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Freiman Corporation's most recent balance sheet and income statement appear below: Balance Sheet December 31, Year 2 and Year 1 (in thousands of dollars) Year
Freiman Corporation's most recent balance sheet and income statement appear below:
Balance Sheet | |||||||||||
December 31, Year 2 and Year 1 | |||||||||||
(in thousands of dollars) | |||||||||||
Year 2 | Year 1 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash | $ | 166 | $ | 126 | |||||||
Accounts receivable, net | 235 | 255 | |||||||||
Inventory | 126 | 136 | |||||||||
Prepaid expenses | 43 | 43 | |||||||||
Total current assets | 570 | 560 | |||||||||
Plant and equipment, net | 730 | 730 | |||||||||
Total assets | $ | 1,300 | $ | 1,290 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 136 | $ | 156 | |||||||
Accrued liabilities | 93 | 93 | |||||||||
Notes payable, short term | 63 | 73 | |||||||||
Total current liabilities | 292 | 322 | |||||||||
Bonds payable | 289 | 299 | |||||||||
Total liabilities | 581 | 621 | |||||||||
Stockholders' equity: | |||||||||||
Common stock, $2 par value | 106 | 106 | |||||||||
Additional paid-in capital | 215 | 215 | |||||||||
Retained earnings | 398 | 348 | |||||||||
Total stockholders' equity | 719 | 669 | |||||||||
Total liabilities & stockholders' equity | $ | 1,300 | $ | 1,290 | |||||||
Income Statement | |||||||||||
For the Year Ended December 31, Year 2 | |||||||||||
(in thousands of dollars) | |||||||||||
Sales (all on account) | $ | 1,430 | |||||||||
Cost of goods sold | 840 | ||||||||||
Gross margin | 590 | ||||||||||
Selling and administrative expenses | 374 | ||||||||||
Net operating income | 216 | ||||||||||
Interest expense | 41 | ||||||||||
Net income before taxes | 175 | ||||||||||
Income taxes (30%) | 53 | ||||||||||
Net income | $ | 122 | |||||||||
The current ratio at the end of Year 2 is closest to:
Multiple Choice
-
0.47
-
0.48
-
1.07
-
1.95
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