SOLVED

11) CapiCal Enterprises recorded net income of $20 million for the year. The company has 1,500,000 preferred shares outstanding, with a stated dividend of $.80. It also has 5 million common shares outstanding. If the company wishes its total dividend payout for the year to equal 20% of its net income, what will be the dividend paid on each common share? A) $.43 B) $.56 C) $.62 D) $.80 E) $.82 12) A company distributed $612,000 3rd quarter dividends to its 900,000 common shareholders and $150,000 to its 300,000 preferred shareholders. It recorded a net income of $1,520,000 for the same quarter. The closing balance of the periods’ statement of Retained Earnings was a $1,287,000. It can be concluded that the opening balance on the Statement of Retained Earnings was A) $529,000 B) -$233,000 C) $233,000 D) -$83,000 E) $379,000 13) Picton Furniture’s Dining Department sold 372 units at an average price of $1,278 each. Sales expenses accounted for $125,000, Distribution expenses totaled $24,500 and Administration expenses totaled $13,500. It costs Picton an average of $695 to manufacture each unit. What was Picton’s gross profit? A) $475,416 B) $187,416 C) $312,416 D) $133,540 E) $216,876 14) Over the week, East Wind Chinese Buffet sold 4,820 buffet meals at an average price of $15 each, which cost the company, on average, $5.50 each. Salaries accounted for $24,600, newspaper advertising and coupon expenses were $8,000, rent was $4,500 and administration expenses totaled $3,500. Interest equals $1,000. Their income tax rate is 31%. What was East Wind’s operating income? A) $45,790 B) $2,991 C) $40,600 D) $5,190 E) $43,190 15) RAJ Inc. has secured an electronic link with its established customers and can offer Just In Time delivery to their retail locations. The JIT delivery expenses appear on the income statement included in A) Cost of Goods Sold B) Distribution Expenses C) Amortization Expenses D) Selling Expenses E) Administration Expenses 16) A vacuum moulding machine, originally priced at $140,000 was purchased for $100,000 from industrial liquidators. It was subsequently sold five years later for $75,000. Straight-line accumulated amortization amounted to $50,000. The sale of the machine produced A) A gain of $5,000 B) A gain of $15,000 C) A loss of $15,000 D) A gain of $25,000 E) A loss of $25,000 17) If a business acquired a $250,000 loan to buy a new warehouse, it would be recorded on a Cash Flow statement as A) An increase in the cash flow from financing activities B) An increase in cash flow from investing activities C) A decrease in cash flow from operating activities D) A decrease in cash flow from financing activities E) A decrease in cash flow from investing activities 18) When drawing up the Cash Flow statement, a step in determining the cash flow from operating activities is A) Adding accumulated amortization to net income after-tax B) Adding accumulated amortization to net income before tax C) Deducting increases in current liabilities and adding decreases in current liabilities D) Adding the gain on the sale of capital assets, such as land and buildings E) Deducting increases in current assets and adding decreases in current assets 19) The Board of Directors for JKJ Manufacturing Inc., set aside $1 million of retained earnings for capital project allocations. This has the effect of A) Restricting the claim of shareholders on the Company’s assets B) Limiting the potential for the distribution of profits as dividends C) Maintaining a $1 million cash reserve for the company D) Moving $1 million of Retained Earnings to Capital Assets on the Balance Sheet E) Limiting the company’s growth potential 20) An increase in ________ represents a cash inflow from operating activities. A) Inventory B) Accounts receivable C) Accrued salaries D) Prepaid rent E) An organization