Selected Data for Kris Corporation's Comparative Balance Sheets for Year

question 43

Multiple Choice

Selected data for Kris Corporation's comparative balance sheets for Year 1 and Year 2 are as follows:
$\begin{array}{lrr}\text { Assets } & \text { Year 1 } & \text { Year 2 }\\\hline \text { Cash } & \$ 100,000 & (\$ 50,000) \\\text { Accounts receivable (net) } & 50,000 & 100,000 \\\text { Inventory } & 100,000 & 250,000 \\\text { Equipment (net) } & \$ 300,000 & \underline{350,000} \\{\text { Total assets }} & \$ 550,000 & \$ 650,000\\\\\text { Liabilities and Equity }\\\text { Accounts payable } & \$ 150,000 & \$ 100,000 \\\text { Income taxes payable } & 80,000 & 30,000 \\\text { Bonds payable } & 100,000 & 80,000 \\\text { Common stock } & 100,000 & 200,000 \\\text { Retained earnings } & 120,000 & 240,000 \\\quad \text { Total liabilities and Equity } & \$ 550,000 & \$ 650,000\\\\\text { A brief income statement for Year } 2 \text { shows the }\\\text { following: }\\\text { Sales }&&\$900,000\\\text { Cost of goods sold } & \$ 500,000 \\\text { Operating expenses } & 100,000 \\\text { Depreciation } & 50,000 \\\text { Income tax expense } & 100,000&750,000 \\\text { Net Income }&&\$150,000\end{array}$
-How much did Kris pay in income taxes to the government in Year 2?

• A)$30,000
• B)$80,000
• C)$110,000
• D)$150,000

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Definitions:

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of numerical values, often used to assess the risk associated with a particular investment.

Risk-Free Rate

The theoretical return on an investment with no risk of financial loss, typically represented by the yield on government bonds from stable countries.

Perfectly Negatively Correlated

Describes two variables that move in opposite directions; if one increases, the other decreases.

Global Minimum Variance Portfolio

An investment portfolio that is designed to have the lowest possible risk (variance) for the expected return, part of modern portfolio theory.