SECTION 2 Multiple Choice 21 marks (3 mark each: 1.5 for work and 1.5 for correc
ID: 2620331 • Letter: S
Question
SECTION 2 Multiple Choice 21 marks (3 mark each: 1.5 for work and 1.5 for correct answer) 1) Silver City Ltd reported current liabilities of S700,000, total assets of $12,000,000, and shareholders equity of $5,000,000 on its July balance sheet. Which of the following would the business have to have reported to complete the balance sheet equation? A) $14,790,000 in long-term liabilities B) S6,300,000 in long-term liabilities C) $10,040,000 in long-term liabilities D) $10,040,000 in accumulated amortization Winston's Musical Instruments expects to make purchases of $210,000. It anticipates an opening inventory of $75,000 and closing inventory of $15,000. If its Sales Revenue is $250,000, what will the Company's cost of goods sold be? 2) A) $247,000 B) $346,030 C) $266,000 D) $270,000 3) The financial statements of a company provided the following information: sales revenue equals $4,482,000, gross margin equals $2,689,000, EBIT equals $600,000, net income equals $204,000, current liabilities equal S700,000, long-term liabilities equal $2,100,000, common shares equal S2.5 million, preferred shares equal $1.25 million, retained earnings equal $275,000. The return on capital employed (ROCE) for the company is A) 2.6% B) 390 C) 6.9% D) 10.3% f harrel of oilis expectedExplanation / Answer
1) Capital +liabilities=Assets
Therefore
700000+long term liabilities+5000000=12000000
Long term liabilities =6300000
Option b
2)COGS=OPENING STOCK+PURCHASES-CLOSING STOCK
=75000+210000-15000=270000
OPTION D
3) ROCE=NET INCOME /(common and preferred equity+ retained earnings+debt)
=204000/(2500000+1250000+275000+2100000)=3.3%
Option b
Note we have assumed long term lI abilities as debt
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