1) Riley Company borrowed $22,000 on April 1, Year I from the Titan Bank. The note issued by Riley carried a one year term and a 8% annual interest rate. Riley earned cash revenue of $880 in Year 1 and $900 in Year 2. Assume no other transactions. The amount of net income on the Year 2 income statement would be: A) $1,760. B) $460. C) $440. D) $1,320. 2) Which form of business organization is established as a legal entity separate from its owners? A) Sole proprietorship B) Partnership Corporation D) None of these 3) The Fortune Company reported the following income for Year 2: Sales Cost of goods sold Gross margin Selling and administrative expense Operating income Interest expense Income before taxes Income tax expense Net income What is the company's number of times interest is earned ratio? A) 1.9 times B) 2.7 times C) 3.7 times D) None of these answers are correct. $149,000 89,500 $59,500 B) $70,000. C) $100,000. D) $107,000. 34,000 $25,500 6,900 $18,600 5,580 $13,020 4) Laramie Company paid $800,000 for a purchase that included land, building, and office furniture. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Land, $100,000, Building, $740,000, and Office Furniture, $160,000. Based on this information the cost that would be allocated to the land is: A) $80,000. 2

1) Rilcy Company borrowed $22,000 an April 1. Year 1 from the Titan Bank. The note issued by Riley carried a one yese term and a 5% antual interest rate. Riley carned cauh revertue of $880 in Year 1 and $900 in Year 2 A swame no orber trumoctions. The amount of net incorme on the Year 2 income statement would be: A) 51,760 B) 5460 . C) $440. D) 51,320 . 2) Which form of business organization is ertablished as a legal entity sepurate from its owners? A) Scile proprietorship B) Patnership (C) Corporation D) None of these 3) The Fortune Compary reported the following income for Year 2 : \begin{tabular}{lr} Sales & \\ Cost of goods nold & 5149,000 \\ Gross margin & 89,500 \\ Selliog and mdministrative expense & 559,500 \\ Operating income & 34,000 \\ Interest expense & 525,500 \\ Income before taxes & 6,900 \\ Income tax expense & 518,600 \\ Net income & 5,580 \\ What is the company's number of times interest is camed ratio? & 513,020 \end{tabular} A) 1.9 times B) 2.7 times C) 3.7 times D) None of these answers are correct. 4) Laramie Company paid $800,000 for a purchase that included land, building, and office furmiture. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Land, $100,000, Building, $740,000, and Office Fumiture, $160,000. Based on this information the cost that would be allocated to the land is: A) $80,000. B) $70,000. C) $100,000. D) $107,000