Use This Information for Kellman Company to Answer the Questions $\text { Kellman Company }$

question 166

Multiple Choice

Use this information for Kellman Company to answer the questions that follow.
​
The balance sheets at the end of each of the first two years of operations indicate the following:
​
$\text { Kellman Company }$
$\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\\\text { Total current assets } & \$ 600,000 & \$ 560,000 \\\text { Total investments } & 60,000 & 40,000 \\\text { Total property, plant, and equipment } & 900,000 & 700,000 \\\text { Total current liabilities } & 125,000 & 65,000 \\\text { Total long-term liabilities } & 350,000 & 250,000 \\\text { Preferred } 9 \% \text { stock, } \$ 100 \text { par } & 100,000 & 100,000 \\\text { Common stock, } \$ 10 \text { par } & 600,000 & 600,000 \\\text { Paid-in capital in excess of par-Common stock } & 75,000 & 75,000 \\\text { Retained earnings } & 310,000 & 210,000\end{array}$
-Using the balance sheets for Kellman Company, if net income is $150,000 and interest expense is $20,000 for Year 2, what is the return on stockholders' equity for Year 2?

• A) 6.9%
• B) 14.5%
• C) 16.04%
• D) 13.8%

Understand the role and impact of technology in enhancing internal control.

Distinguish between suitable and unsuitable practices in internal control.

Grasp the concept of liquidity and its relevance to a company's financial health.

Understand the procedures and significance of controlling cash receipts and payments.

---

Definitions:

Illegal Drugs

Substances whose production, sale, or possession is prohibited by law due to their potential for abuse and harm.

Legal Drugs

Substances that are permitted by law for sale and use, such as alcohol, nicotine, and prescription medications.

Hypnotized Individuals

People who are in a state of hypnosis, experiencing altered attention and increased suggestibility.

Brain Waves

Patterns of electrical activity in the brain, measured by EEG, that reflect different states of consciousness or mental activities.