55) The Down Towner has annual costs of goods sold of $42,600, interest expense of $650, selling
and administrative expenses of $7,800, dividends paid of $1,200, depreciation of $1,100, and a tax
rate of 34 percent. What is the firm’s taxable income if it added $2,500 to retained earnings during
the year?
A) $2,181.30
B) $8,711.18
C) $3,700.00
D) $5,606.06
E) $10,882.35
56) Brewster’s has annual sales of $11,800, dividends of $270, interest expense of $320, cost of
goods sold of $7,230, addition to retained earnings of $510, selling and administrative expenses of
$1,940, and a tax rate of 34 percent. What is the amount of the depreciation expense?
A) $584.18
B) $1,385.82
C) $1,128.18
D) $1,215.00
E) $1,474.24
57) Assume sales are $2,220; cost of goods sold is $1,055, general expenses are $630, depreciation
expense is $210, and the tax rate is 35 percent. What is the net income amount if the firm paid $40
in interest expense?
A) $171.25
B) $99.75
C) $185.25
D) $120.25
E) $270.75
58) Atlantic Fisheries has an EBIT of $3,280, depreciation of $1,850, cost of goods sold of $6,920,
dividends paid of $750, interest expense of $860, and sales of $6,500. What is the taxable income?
A) $2,376
B) $1,805
C) $1,610
D) $1,670
E) $2,420
59) Art’s Boutique has sales of $610,000 and costs of $480,000. Interest expense is $40,000,
dividends paid is $37,000, and depreciation is $60,000. The tax rate is 34 percent and there are
8,500 shares of stock outstanding. What is the earnings per share?
A) $1.99
B) $2.33
C) $3.53
D) $4.28
E) $2.67
60) Given the tax rates as shown, what is the average tax rate for a firm with taxable income of
$228,610?
Taxable Income
Tax Rate
$0
–
50,000
15
%
50,001
–
75,000
25
%
75,001
–
100,000
34
%
100,001
–
335,000
39
%
A) 36.38%
B) 33.88%
C) 31.67%
D) 34.64%
E) 39.00%
61) The tax rates are as shown. Your firm currently has taxable income of $73,900. How much
additional tax will the firm owe if it increases its taxable income by $10,000?
Taxable Income
Tax Rate
$0
–
50,000
15
%
50,001
–
75,000
25
%
75,001
–
100,000
34
%
100,001
–
335,000
39
%
A) $3,400
B) $3,500
C) $2,500
D) $2,950
E) $3,301
62) The tax rates are as shown. Lasseter’s currently has taxable income of $163,400. What is the
firm’s average tax rate?
Taxable Income
Tax Rate
$0
–
50,000
15
%
50,001
–
75,000
25
%
75,001
–
100,000
34
%
100,001
–
335,000
39
%
A) 34.00%
B) 36.03%
C) 28.75%
D) 39.00%
E) 30.32%
63) Total assets are $2,630, fixed assets are $1,825, long-term debt is $1,015, and short-term debt
is $530. What is the amount of net working capital?
A) $1,295
B) $275
C) $1,085
D) $350
E) $400
64) School House Antiques has current assets of $340 and current liabilities of $190 at the end of
the year. At the beginning of the year, the current assets were $415 and the current liabilities were
$210. What is the change in net working capital?
A) –$95
B) $0
C) $55
D) $95
E) –$55
65) You are given the following balance sheets.
2017
Assets
Cash
$
101
$
128
Other current assets
289
307
Net fixed assets
624
631
Total assets
$
1,014
$
1,066
Liabilities and Equity
Accounts payable
$
123
$
118
Long-term debt
306
302
Stockholders’ equity
585
646
Total liabilities and equity
$
1,014
$
1,066
What is the change in the net working capital from 2016 to 2017?
A) $45
B) –$35
C) $50
D) –$50
E) $35
66) Charter Tours has the following balance sheets:
2017
Assets
Cash
$
203
$
197
Accounts receivable
684
726
Inventory
918
1,023
Net fixed assets
2,014
1,989
Total assets
$
3,819
$
3,935
Liabilities and Equity
Accounts payable
$
748
$
818
Deferred taxes
306
302
Long-term debt
1,647
1,722
Stockholders’ equity
1,118
1,093
Total liabilities and equity
$
3,819
$
3,935
What is the amount of net working capital for 2017?
A) $751
B) $1,057
C) $1,128
D) $1,734
E) $826
67) Frederick Antiques has the following balance sheets:
2017
Assets
Cash
$
182
$
153
Accounts receivable
911
979
Inventory
1,304
1,223
Net fixed assets
2,659
2,037
Total assets
$
5,056
$
4,392
Liabilities and Equity
Accounts payable
$
1,248
$
1,318
Deferred taxes
103
97
Long-term debt
2,804
2,607
Stockholders’ equity
901
370
Total liabilities and equity
$
5,056
$
4,392
What is the change in net working capital?
A) –$118
B) $34
C) $12
D) $144
E) –$112
68) Murphy’s Outlet has the following balance sheets:
2017
Assets
Cash
$
214
$
187
Accounts receivable
1,306
1,259
Inventory
1,847
2,048
Net fixed assets
3,511
3,287
Total assets
$
6,878
$
6,781
Liabilities and Equity
Accounts payable
$
1,414
$
1,632
Other current liabilities
624
598
Long-term debt
1,320
1,264
Stockholders’ equity
3,520
3,287
Total liabilities and equity
$
6,878
$
6,781
What is the change in net working capital?
A) –$65
B) $91
C) $65
D) –$91
E) $57
69) Nel’s Place has total sales of $1,456, costs are $782, and depreciation is $115. The tax rate is 34
percent. The firm does not have any interest expense. What is the operating cash flow?
A) $393.08
B) $524.40
C) $501.38
D) $483.94
E) $427.82
70) Teddy’s Pillows had beginning net fixed assets of $648 and ending net fixed assets of $621.
Assets valued at $285 were sold during the year. Depreciation was $76. What is the amount of net
capital spending?
A) $334
B) $236
C) $115
D) $49
E) $66
71) At the beginning of the year, Malek Farm’s had long-term debt of $687 and total debt of $911.
At the end of the year, the long-term debt is $579 and total debt is $898. If $58 of interest was paid
during the year, what is the cash flow to the creditors?
A) –$50
B) –$166
C) $71
D) $166
E) $50
72) Pete’s Boats has beginning long-term debt of $647 and ending long-term debt of $749. The
beginning and ending total debt balances are $801 and $768, respectively. The interest paid is $54.
What is the amount of the cash flow to the creditors?
A) –$10
B) –$48
C) $21
D) $156
E) $87
73) Peggy Grey’s Cookies has net income of $2,918. The firm pays out 35 percent of the net
income to its shareholders as dividends. During the year, the company sold $150 worth of common
stock. What is the cash flow to the stockholders?
A) $1,171.30
B) $871.30
C) $2,046.70
D) $1,224.20
E) $1,746.70
74) Thompson’s Jet Skis has operating cash flow of $994. Depreciation is $102, taxes are $298,
and interest paid is $65. A net total of $82 was paid on long-term debt. The firm spent $481 on
fixed assets and increased its net working capital by $32. What is the amount of the cash flow to
stockholders?
A) −$104
B) $334
C) $464
D) –$114
E) $138