Table 12-4

Carson Picture Company

Income Statement

(in thousands)

For the Years Ended December 31, 2X10 and 2X09

2X10 2X09

Sales $999 $800

Less Cost of Goods Sold 399 336

Gross Profit $600 $464

Less Operating Expenses:

Wage Expenses $214 $150

Rent Expense 120 120

Miscellaneous Expense 100 50

Depreciation Expense 40 40

Total Operating Expenses $474 $360

Operating Income $126 $104

Less Other Expense:

Interest Revenue $ 36 $ 36

Interest Expense (12) (12)

Income before Tax $150 $128

Less: Income Tax Expense 60 48

Net Income $ 90 $ 80

Earnings Per Share $ .45 $ .40

Annual Common Dividends Per Share $ .40 $ .20

Closing Market Price Common Stock, 12/31 $9.00 $6.00

Current Assets: 2X10 2X09

Cash $150 $ 57

Accounts Receivable 95 70

Accrued Interest Receivable 15 15

Inventory 20 60

Prepaid Rent 10 --

Total Current Assets $290 $202

Long-Term Assets:

Long-Term Note Receivable $288 $288

Equipment, less Accumulated Depreciation

of $120 and $80 80 120

Total Long-Term Assets $368 $408

Total Assets $658 $610

Current Liabilities:

Accounts Payable $ 90 $ 65

Accrued Wages Payable 24 10

Accrued Income Taxes Payable 16 12

Accrued Interest Payable 9 9

Unearned Sales Revenue -- 5

Current Portion

of Long-Term Notes Payable 80 --

Total Current Liabilities $219 $101

Long-Term Liabilities:

Notes Payable 40 120

Total Liabilities $259 $221

Stockholders' Equity:

Common Stock $102 $102

Retained Earnings 297 287

Total Stockholders' Equity $399 $389

Total Liabilities and

Stockholders' Equity $658 $610

14) Referring to Table 12-4, what is the average collection period in days for Carson Picture Company in 2X10? Has the average collection period in days improved or not improved since 2X09?

A) 30.0, not improved

B) 10.0, unknown

C) 10.0, improved

D) 30.0, improved

E) 30.2, unknown

15) Referring to Table 12-4, what is the inventory turnover for Carson Picture Company in 2X10? Has the inventory turnover improved or not improved since 2X09?

A) 10.0, improved

B) 10.0, unknown

C) 10.0, not improved

D) 30.0, improved

E) 30.0, not improved

16) Referring to Table 12-4, what is the earnings per share for Carson Picture Company in 2X10? Has the earnings per share improved or not improved since 2X09?

A) $.40, improved

B) $.40, not improved

C) $.40, unknown

D) $.45, not improved

E) $.45, improved