Reference no: EM131621570

Q1. The following data came from the balance sheet of Han Company as of December 31, 20X2.

	Dec. 31, 20X2	Dec. 31, 20X1
Machine	$3,500	$2,950
Accumulated depreciation on machines	1,400	1,300
Cash	135	180

The following additional data were found in Han Company's financial statements for 20X2.

Sales	$10,000
Cash dividends paid	65
New machine purchases (for cash)	1,000
Net income	300
Depreciation expense	270
gain on sale of old machines	140

How much cash did Han Company receive from the sale of old machines during the year? (Assume that all machine sales were cash transactions.)

$210

$420

$490

$590

$360

Q2. On December 31, 20X1, Thomson Company had the following account balances:

Accounts receivable	$15,000
Sales revenues	845,000
Gain on sale of equipment	14,000
Retained earnings (beginning of year, January 1, 20X1)	120,000
Accounts payable	25,000
Loan payable	45,000
Cost of goods sold	650,000
Cash	65,000
Inventory	11,000
Common stock	41,000
Operating expenses	210,000
Dividends	34,000
Unearned revenue	55,000
Property, plant, and equipment	145,000
Prepaid rent	50,000
Bonds payable	35,000

Given these data, what is Thomson's DEBT-TO-EQUITY RATIO as of December 31, 20X1?

1.27

1.00

1.88

0.99

1.01

0.78

0.79

0.56

Q3. Derrald Company's financial statements show the following items.

Sales	$200,000
Wage expense	80,000
Accounts receivable increase	36,000
Loss on sale of equipment	13,000
Unearned rent income	22,000
Rent revenue	50,000
Dividends (declared and paid)	40,000
Wages payable increase	26,000
Depreciation expense	25,000

Derrald has no other revenues or expenses. What is Derrald's net cash flow from operating activities?

$196,000

$182,000

$154,000

$231,000

$132,000

Use the following information in answering the following 4 questions. Below are balance sheet and income statement data for Howard Bannister Company. Note: For the balance sheet data, the end-of-year information is in the left column.

Balance Sheet Data
	20X2	20X1
Accounts Payable	165	95
Accumulated Depreciation	520	339
Cash	200	100
Common Stock	1,000	700
DIVIDENDS PAYABLE	40	25
Equipment	2,700	2,395
Income Tax Payable	100	135
Inventory	1,120	890
Mortgage Payable	900	1,265
Prepaid General Expenses	300	350
Retained Earnings (ending balance, after closing)	1,545	1,098
Unearned Sales Revenue	50	78

 

Income Statement Data (for 20X2)
Sales		10,000
Loss on sale of PPE	100
Cost of Goods Sold	6,000
General Expense	2,000
Depreciation Expense	330
Income Tax Expense	700
Total Expenses		9,130
Net Income		870

Additional Information:

Equipment with a book value of $300 was sold during 20X2.

All accounts payable relate to inventory purchases.

Equipment costing $160 was purchased with a mortgage during 20X2. This fact is already
reflected in the balance sheet numbers reported above. All other purchases of Equipment in
20X2 were cash transactions.

Q4. Compute the amount of Cash Paid for Inventory Purchases in 20X2.

$6,100

$5,700

$6,160

$6,230

$5,840

$6,300

$6,280

Q5. Compute the total CASH FROM OPERATING ACTIVITIES in 20X2.

$1,183

$1,200

$1,300

$927

$697

$1,027

$1,227

$1,127

Q6. Compute the total CASH FROM INVESTING ACTIVITIES in 20X2.

net outflow of $394

net outflow of $343

net outflow of $455

net inflow of $500

Q7. Compute the CASH PAID FOR DIVIDENDS in 20X2.

$422

$458

$378

$428

$408

Q8. Portland Company sold equipment with a book value of $600 for $850 cash. Total depreciation expense for the entire company for the year was $500. The beginning and ending balances in the Accumulated Depreciation account are $1,000 and $700, respectively. The beginning and ending balances in the Equipment account are $3,500 and $3,700 respectively. In the journal entry to record the sale of the equipment for $850 cash, which ONE of the following items would appear? Note: No other equipment was sold during the year.

Credit to Equipment for $1,400

Debit to Accumulated Depreciation for $500

Debit to accumulated Depreciation for $300

Debit to Loss on Sale of Equipment for $250

Debit to Equipment for $200

Q9. The following data come from the financial statements of TaraziAina Company for 20X8.

Dividends declared and paid during the year	$65
Increase in stockholder's equity during the year	100
Depreciation expense for the year	40
Increase in interest payable during the year	11
Total cash received from operating activities during the year	124
Increase in accumulated depreciation during the year	32
Increase in cash during the year	15
Net income for the year	90
Interest expense for the year	55
Total cash paid for investing activities during the year	185

What was the amount of cash received through the issuance of new shares of stock by TaraziAina Company during the year 20X8?

$100

$55

$75

$35

$10

$25

$115

$60

Q10. Which ONE of the following accounts will be CREDITED when making closing entries?

Unearned Revenue

Cash

Interest Revenue

Accounts Payable

Cost of Goods Sold

Prepaid Rent Expense

Inventory

Paid in Capital

Q11. The following information is for Byrne Dareid Company:

	20X2	20X1
Loans Payable	$10,000	$20,000
Retained Earnings	85,000	78,000
Common Stock	25,000	17,000
Net Income	18,000	20,000
Net cash paid for financing activities	27,000	21,000

Using this information, compute the cash paid to repurchase shares of stock in 20X2.

$19,000

$10,000

$5,000

$14,000

$21,000

Q12. Harry Company's statement of cash flows shows the following items scattered among the three sections of the statement.

Accounts receivable decrease	$36,000
Gain on sale of equipment	13,000
Prepaid rent increase	22,000
Cash used to repay long-term loans	80,000
Accounts payable decrease	18,000
Inventory decrease	50,000
Dividends (declared and paid)	40,000
Interest payable decrease	26,000
Cash paid to purchase new equipment	125,000
Depreciation expense	25,000
Net cash flow from operating activities	positive 100,000

This is not a list of all of the items in Harry's statement of cash flows, but Harry has no other items reported in the operating activities section of its statement of cash flows (prepared using the indirect method). What is Harry's net income?

$28,000

$42,000

$68,000

$118,000

$92,000

$290,000

$108,000

$132,000

Q13. Lily Company had the following account totals as of December 31, 20X2.

Cost of goods sold	$150,000
Accounts receivable	100,000
Rent revenue	10,000
Accounts payable	25,000
Sales	200,000
Inventory	50,000
Bank Loan Payable*	20,000
Cash	18,000
Retained earnings (beginning of year, January 1, 20X2)	80,000
Prepaid insurance (6-month insurance policy)	15,000
Paid-in capital	38,000
Equipment	45,000
Unearned rent revenue (9-month contract)	5,000

*Of the $20,000 bank loan payable, $3,000 will be repaid in 20X3. What is Lily Company's CURRENT RATIO?

5.74

6.14

4.06

5.90

5.55

Q14. The following items have been extracted from the financial statements of Lorien Company for the year 20X1.

Total liabilities	$700
Net income	50
Gross profit	400
EBIT (also called operating income)	220
Sales	1,000
Total assets	1,600
Income tax expense	40
Cost of goods sold	600

Note: This list does not include all of the items in Lorien's 20X1 financial statements. However, the list does include all of the items you need to correctly answer the question below. What is the value of Lorien Company's TIMES INTEREST EARNED ratio for 20X1?

1.69

3.08

3.38

3.00

1.29

5.50

4.40

2.69

Q15. Rocky Company borrowed $10,000 on February 1, 20X1. The loan has an annual interest rate of 14%. Rocky Company repaid the loan in full (both principal and interest) on January 31, 20X2; no payments were made on the loan between February 1, 20X1 and January 31, 20X2. [Note: The correct adjusting entry with respect to this loan was recorded on December 31, 20X1.] The single journal entry to record the repayment of the loan (both principal and interest) on January 31, 20X2 includes a

Debit to Interest Expense for $1,283

Credit to Interest Expense for $1,283

Debit to Interest Expense for $1,167

Credit to Interest Expense for $1,167

Debit to Interest Expense for $1,400

Credit to Interest Expense for $1,400

Debit to Interest Payable for $1,283

Credit to Interest Payable for $1,283

Q16. On June 1, 20X1, MaScare Company paid $3,600 for an insurance policy on some equipment that will be in effect for the 12 months from June 1, 20X1 through May 31, 20X2. MaScare recorded this payment on June 1 by debiting Insurance Expense. On September 1, 20X1, MaScare paid an additional $4,800 for an insurance policy on a building that will be in effect for the 12 months from September 1, 20X1 through August 31, 20X2. MaScare recorded this payment on September 1 by debiting Prepaid Insurance. On December 31, 20X1, MaScare makes one summary adjusting entry to make sure that the amount of Insurance Expense for 20X1 and the Prepaid Insurance amount as of December 31, 20X1 are both correct. The necessary summary adjusting entry includes a

Debit to Insurance Expense of $1,500

Debit to Insurance Expense of $100

Debit to Insurance Expense of $2,100

Debit to Insurance Expense of $1,600

Q17. The following information is for Yosef Company:

	20X2	20X1
Sales	$260,000	$320,000
Accounts Payable	10,000	20,000
Retained Earnings	125,000	78,000
Inventory	40,000	50,000
Accounts Receivable	25,000	20,000
Cost of Goods Sold	180,000	200,000

For 20X2, compute the average number of days that elapse from the time Yosef purchases inventory until the time Yosef sells that inventory.

59.7 days

122.9 days

32.2 days

91.3 days

105.2 days

Use the following information to answer the following 5 questions. XYZ Company Balance Sheet as of December 31, 20X7 & 20X8

ASSETS:	20X7	20X8
Current assets:
Cash	$10,000	$12,000
Accounts receivable	20,000	25,000
Inventory	16,000	24,000
Prepaid insurance	4,000	3,000
	50,000	64,000
Property & equipment	76,000	84,000
Total assets	$126,000	$148,000
LIABILITIES AND STOCKHOLDERS EQUITY:
Current liabilities:
Accounts payable	$15,000	$17,000
Other payables	3,000	7,000
	18,000	24,000
Long term notes payable	35,000	40,000
Total liabilities	53,000	64,000
Stockholder's equity
Capital stock, 2,400 shares outstanding	24,000	24,000
Retained earnings	49,000	60,000
	73,000	84,000
Total liabilities and stockholders equity	$126,000	$148,000

XYZ Company Income Statement for the years ended December 31, 20X7 & 20X8

	20X7	20X8
Sales revenues	$200,000	$250,000
Cost of goods sold	120,000	140,000
	80,000	110,000
Selling and admin. expenses	40,000	65,000
	40,000	65,000
Income tax expense	15,000	25,000
Net income	$25,000	$40,000

Dividends paid in 20X8 amounted to $29,000. Calculate the 12/31/X8 current ratio (round to nearest tenth).

Q18. Calculate the 12/31/X8 current ratio (round to nearest tenth).

1.5

2.7

2.5

.5

none of the above

Q19. Calculate the 20X8 accounts receivable turnover assuming all sales during the year are made on account (round to the nearest tenth).

8.9

10.0

11.1

12.5

none of the above

Q20. Calculate the 20X8 average number of days of inventory on hand (round to the nearest tenth of a day).

7.0

52.1

56.2

62.6

Q21. Calculate the 20X8 EPS (round to nearest penny).

$25.00

$10.42

$4.58

$16.67

none of the above

Q22. Calculate the % increase in accounts receivable during the year ended 20X8.

10%

20%

50%

125%

none of the above

Q23. Which of the following best measures a company's liquidity?

vertical analysis of the income statement

debt to equity ratio

acid-test ratio

book value per share

Q24. A company's P/E ratio:

is calculated by dividing the company's book value per share by its EPS.

measures a company's leverage.

measures a company's liquidity.

is used to measure a company's stock price relative to its earnings.

is rarely used by value oriented investors.