Presented Below Are the Balance Sheets of Monty Company and Hall

question 87

Multiple Choice

Presented below are the balance sheets of Monty Company and Hall Company at January 1, 20X6: $\begin{array}{lrlr}\text { Hall Company } && \text { Monty Company } \\\text { Balance Sheet } && \text { Balance Sheet } \\\text { January } 1,20 \mathrm{X} 6 && \text { January } 1,20 \mathrm{X} 6\\\text { Cash } & \$ 100 & \text { Cash } & \$ 400 \\\text { Net fixed assets } & 400 & \text { Net fixed assets } & 380 \\\text { Total assets } & \$ 500 & \text { Total assets } & \$ 780\\\text { Accounts payable } & \$ 20 &\text { Accounts payable }&\$120\\\text { Long-term bonds }&&\text { Long-term bonds }\\\text { payable } & 220 & \text { payable } & 280 \\\text { Stockholders' equity } & \underline{260} & \text { Stockholders' equity } & \underline{380}\\\text { Total liabilities and } & - & \text { Total liabilities and } & \\\text { stockholders' equity } & \$ 500 & \text { stockholders' equity } & \$ 780\end{array}$ On January 1, 20X6, Monty Company acquired 100% of the outstanding common stock of Hall Company for $260 in cash.The net income for 20X6 was $30 and $40 for Hall Company and Monty Company, respectively.None of the income resulted from intercompany sales.The net income on the consolidated income statement is_____.

• A)$-0-
• B)$30
• C)$35
• D)$40

Learn how to compute the margin of safety and its implications for business stability.

Grasp the concept and calculation of contribution margin and contribution margin ratio.

Understand how changes in sales volume, prices, and costs affect net income.

Learn to calculate and interpret the degree of operating leverage.

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Definitions:

Security Interest

A security interest is a legal claim or entitlement provided to a lender or creditor over the borrower's assets, serving as collateral for the repayment of a loan or obligation.

Attached

Pertaining to property law and commercial transactions, it refers to the legal process by which a security interest is formally linked to specific assets, making it enforceable against third parties.

Debtor

An individual or entity that owes money or services to another entity.

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to harmonize the law of sales and other commercial transactions across American jurisdictions.