1/ Allen Lumber Company had earnings after taxes of $560,000 in the year 2009 wi

Question

1/ Allen Lumber Company had earnings after taxes of $560,000 in the year 2009 with 390,000 shares outstanding on December 31, 2009. On January 1, 2010, the firm issued 26,000 new shares. Because of the proceeds from these new shares and other operating improvements, 2010 earnings after taxes were 28 percent higher than in 2009. Earnings per share for the year 2010 were (Round your answer to 2 decimal places.)

$1.72

$1.35

$1.45

$1.84

2/ Density Farms, Inc. had sales of $490,000, cost of goods sold of $180,000, selling and administrative expense of $73,000, and operating profit of $91,000. What was the value of depreciation expense?

$146,000

$155,000

$46,000

$144,000

3/ Elgin Battery Manufacturers had sales of $890,000 in 2009 and their cost of goods sold represented 70 percent of sales. Selling and administrative expenses were 8 percent of sales. Depreciation expense was $9,000 and interest expense for the year was $10,000. The firm's tax rate is 34 percent. What is the dollar amount of taxes paid?

$178,332

$204,600

$63,512

$60,112

Explanation / Answer

1 Average shares outstanding = (390000+26000)= 416000 Net income in 2010 = 560000*1.28= $716800 Earnings per share for the year 2010 = 716800/416000 = $1.72 2 Depreciation expense = (490000-180000)-73000-91000= $146000 3 Sales 890000 Cost of goods sold 623000 =890000*70% Gross Profit 267000 Selling and administrative expenses 71200 =890000*8% Depreciation expense 9000 interest expense 10000 90200 Income before taxes 176800 Dollar amount of taxes paid = 176800*34%= $60112

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