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Question
Please refer to Table 4-2 for the following questions.Table 4-2
Drummond Company
Balance Sheet
| Assets: | ||
| Cash and marketable securities | $400,000 | |
| Accounts receivable | 1,415,000 | |
| Inventories | 1,847,500 | |
| Prepaid expenses | 24,000 | |
| Total current assets | 3,686,500 | |
| Fixed assets | 2,800,000 | |
| Less: accum. depr. | (1,087,500) | |
| Net fixed assets | 1,712,500 | |
| Total assets | $5,399,000 | |
| Liabilities: | ||
| Accounts payable | $600,000 | |
| Notes payable | 875,000 | |
| Accrued taxes | 92,000 | |
| Total current liabilities | $1,567,000 | |
| Long-term debt | 900,000 | |
| Common Stock (100,000 shares) | 700,000 | |
| Retained Earnings | 2,232,000 | |
| Total liabilities and owner's equity | $5,399,000 | |
| Net sales (all credit) | $6,375,000 | |
| Less: Cost of goods sold | (4,375,000) | |
| Selling and administrative expense | (1,000,000) | |
| Depreciation expense | (135,000) | |
| Interest expense | (100,000) | |
| Earnings before taxes | $765,000 | |
| Income taxes | (306,000) | |
| Net income | $459,000 | |
A) 2.97.
B) 2.46.
C) 2.35.
D) 2.23.
Answer
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