Orca Industries Below Are the Two Most Recent Balance Sheets

question 55

Multiple Choice

Orca Industries Below are the two most recent balance sheets and most recent income statement for Orca Industries. The company has an effective tax rate of 35%.
$\begin{array}{llcc}\text { Balance Sheet }&2011&2010 \\ \text { Assets: } &\\ \text { Cash} &\$10,000&\$6,000\\ \text { Accounts Receivable (net) } &6,000&1,500\\ \text { Inventory } &8,000&10,000\\ \text { Long-lived assets} &12,000&11,000\\ \text { Less: Accumulated depreciation } &\underline{(4,000) }&\underline{(2,000) } \\ \text { Total assets } &\underline{\$32,000}&\underline{\$26,500}\\\\ \text { Liabilities and Stockholders' Equity: } &\\ \text {Accounts payable } &\$5,000&\$6,000\\ \text { Deferred revenues } &1,000&2,000\\ \text { Long-term note payable } &10,000&10,000\\ \text { Less: Discount on note payable} & (800) &(1,000) \\ \text {Common stock } &12,000&6,000\\ \text { Retained earnings} &\underline{4,800}&\underline{\$3,500}\\ \text {Total liabilities and stockholders' equity } &\underline{\$32,000}&\underline{\$26,500}\\\\ \text { Income Statement} &\\ \text { For the year ended December 31, 2011 } &\\ \text { Revenues} &&\$42,000\\ \text { Cost of goods sold } &&(24,000) \\ \text { Depreciation expense} &&(2,000) \\ \text { Interest expense } &&(3,000) \\ \text { Bad debt expense} &&(2,000) \\ \text { Other expense (including income taxes) }& &\underline{(9,000) }\\ \text { Net income } &&\underline{\$2,000}\\\end{array}$
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Refer to the information for Orca Industries. Orca's accounts receivable turnover is (assume that Orca makes all sales on account)

• A) 7.0
• B) .53
• C) 11.2
• D) 10

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Definitions:

Posterior Cruciate Ligament

A ligament in the knee that connects the femur to the tibia, helping to stabilize the knee joint.

Medial Collateral Ligament

A ligament located on the medial (inner) side of the knee, providing stability to the joint.

Costochondral Joint

The articulation between the end of a rib and the costal cartilage that attaches the rib to the sternum, allowing for some movement and flexibility.

Stylomandibular Ligament

The stylomandibular ligament is a band of fibrous tissue that extends from the styloid process of the temporal bone to the angle of the mandible, playing a role in the support of the jaw.