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Fayer Corporation has provided the following financial data: Balance Sheet December 31, Year 2 and Year 1 Assets Year 2 Year 1 Current assets: Cash
Fayer Corporation has provided the following financial data:
Balance Sheet December 31, Year 2 and Year 1 | ||
Assets | Year 2 | Year 1 |
Current assets: | ||
Cash | $161,000 | $180,000 |
Accounts receivable | 110,000 | 130,000 |
Inventory | 181,000 | 160,000 |
Prepaid expenses | 57,000 | 70,000 |
Total current assets | 509,000 | 540,000 |
Plant and equipment, net | 1,044,000 | 960,000 |
Total assets | $1,553,000 | $1,500,000 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | $188,000 | $160,000 |
Accrued liabilities | 57,000 | 60,000 |
Notes payable, short term | 36,000 | 40,000 |
Total current liabilities | 281,000 | 260,000 |
Bonds payable | 200,000 | 200,000 |
Total liabilities | 481,000 | 460,000 |
Stockholders' equity: | ||
Common stock, $4 par value | 200,000 | 200,000 |
Additional paid-in capital-common stock | 80,000 | 80,000 |
Retained earnings | 792,000 | 760,000 |
Total stockholders' equity | 1,072,000 | 1,040,000 |
Total liabilities & stockholders' equity | $1,553,000 | $1,500,000 |
Income StatementYear 2 For the Year Ended December 31, Year 2 | |
Sales (all on account) | $1,220,000 |
Cost of goods sold | 760,000 |
Gross margin | 460,000 |
Operating expenses | 389,846 |
Net operating income | 70,154 |
Interest expense | 14,000 |
Net income before taxes | 56,154 |
Income taxes (35%) | 19,654 |
Net income | $36,500 |
Dividends on common stock during Year 2 totaled $4,500. The market price of common stock at the end of Year 2 was $10.88 per share. The company's times interest earned for Year 2 is closest to:
7.71 | ||
4.01 | ||
2.61 | ||
5.01 |
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