Question

1. A corporation reports the following balances and amounts:    Accounts payable, $50,000    Cash provided...

1. A corporation reports the following balances and amounts:
   Accounts payable, $50,000
   Cash provided by operations, $100,000
   Accounts receivable, $35,000
   Net income, $40,000
   Average number of common shares, 15,000
   Salaries and wages payable, $40,000
   Average current liabilities, $225,000
   Stockholders’ equity, $200,000
   Average total assets, $600,000
   Current assets, $300,000
   Average total liabilities, $320,000
   Current liabilities, $250,000
   Dividends paid to preferred shareholders, $5,000

Determine its earnings per share?

Group of answer choices

$4.00

$1.30

$2.33

$1.50

$1.80

2.The following ratios are available for Alpha Inc. and Omega Inc.

Alpha Inc. Omega Inc.
Current ratio     1.8     1.6
Earnings per share    $1.5/share     $1/share

Compared to Alpha Inc., Omega Inc. has

Group of answer choices

lower profitability.

higher solvency.

higher liquidity.

lower liquidity.

lower solvency.

3. A company has assets of $3,000,000, common stock of $780,000, and liabilities of $475,000. What is the company’s retained earnings?

Group of answer choices

$4,255,000

$3,305,000

$2,695,000

$1,255,000

$1,745,000

4. Based on the following data (in dollars), what is the current ratio?

Accounts payable $ 110,000 Investments in bonds      170,000
Accounts receivable         80,000 Land      190,000
Accumulated depreciation       40,000 Notes payable (due in 2 years)      180,000
Buildings      226,000 Patents      140,000
Cash         84,000 Prepaid insurance         60,000
Common stock      240,000 Salaries and wages payable     20,000
Inventory      140,000

Group of answer choices

3.31

3.39

2.34

1.26

2.80

Business   Accounting   
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Homework Answers

Answer #1
1) $2.33

EPS

= (Net income - Dividends paid to preferred shareholders) / Average number of common shares

= (40,000 - 5,000) / 15,000

= 2.33
2) lower liquidity
None of the provided ratios show profitability or solvency so it is about liquidity that is lesser of Omega's.
3) $1,745,000

Retained Earnings

= Assets - Common stock - Liabilities

= 3,000,000 - 780,000 - 475,000

= 1,745,000
4) 2.80

Current ratio

= Current assets / Current liabilities

= (Accounts receivable + Cash + Inventory + Prepaid insurance) / (Accounts payable + Salaries and wages payable)

= (80,000 + 84,000 + 140,000 + 60,000) / (110,000 + 20,000)

= 364,000 / 130,000

= 2.80
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