Reference no: EM131622518
Q1. 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
Q2. 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
Q3. 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
Q4. 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