You Have Been Given the Following Information for Sherry's Sandwich

question 79

Multiple Choice

You have been given the following information for Sherry's Sandwich Corp.: Net sales = $300,000; Gross profit = $100,000; Addition to retained earnings = $30,000; Dividends paid to preferred and common stockholders = $8,500; Depreciation expense = $25,000. The firm's tax rate is 30 percent. What are the cost of goods sold and the interest expense for Sherry's Sandwich Corp.?

• A) $20,000, and $200,000, respectively
• B) $100,000, and $20,000, respectively
• C) $200,000, and $20,000, respectively
• D) $200,000, and $36,500, respectively

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Definitions:

Fixed-Wage Contract

An employment agreement where the salary does not change regardless of economic conditions or performance levels.

Inflation

The quickness at which the comprehensive level of goods and services' prices rises, corroding purchasing ability.

Real Income

The earning power of a person's money, considering the effects of inflation on purchasing power.

Wages

Payment to resource owners for their labor.