1) HUD, Co. had a beginning retained earnings of $31,775. For the year, the comp

Question

1) HUD, Co. had a beginning retained earnings of $31,775. For the year, the company had net income of $8,290 and paid dividends of $3,500. The company also issued $5,900 in new stock during the year. What is the ending retained earnings balance?

A $30,665

B $36,565

C $42,465

D $37,675

E $35,275

2) A firm has sales of $1,210, net income of $225, net fixed assets of $542, and current assets of $298. The firm has $100 in inventory. What is the common-size balance sheet value of inventory?

A 33.56%

B 18.45%

C 44.44%

D 8.26%

E 11.90%

Explanation / Answer

1.Ending retained earnings=Beginning retained earnings+Net income-dividend

(31775+8290-3500)

which is equal to

=$36565.

2.

Total assets=current assets+Fixed assets

=(542+298)=$840

Hence common size value of inventory=inventory/Total assets

=(100/840)

=11.90%(Approx).

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