense in the 2021 income statement was:

Multiple Choice

• $152,000.

• $136,000.

• $184,000.

• $168,000.

Cash flows from investing do not include cash flows from:

Multiple Choice

• the sale of equipment.

• borrowing.

• the purchase of other corporation's securities.

• lending money to another corporation.

Answer 1

Answer- The following most likely would be classified as restructuring costs =Severance pay for employee layoffs associated with facility closings.

Answer- Dowling's 2021 profit margin is=15.4%

Explanation- Profit margin = (Net income/ Net sales)*100

= ($20/$130)*100

=15.4%

Answer- In its income statement for the year ended December 31, 2021,Jamison would report a before-tax loss on discontinued operations of= $85 million.

Answer- Supplies expense in the 2021 income statement was = $152000.

Explanation- Supplies expense for 2017 income statement= Supplies paid+ Opening balance of supplies-Closing balance of supplies

= $168000+$44000-$60000

=$152000.

Answer- Cash flows from investing do not include cash flows from= borrowing.