Use the Following Information to Answer the Question(s) Below

question 29

Multiple Choice

Use the following information to answer the question(s) below.

Bower Corporation purchased a 70% interest in Stage Corporation on June 1, 2013 at a purchase price of $350,000. On June 1, 2013, the book values of Stage's assets and liabilities were equal to fair values. On June 1, 2013, Stage's stockholders' equity consisted of $290,000 of Common Stock and $210,000 of Retained Earnings. All cost-book differentials were attributed to goodwill.

During 2013, Stage earned $120,000 of net income, earned uniformly throughout the year and paid $6,000 of dividends on March 1 and another $6,000 on September 1.

-Preacquisition income for 2013 is

• A)$50,000.
• B)$35,000.
• C)$44,000.
• D)$36,000.

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Definitions:

Sales Dollars

The total revenue generated from the sale of goods or services, expressed in monetary value.

Net Operating Income

The profit generated from a company's operational activities, calculated as revenues minus the cost of goods sold and all operational expenses, excluding interest and taxes.

Common Fixed Expenses

Costs that remain constant regardless of the volume of goods produced or sold, including items like lease payments, wages, and coverage fees.

Break-Even

The point at which total costs equal total revenue, resulting in neither profit nor loss.