Multiple choice

1. During 2004, Carlita's competitor Farside had double the sales of Carlita, but it also earned a gross margin of $30,000. Farside's 2004 gross margin percentage was:

• 25%

• 50%

• 12.5%

• Insufficient information; cannot be calculated

2. Carlita began 2004 with a retained earnings account balance of $132,000. During 2004, it declared and paid dividends of $5,000. Its December 31, 2004 retained earnings account balance is:

• $132,000

• $120,000

• $139,000

• Cannot be calculated

3. Carlita's 2004 return on sales percentage is:

• 25%

• 16.67%

• 15%

• 10%

4. Carlita began 2004 with an interest payable account balance of $13,000. During 2004, it paid $5,000 in interest to its lenders. On December 31, 2004, its interest payable account balance is:

• $15,000

• $10,000

• $13,000

• Cannot be calculated