The following items are taken from the financial statements of Grove Company for 2017: Accounts Payable Accounts Receivable Accumulated Depreciation Bonds Payable Cash Common Stock Cost of Goods Sold Depreciation Expense Dividends Equipment Interest Expense Patents Retained Earnings, January 1 Salaries Expense Sales Revenue Supplies $18,500 4,000 4.800 18,000 24,000 25,000 17,000 4,800 5,300 44,000 2,500 7,500 16,000 5,200 36,500 4,500 Instructions (a) Prepare an Income Statement, Statement of Retained Earnings and a Classified Balance Sheet for Grove Company. (b) Compute the following ratios and values: 1. Current ratio 2. Debt to total assets ratio 3. Working capital 4. Earnings per share (Grove's average number of shares outstanding during the year was 5,000.) 1. Which of the following is an advantage of corporations relative to partners s an advantage of corporations relative to partnerships and sole proprietorships? a. Reduced legal liability for investors b. Harder to transfer ownership C Lower taxes d. Most common form of organization 2. The right to receive money in the future is called a(n) a. account payable. b. account receivable. C. liability d. rovenue. Borrowing money is an example of a(n) a. delivering activity. b. financing activity. C. investing activity. d. operating activity. 4. When expenses exceed revenues, which of the following is true? a. a net loss results b. a net income results c.assets equal liabilities d. assets are increased 5. Which of the following is an asset? a. Mortgage payable b. Investments c. Common stock d. Retained earnings 6. Which of the following is not a liability? a. Uneared Service Revenue b. Accounts Payable G. Accounts Receivable d. Interest Payable 7. Dividends are reported on the a. income statement. b. retained earnings statement. c. balance sheet. d. income statement and balance sheet. 8. Dividends pald a. increase assets. b. increase expenses. c. decrease revenues. d. decrease retained earnings. 9. Net income results when a. Assets Liabilities b. Revenue Expenses Revenues Expenses d. Revenues Expenses. 10. Retained earnings at the end of the period is equal to a. retained earnings at the beginning of the period plus net income minus liabilities. b. retained earnings at the beginning of the period plus net income minus dividends. cnet Income. d. assets plus liabilities. 11. Which of the following financial statements is concerned with the company at a point in time? a Balance sheet b. Income statement c. Retained earnings statement d. Statement of cash flows 12.Hanson Company began the year with retained earnings of $380,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year? a. $540,000 b. $460.000 C. $840,000 d. $500,000 13. Jimmy's Repair Shop started the year with total assets of $300,000 and total liabilities of $240,000. During the year the business recorded $630,000 in revenues, $330,000 in expenses, and dividends of $60,000. Stockholders' equity at the end of the year was a. $360,000 b. $300,000 C. $240,000. d. $270,000 Liabilities a. are future economic benefits. b. are debts and obligations. C. possess service potential. d. are things of value owned by a business. 14. 15. In a classified balance sheet, assets are usually classified as a. current assets; long-term assets; property, plant, and equipment; and intangible assets b. current assets; long-term investments; property, plant, and equipment, and common stocks. C current assets; long-term investments: tangible assets; and intangible assets. d. current assets; long-term investments; property, plant, and equipment: and Intangible assets. MacBook Air 16. These are selected account balances on December 31, 2017 Land $150,000 Land (hold for future uso) 225.000 Buildings 1,200,000 Inventory 300,000 Equipment 675.000 Furniture 150.000 Accumulated Depreciation 450,000 What in the total amount of property, plant, and equipment that will appear on the balance sheet? a $2,250,000 b. $1,050,000 C $2,700,000 d. $1,725,000 17. Ratios that measure the income or operating success of a company for a given period of time a liquidity ratlos. b. profitability ratios. c solvency ratios. d. trending ratios. 18. Use the following data to determine the total dollar amount of assets to be classified as current assets. Koonce Office Supplies Balance Sheet December 31, 2017 Cash $ 195,000 Accounts payable $ 210,000 Accounts receivable 150,000 Salaries and wages payable 30,000 Inventory 165,000 Mortgage payable 240.000 Prepaid insurance 90,000 Total liabilities $480,000 Stock investments 255,000 Land 270,000 Buildings $315,000 Common stock $360,000 Less: Accumulated Retained earnings 750,000 depreciation (60,000) 255,000 Total stockholders' equity $1.110.000 Trademarks 210.000 Total liabilities and Total assets S1.590.000 stockholders' equity $1.590.000 a. $855,000 b. $600,000 c. $510,000 d. $435,000 MacBook Air 19. Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment. Koonce Office Supplies Balance Sheet December 31, 2017 Cash $ 105,000 Accounts payable $ 210,000 Accounts receivable 150.000 Salaries and wages payable 30.000 Inventory 165,000 Mortgage payable 240,000 Prepaid insurance 90,000 Total liabilities 480,000 Stock investments 255,000 270,000 Buildings $315,000 Common stock 380,000 Less: Accumulated Retained earnings 750.000 depreciation (00.000) 255,000 Total stockholders' equity $1.110,000 Trademarks 210.000 Total liabilities and Total assets $1.500.000 stockholders' equity $1.500.000 a. $990,000 b. $525.000 C. $735,000 d. $585,000 Land 20. Use the following data to determine the total dollar amount of assets to be classified as current assets. Carne Auto Supplies Balance Sheet December 31, 2017 Cash $ 70,000 Accounts payable $ 130,000 Accounts receivable 100,000 Salaries and wages payable 20,000 Inventory 140,000 Mortgage payable 180,000 Prepaid insurance 80,000 Total liabilities $330,000 Stock investments 180,000 Land 190,000 Buildings $230,000 Common stock $240,000 Less: Accumulated Retained earnings _500.000 depreciation (60.000) 170,000 Total stockholders' equity $740.000 Trademarks 140,000 Total liabilities and Total assets $1.070,000 stockholders' equity $1.070,000 a. $390,000 b. $250,000 C. $570,000 d. $330,000 21. Came Auto Supplies Balance Sheet December 31, 2017 Cash $ 70,000 Accounts payable Accounts receivable 100,000 Salaries and wages payable Inventory 140.000 Mortgage payable Prepaid Insurance 80,000 Total liabilities Stock Investments 180,000 Land 190,000 Buildings $230,000 Common stock Less: Accumulated Retained earnings depreciation (60.000) 170,000 Total stockholders' equity Trademarks 140,000 Total liabilities and Total assets $1.070.000 stockholders' equity $ 130,000 20,000 180.000 $330,000 $240,000 500.000 $740.000 $1.070.000 a. 2.07 : 1 b. 1.67:1 C. 3.00:1 d. 2.60 : 1 22. A measure of profitability is the a. current ratio. b. debt to assets ratio. c. earnings per share. d. working capital. 23. For 2017 Kuhlman Corporation reported net income of $36,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2017 earnings per share? a. $2.25 b. $0.44 c. $25.00 d. $0.09 24. Working capital is a measure of a. consistency. b. liquidity. c. profitability. d. solvency. 25. Long-term creditors are usually most interested in evaluating a. liquidity and profitability. b. consistency and profitability. C. liquidity and solvency. d. consistency and solvency. 26.A liquidity ratio measures the a. income or operating success of a company over a period of time. b. ability of a company to survive over a long period of time. c. short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash. d. percentage of total financing provided by creditors. 27. Working capital is a. calculated by dividing current assets by current liabilities. b. used to evaluate a company's liquidity and short-term debt paying ability. G used to evaluate a company's solvency and long-term debt paying ability, d. calculated by subtracting current assets from current liabilities. 28. The ability of a business to pay obligations that are expected to become due within the next year or operating cycle is a. leverage. b. liquidity. c. profitability d wealth 29. Based on the following data, what is the amount of current assets? Accounts payable..... $62,000 Accounts receivable..... 100,000 Cash...... 70,000 Intangible assets.......... 100,000 Inventory...... 138,000 Long-term investments... 160,000 Long-term liabilities.... 200,000 Short-term investments.. 80,000 Notes payable..................... 58,000 Property, plant, and equipment.. 1,340,000 Prepaid insurance... 2,000 a. $232,000 b. $390,000 c. $252,000 d. $250,000 30. Using the following balance sheet and income statement data, what is the total amount of working capital? Current assets $ 32,000 Net income $ 42,000 Current liabilities 16,000 Stockholders' equity 78,000 Average assets 160,000 Total liabilities 42,000 Total assets 120,000 Average common shares outstanding was 15,000. a. $ 8,000 b. $ 32,000 C. $ 10,000 d. $ 16,000 Using the following balance sheet and income statement data, what is the debt to assets ratio? Current assets $ 32,000 Not income $ 42,000 Current liabilities 16,000 Stockholders' equity 78,000 Average assets 160,000 Total liabilities 42,000 Total assets 120,000 Average common shares outstanding was 15,000. a. 26 percent b. 13 percent C. 65 percent d. 35 percent 32. What organization issues U.S. accounting standards? a. Security Exchange Commission b. International Accounting Standards Committee c. International Auditing Standards Committee d. Financial Accounting Standards Board 33. The TNT Company has five plants nationwide that cost $300 million. The current fair value of the plants is $500 million. The plants will be reported as assets at a. $200 million. b. $800 million. C. $300 million. d. $500 million