Reference: 13-02
Financial Statements for Larned Company Appear Below:
Larned

question 20

True/False

Reference: 13-02
Financial statements for Larned Company appear below:
Larned Company
Balance Sheet
December 31, 20X6 and 20X5 (dollars in thousands)
$$\begin{array} { | l | l | l | } \hline & 20 X 6 & 20 \times 5 \\\hline \text { Current assets: } & & \\\hline \text { Cash and marketable securities } & \$ 130 & \$ 100 \\\hline \text { Accounts receivable, net } & 150 & 130 \\\hline \text { Inventory } & 100 & 100 \\\hline \text { Prepaid expenses } & 20 & 20 \\\hline \text { Total current assets } & 400 & 350 \\\hline \text { Noncurrent assets: } & & \\\hline \text { Plant \& equipment, net } & 1,640 & 1,600 \\\hline\end{array}$$ $\begin{array}{|c|l|l|}\hline \text { Plant \& equipment, net } & {1,640}&{1,600} \\\hline \text { Total assets } & \$ 2,040 & \$ 1,950 \\\hline & & \\\hline \text { Current liabilities: } & & \\\hline \text { Accounts payable } & \$ 120 & \$ 120 \\\hline \text { Accrued liabilities } & 110 & 80 \\\hline \text { Notes payable, short term } & {170} & 160 \\\hline \text { Total current liabilities } & 400 & 360 \\\hline \text { Noncurrent liabilities: } & & \\\hline \text { Bonds payable } & 370 & 400 \\\hline \text { Total liabilities } & 770 & 760 \\\hline \text { Shareholders' equity: } & & \\\hline \text { Preferred shares, \$20 par, 10\% } & 120 & 120 \\\hline \text { Common shares, \$10 par } & 180 & 180 \\\hline \text { Additional paid-in capital--common shares } & 110 & 110 \\\hline \text { Retained earnings } & 860 & 780 \\\hline \text { Total shareholders' equity } & 1,270 & 1,190 \\\hline \text { Total liabilities \& shareholders' equity } & \$ 2,040 & \$ 1,950 \\\hline\end{array}$ Larned Company
Income Statement
For the Year Ended December 31, 20X6 (dollars in thousands) $$\begin{array} { | l | r | } \hline \text { Sales (all on account) } & \$ 2,930 \\\hline \text { Cost of goods sold } & 2,050 \\\hline \text { Gross margin } & 880 \\\hline \text { Operating expenses } & 350 \\\hline \text { Net operating income } & 530 \\\hline \text { Interest expense } & 40 \\\hline \text { Net income before taxes } & 490 \\\hline \text { Income taxes (30\%) } & 147 \\\hline \text { Net income } & \$ 343 \\\hline\end{array}$$ Dividends during 20X6 totalled $263 thousand, of which $12 thousand were preferred dividends. The market price of a share of common stock on December 31, 20X6 was $160.
Included in operating expenses was depreciation expense of $20,000.
7
-Assuming that a company has a current ratio greater than 1.0 to 1, repaying a short-term note payable will increase the current ratio.

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Definitions:

Consent Decree

A legal agreement approved by a judge, often used to settle lawsuits without the defendant admitting guilt but agreeing to do or stop doing certain actions.

Affirmative-Action Practices

Strategies and policies employed to promote opportunities for historically marginalized groups in areas such as employment and education.

Uniformed Services Employment

Laws and regulations that protect the employment rights of individuals serving in the armed forces or other uniformed services.

Reemployment Rights Act

Legislation that protects the job rights of individuals who voluntarily or involuntarily leave employment positions for military service.