MEGAFRAME COMPUTER COMPANY
Balarce Sheet
as of Decermber 31 MEGAFRAME COMPUTER COMPANY
Income Staternent
for the Year Ended Decernber

question 95

Multiple Choice

MEGAFRAME COMPUTER COMPANY
Balarce Sheet
As of Decermber 31
$\begin{array}{lr}\text { ASSETS } \\\text { Cash } & \$ 50,000 \\\text { Accounts receivable } & 70,000 \\\text { Inventory } & 110,000 \\\text { Net plant and equipment } & 220,000\\\text { Total assets }&\$450,000\\\\\text { LIABIITES AND STOCKHOLDERS' EQUTTY }\\\text { Accounts payable } & \$ 0,000 \\\text { Accrued expenses } & 50,000 \\\text { Long-term debt } & 130,000 \\\text { Common stock } & 70,000 \\\text { Paid-in capital } & 40,000 \\\text { Retained earnings } & 90,000\\\text { Total liabilities and stockholders' equity }&\$450,000\end{array}$
MEGAFRAME COMPUTER COMPANY
Income Staternent
For the year ended Decernber 31
$\begin{array}{ll}\text { Sales (all on credit) }&\$875,000\\\text { Cost of goods sold }&600,000\\\text { Gross profit }&\$275,000\\\text { Sales and administrative expenses }&30,000\\\text { Depreciation }&55,000\\\text { Operating profit }&\$190,000\\\text { Interest expense }&25,000\\\text { Profit before taxes }&\$165,000\\(\text { Taxes (30\%) }&49,000\\\text { Net income }&\$115,500\\\end{array}$

Refer to the tables above. Megaframe's current ratio is ________.

• A) 1.9:1
• B) 1.8:1
• C) 1:1
• D) 3.0:1

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Definitions:

Noncontrolling Interest

An ownership interest in a subsidiary not attributable, directly or indirectly, to the parent company, reflecting the equity in a subsidiary not owned by the parent.

Subsidiary

A company that is controlled by another company, known as a parent company, through the ownership of more than half of its voting stock.

Stock Dividend

A distribution of extra shares to shareholders, as opposed to a cash payment, as a form of dividend.

Common Stock

A type of equity security that represents ownership in a corporation, usually carrying voting rights and potential dividends.