Question 12: In an effort to concentrate its resources in more profitable areas, Frick Corporation r

Question 12:

In an effort to concentrate its resources in more profitable areas, Frick Corporation recently sold its family pizza restaurant segment. The disposal constitutes:

a.   an extraodinary item.

b.   a discontinued operation which should be treated as a prior period adjustment.

c.   a discontinued operation which should be disclosed net-of-tax effects.

d.   a portion of income from continuing operations.

e.   None of these.

Question 13:

Frick Corporation has 100,000, 5%, $100 par preferred shares outstanding. The stock is callable at 102, but was originally issued at 99. The current dividend has been fully paid. Total stockholders’ equity is $20,000,000. The residual common equity is:

a.   $20,000,000

b.   $10,100,000

c.   $10,000,000

d.   $9,800,000

e.   None of these.

Question 14:

Frick Company’s balance sheet included cash ($4,000,000), accounts receivable ($16,000,000), inventories ($10,000,000), prepaid expenses ($2,000,000), accounts payable ($9,000,000), and accrued expenses ($7,000,000). These are the only current items.

a.   The quick ratio is 2:1.

b.   The quick ratio is 1.25:1.

c.   The current ratio is 1.875:1.

d.   Both A and C.

e.   None of these.

Question 15:

Selected information for 2014 is: cost of goods sold, $5,400,000; average inventory, $1,800,000; net sales, $7,200,000; average receivables, $960,000; and net income, $720,000. Assuming a 360-day year, what was the inventory turnover ratio for 2014?

a.   333

b.   3

c.   7.5

d.   20

e.   None of these.

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