答案和详解如下： 13.Selected financial data from Krandall, Inc.’s balance sheet for the year ended December 31 was as follows (in $): Cash | $1,100,000 | Accounts Payable | $400,000 | Accounts Receivable | 300,000 | Deferred Tax Liability | 700,000 | Inventory | 2,400,000 | Long-term Debt | 8,200,000 | Property, Plant & Eq. | 8,000,000 | Common Stock | 1,000,000 | Total Assets | 11,800,000 | Retained Earnings | 1,500,000 | LIFO Reserve at Jan. 1 | 600,000 | Total Liabilities & Equity | 11,800,000 | LIFO Reserve at Dec. 31 | 900,000 |
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Krandall uses the last in, first out (LIFO) inventory cost flow assumption. The tax rate is 40 percent. If Krandall used first in, first out (FIFO) instead of LIFO and paid any additional tax due, its assets-to-equity ratio would be closest to:
A) 4.06 B) 3.63 C) 3.73 D) 4.18 The correct answer was A) With FIFO instead of LIFO: Inventory would be higher by $900,000, the amount of the ending LIFO reserve. Cumulative pretax income would also be higher by $900,000, so taxes paid would be higher by 0.40($900,000) = $360,000. Therefore cash would be lower by $360,000. Cumulative retained earnings would be higher by (1 - 0.40)($900,000) = $540,000. So assets under FIFO would be $11,800,000 + $900,000 - $360,000 = $12,340,000 and equity would be $1,000,000 + $1,500,000 + $540,000 = $3,040,000. The assets-to-equity ratio would be $12,340,000/$3,040,000 = 4.06.
14.Selected information from Newcomb, Inc.’s financial statements for the year ended December 31, 2004 included the following (in $): Cash | 70,000 | | Accounts Payable | 90,000 | Accounts Receivable | 140,000 | | Deferred Tax Liability | 100,000 | Inventory | 460,000 | | Long-term Debt | 520,000 | Property, Plant & Equip. | 1,200,000 | | Common Stock | 600,000 | Total Assets | 1,870,000 | | Retained Earnings | 360,000 | | | | Total Liabilities & Equity | 1,870,000 | Interest Expense | 60,000 | | | | Net Income | 220,000 | | | | LIFO Reserve at Jan. 1 | 185,000 | | | | LIFO Reserve at Dec. 31 | 250,000 | | | |
Newcomb uses the last in, first out (LIFO) inventory cost flow assumption. The tax rate is 40 percent. If Newcomb changed from LIFO to first in, first out (FIFO) for 2004 and average total capital was $1,700,000 for both the LIFO and FIFO computations, the return on total capital would: A) decrease from 16.5 to 12.6 percent. B) remain unchanged at 16.5 percent. C) increase from 16.5 to 18.8 percent. D) increase from 16.5 to 14.2 percent. The correct answer was C) The return on total capital under LIFO ((net income + interest expense) / average total capital) was (( $220,000 + $60,000) / $1,700,000) =) 16.5 percent. Under FIFO, net income is increased by the increase in the LIFO reserve during the year multiplied by (1 – tax rate). FIFO return on total capital is (($220,000 + (($250,000 - $185,000) (1 – 0.40)) + $60,000) / $1,700,000 =) 18.8 percent. |
发表于 2008-4-14 12:16
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