Below Are the 2012 and 2013 Year-End Balance Sheets for Tran

question 67

Multiple Choice

Below are the 2012 and 2013 year-end balance sheets for Tran Enterprises: $\begin{array}{lrr}\underline{\text { Assets: }} & \underline{2013} & \underline{2012}\\\text { Cash } & \$ 200,000 & \$ 170,000 \\\text { Accounts receivable } & 864,000 & 700,000 \\\text { Inventories } & \underline{2,000,000} & \underline{1,400,000} \\\quad \text { Total current assets } & \$ 3,064,000 & \$ 2,270,000 \\\text { Net fixed assets } & \underline{6,000,000}&\underline{5,600,000} \\\text { Total assets } & \underline{\$ 9,064,000 }& \underline{\$ 7,870,000} \\\end{array}$


$\begin{array}{llcc} \underline{ \text { Liabilities and equity:}} &\\ \text { Accounts payable } &\$1,400,000&\$1,090,000\\ \text { Notes payable to bank } &\underline{1,600,00}&\underline{1,800,000}\\ \text { Total current liabilities } &\underline{\$3,000,000}&\underline{\$2,890,000}\\ \text { Long-term debt } &2,400,000&2,400,000\\ \text { Common stock } &3,000,000&2,000,000\\ \text { Retained earnings} &\underline{664,000}&\underline{580,000}\\ \text {Total common equity } &\underline{\$3,664,000}&\underline{\$2,580,000}\\ \text { Total liabilities and equity} &\underline{\$9,064,000}&\underline{\$7,870,000}\\\end{array}$
The firm has never paid a dividend on its common stock, and it issued $2,400,000 of 10-year, non-callable, long-term debt in 2012. As of the end of 2013, none of the principal on this debt had been repaid. Assume that the company's sales in 2012 and 2013 were the same. Which of the following statements must be CORRECT?

• A) The firm increased its short-term bank debt in 2013.
• B) The firm issued long-term debt in 2013.
• C) The firm issued new common stock in 2013.
• D) The firm repurchased some common stock in 2013.
• E) The firm had negative net income in 2013.

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Elaboration

The process of adding more information or detail to a concept, idea, or argument in order to enhance understanding or clarity.

Medusa

A jellyfish-like animal; a free-swimming, umbrella-shaped stage in the life cycle of certain cnidarians. Compare with polyp.

Planula

The free-swimming, ciliated larva form of certain cnidarians, such as jellyfish, before it settles on a surface and develops into a polyp.

Miracidium

A free-swimming larval stage in the life cycle of certain parasitic flukes, hatching from eggs and infecting the first intermediate host, typically a snail.