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.
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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.