Finance Chapter 2

• 2–4.

Robust Robots (RR) recently issued 100,000 shares of common stock at $7 per share. The stock has a par value equal to $3 per share. What amount of the $700,000 that RR raised should be reported in the “common stock at par” account, and what amount should be reported in the “Paid-in capital” account?

• 2–5.

Crooked Golf’s 2014 income statement shows that net income was $90,000, depreciation was $25,000, and taxes were $60,000. What was Crooked Golf’s net cash flow in 2014?

• 2–6.

HighTech Wireless just published its 2014 income statement, which shows net income equal to $240,000. The statement also shows that operating expenses were $500,000 before including depreciation, depreciation was $100,000, and the tax rate was 40 percent. If HighTech has no debt, what were its sales revenues in 2014? What was its 2014 net cash flow?

• 2–7.

Credit Card of America (CCA) has a current ratio of 3.5 and a quick ratio of 3.0. If its total current assets equal $73,500, what are CCA’s

o (a) current liabilities and

o (b) inventory?

• 2–8.

At the end of the year, Wrinkle Free Laundry (WFL) had $150,000 in total assets.

o (a) If WFL’s total assets turnover was 2.0, what were its sales revenues?

o (b) If WFL’s return on assets was 6 percent, what were its net income and net profit margin?

• 2–9.

The balance sheet for Panoramic Open Pictures (POP) shows $300,000 in total assets and $200,000 in total liabilities. POP’s return on assets (ROA) is 5 percent. Compute POP’s

o (a) net income for the year and

o (b) its return on equity (ROE). POP has no preferred stock.

• 2–10.

Legacy Cleaning has a debt ratio equal to 40 percent, total assets equal to $750,000, return on assets (ROA) at 6 percent, and total assets turnover of 3.0.

o (a)If it has no preferred stock, what amount of common equity does Legacy have?

o (b)What is Legacy’s net profit margin?

• 2–11.

At the end of the year, Water Works International (WWI) had...