Madrid Company Has Provided the Following Data (Ignore Income Taxes)

question 68

Multiple Choice

Madrid Company has provided the following data (ignore income taxes) : 2014 revenues were $77,500.
2014 net income was $33,900.
Dividends declared and paid during 2014 totaled $5,700.
Total assets at December 31, 2014 were $217,000.
Total stockholders' equity at December 31, 2014 was $123,000.
Retained earnings at December 31, 2014 were $83,000.
Which of the following is correct?

• A) 2014 expenses were $37,900.
• B) Total liabilities at December 31, 2014 were $11,000.
• C)Retained earnings increased $28,200 during 2014.
• D)Common stock at December 31, 2014 was $206,000.

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Definitions:

Capital Budgeting

The process by which a business evaluates and selects major capital investments based on their potential to generate additional revenue or reduce costs.

Simple Rate of Return

A method to evaluate the profitability of an investment by dividing the annual incremental net operating income by the initial investment cost.

Operating Expenses

Costs associated with a company’s operational activities, excluding direct labor and materials, that are necessary to run the business.

Sales Revenues

The total amount generated from selling goods or services before any expenses are subtracted.