26.1. The balance sheets at the end of each of the first two years of operations

Question

26.1.
The balance sheets at the end of each of the first two years of operations indicate the following:


2012
2011
Total current assets
$600,000
$560,000
Total investments
60,000
40,000
Total property, plant, and equipment
900,000
700,000
Total current liabilities
125,000
65,000
Total long-term liabilities
350,000
250,000
Preferred 9% stock, $100 par
100,000
100,000
Common stock, $10 par
600,000
600,000
Paid-in capital in excess of par-common stock
75,000
75,000
Retained earnings
310,000
210,000


If net income is $115,000 and interest expense is $30,000 for 2012, what are the earnings per share on common stock for 2012, (round to two decimal places)?
A) $2.07
B) $1.77
C) $1.92
D) $1.64


In preparing the statement of cash flows, the correct order of reporting cash activities is Financing, Operating, Investing.
A) False
B) True

The interest portion of an installment note payment is computed by multiplying the interest rate by the carrying amount of the note at the end of the period.
A) True
B) False

The number of times interest expense is earned is computed as
A) net income plus interest expense, divided by interest expense
B) net income divided by interest expense
C) income before income tax divided by interest expense
D) income before income tax plus interest expense, divided by interest expense

Explanation / Answer

$1.77 TRUE FALSE income before income tax plus interest expense, divided by interest expense

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