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(Solved) (Latest ver. Aug 2020) - Merchandise Inventory, Income Tax Rate, and Investments

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7.Keifert Company had a balance in the Merchandise Inventory account of $260,000 at the beginning of the year and a balance of $340,000 at the end of the year. The inventory turnover ratio for 2006 was 4 times. If gross profit as a percentage of sales was 40%, the amount of sales for 2006 was
a.$2,000,000.
b.$1,200,000.
c.$3,000,000.
d.$750,000.

8.Foxter Company reported net income of $140,000 for 2006. The income statement also indicates that interest expense for 2006 was $40,000. Assuming an income tax rate of 30%, the number of times interest earned ratio for 2006 was
a.5 times.
b.6 times.
c.4.5 times.
d.3.5 times.

9.Simms Company has a 70% interest in the stock of Werton Company. What level of investment does Simms hold?
a.Controlling
b.Significant
c.Insignificant
d.Passive

10.Bechtel Enterprises has a 10% interest in Walton Company. During 2006, Walton earned net income of $45,000 and paid dividends of $20,000. The entry on the books of Bechtel to record income from the investment will include
a.a debit to Stock Investments of $4,500
b.a credit to Investment Income of $2,500.
c.a credit to Dividend Income of $2,000.
d.a credit to Gain on the Sale of Stock Investments for $2,500.

 







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