Reference no: EM133139011

Questions -

Q1. Carol wants to invest money in a 8% CD account that compounds semiannually. Carol would like the account to have a balance of $50,000 five years from now. How much must Carol deposit to accomplish her goal?

A) $34,069.

B) $43,131.

C) $34,029.

D) $33,778.

Q2) The transferor relinquish control on the receivables if:

A) The transferred assets have been isolated from the transferor.

B) Each transferee has the right to pledge or exchange the assets it received.

C) The transferor does not maintain effective control over the transferred assets through either repurchase or redemption agreements before maturity or the ability to cause the transferee to return the assets.

D) All of these answer choices must occur.

Q3) For 2018, Rahal's Auto Parts estimates bad debt expense at 1% of credit sales. The company reported accounts receivable and an allowance for uncollectible accounts of $86,500 and $2,100, respectively, at December 31, 2017. During 2018, Rahal's credit sales and collections were $404,000 and $408,000, respectively, and $2,040 in accounts receivable were written off.

Rahal's final balance in its allowance for uncollectible accounts at December 31, 2018, is:

A) $4,340.

B) $4,100.

C) $3,800.

D) $4,040.

Q4. Lester Company reported the following information for the year ended December 31, 2019:

Net income $ 1,000,000

Preferred dividends declared and paid 250,000

Common dividends declared and paid 90,000

Average common shares outstanding 100,000

Ending market price per share 35

Net sales 3,100,000

What was Lester's earnings per share for 2019?

a. $8.40

b. $10.00

c. $7.50

d. $31.00

Q5. On October 1, Robins's Online Sales sold goods for $50,000 and accepted a six-month noninterest-bearing note. Current interest rates were 20%. The December 31 adjusting entry should be

a. Interest Receivable 2,500

Interest Revenue 2,500

b. Discount on Notes Receivable 1,250

Interest Revenue 1,250

c. Discount on Notes Receivable 2,500

Interest Receivable 2,500

d. Interest Revenue 1,250

Discount on Notes Receivable 1,250

Q6. Hunter's, Inc. reported a balance of $1,410 in its cash account at the end of the month. There were $1,200 of deposits in transit and $1,150 of checks outstanding. The bank statement showed a balance of $1,510, service charges of $50, and the collection of a note plus interest. The note had a face value of $170. How much interest did the bank collect for the company?

a. $ 30

b. $ 50

c. $290

d. $390

Q7. Trainor Company estimates bad debt expense using a percentage of credit sales (5%). The company began its current year with an $8,500 balance in the allowance account.

During the current year, $10,500 of accounts receivable were written off, and $1,200 of previously written off accounts were collected. Credit sales for the year were $210,000.

The bad debt expense for the year was

a. $12,750

b. $11,550

c. $10,500

d. $8,500

Q8. Under the allowance method of recording bad debts, which of the following entries, if any, would be made to write off actual uncollectible accounts of $5,500?

a. Allowance for Doubtful Accounts 5,500

Accounts Receivable 5,500

b. Bad Debt Expense 5,500

Allowance for Doubtful Accounts 5,500

c. Bad Debt Expense 5,500

Accounts Receivable 5,500

d. No entry is needed.

Q9. Wholesale Stuff, Inc. sells to retailers on account. Sales for the year totaled $9,900,000. The company uses the aging method for determining bad debt expense. The aging report and related information includes:

Time Outstanding Gross Balance Percentage Uncollectible

< 30 days $660,000 2%

30-60 days 330,000 5%

< 60 days 110,000 10%

The unadjusted balance in the allowance account at year end is $1,700 credit. What is the estimated net realizable value of receivables at year end?

a. $1,100,000

b. $9,900,000

c. $1,065,900

d. $1,059,300

Q10. Wholesale Stuff, Inc. sells to retailers on account. Sales for the year totaled $9,900,000. The company uses the aging method for determining bad debt expense. The aging report and related information includes:

Time Outstanding Gross Balance Percentage Uncollectible

< 30 days $660,000 1%

30-60 days 330,000 5%

< 60 days 110,000 10%

The unadjusted balance in the allowance account at year end is $1,000 credit. What is the amount of bad debt expense for the year?

a. $33,100

b. $32,700

c. $34,100

d. $34,800

Q11. On January 2, 2016, Christopher inherited a trust fund that he could use for college tuition. Christopher hopes to make six equal withdrawals of $40,000 each year for the next six years from the fund that will earn 8% compounded annually. The first withdrawal will be made on January 2, 2017. How much does he need to have invested in the fund on January 2, 2016, to be able to withdraw the needed amounts each year?

a. $151,631

b. $180,000

c. $184,915

d. $168,624

Q12. On January 2, 2016, Christopher inherited a trust fund that he could use for college tuition. Christopher hopes to make six equal withdrawals of $40,000 each year for the next six years from the fund that will earn 8% compounded annually. The first withdrawal will be made immediately. How much does he need to have invested in the fund on January 2, 2016, to be able to withdraw the needed amounts each year?

a. $198,631

b. $189,321

c. $186,915

d. $199,708

Q13. Samanta will receive ten equal annual payments of $15,000, beginning one year from today. Assuming an 8% interest rate compounded annually, the present value of those receipts today is

a. $80,913.

b. $100,651.

c. $108,703.

d. $102,000.

Q14. On January 31, 2016, Manning Company acquired a new machine by paying $40,000 cash and agreeing to pay $25,000 annually for four years, beginning on January 31, 2017. Assuming an interest rate of 10%, Manning should record the acquisition cost of the machine on January 31, 2016, at

a. $122,628.

b. $119,246

c. $113,397.

d. $102,092.

Q15) An investment product promises to pay $42,000 at the end of 10 years. If an investor feels this investment should produce a rate of return of 10%, compounded annually, what's the most the investor should be willing to pay for the investment?

A) $17,146.

B) $13,523.

C) $12,524.

D) $16,193.

Q16. Stacey has $5,000,000 on deposit in a fund that earns 10% interest compounded annually. How much can Stacey withdraw annually from the fund in ten equal annual withdrawals to completely deplete the fund after the tenth draw, assuming the first withdrawal occurs today?

a. $714,771

b. $769,100

c. $739,752

d. $722,908

Q17. Aunt Darla has agreed to deposit a lump sum into an account that pays 10% interest compounded annually in order to pay for her niece's college education. The niece estimated that she will need to withdraw $40,000 at the beginning of each year for four years to pay for room, board, tuition, and books. Aunt Darla will deposit the lump sum on August 1, 2016, and the niece will make the first withdrawal on August 1, 2022.

Required - Determine the amount that Aunt Darla must deposit.

Q18. Suppose you borrow money from your parents for college tuition on January 1, 2013. Your parents require four annual payments of $1,000 each, with the first payment due on January 1, 2017.

They are charging you 6% annual interest. What is the cost of the college tuition?

a. $2,909.37

b. $1,593.85

c. $4,000.00

d. $2,744.69

Q19. For equipment purchase, Samos is given four different payments plans.

1) $450,000 due immediately in cash

2) $120,000 down payment due immediately; $60,000 per year for 10 years, beginning at the end of the current year

3) $100,000 down payment due immediately; $30,000 per year for 4 years beginning at the end of the current year; $80,000 per year for 8 years beginning at the end of the fourth year after the initial purchase

4) $60,000 due immediately and at the beginning of each of the next 11 years

Required - Calculate the present value of each option.

Q20. Given the components below:

A = revenues

B = income from continuing operations

C = earnings per share

D = results from discontinued operations

E = operating income

In what sequence do they normally appear on the income statement?

a. B-A-E-D-C

b. E-B-A-C-D

c. A-E-B-D-C

d. B-D-C-D-E

Q21. Nelly Company sold its cattle ranching component on June 30, 2018, for a gain of $1,000,000. From January through June, the component had sustained operating income of $300,000. The income tax rate is 30%. How should Nelly report the income and the sale on its income statement?

a. as $300,000 operating income and a $1,000,000 gain on sale of component

b. as a $1,300,000 gain in operating income

c. as $210,000 operating income and a $700,000 gain on sale of the component shown before extraordinary items

d. as $195,000 operating income and a $650,000 gain on sale of the component shown before extraordinary items