Question

The following question(s) refer to the year-end account balances for Jensen Systems, Inc. The accounts are...

The following question(s) refer to the year-end account balances for Jensen Systems, Inc. The accounts are listed not in the order they appear on the financial statements. The applicable tax rate is 40%.

Income Statement

Cost of Goods Sold

340
Interest Expense

20
Operating Expense (excluding depreciation)

115
Sales

600
Tax

???


Balance Sheet

Accounts Payable

35
Accounts Receivable

65
Accruals

30
Accumulated Depreciation

(175)
Cash

35
Common Stock

120
Fixed Assets (gross)

390
Inventory

135
Long Term Debt

200
Retained Earnings

65

1. What was the company's earnings before interest and taxes (EBIT)?

a. $155
b. $145
c. $260
d. $245
e. $115


2. What is the company's tax liability?

a. $48
b. $58
c. $55
d. $50
e. $40


3. What was the company's Net Income?

a. $72
b. $45
c. $75
d. $80
e. $100

4.What is the company's Total Assets?

a. $420
b. $570
c. $625
d. $450
e. $490
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Homework Answers

Answer #1

1) EBIT:

Sales $ 600.00
COGS $ 340.00
Op Ex $ 115.00
EBIT $ 145.00

EBIT=sales-COGS-Operating expenses

Option B is correct

2)

EBIT $ 145.00
Interest $    20.00
PBT $ 125.00
Tax $    50.00

Option d is correct

3)

PBT $ 125.00
Tax $    50.00
NI $    75.00

Option c is correct

4)

Fixed asset $   390.00
Dep $ -175.00
Cash $     35.00
Inventory $   135.00
Receivables $     65.00
Total Assets $   450.00

Hence option d is correct

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