1. Accounting 205Test 3Name ________________________________1. True or False (circle) -Trading securitiesare securities which pay interest and which have a fixed maturity date.2. True or False (circle) -Debt Securitiesare securities that represent an ownership interest in the company and which do not have a fixed maturity date.3. Select the correct entry for thefollowing transactions for ACH Inc., which purchased a $10,000 bond issued by SD Inc., at par value on January1, X1.The bond pays 5%interest, annually,startingJanuary 1, X2each year. The purchase of the bond on January1, X1a. Debit Bond Payable $10,000, Credit Cash $10,000b. Debit Cash, $10,000, Credit Bond Payable $10,000c. Debit Bond Investment $10,000, Credit Cash $10,000d. Debit Cash, $10,000, Credit Bond Investment $10,000The accrual of interest receivableon December 31, X1a. Debit Cash $500, Credit Interest Income $500b. Debit Interest Expense, $500, Credit Cash $500c. Debit Interest Receivable $500, Credit Bond Investment $500d. Debit Interest Receivable, $500, Credit Interest Income $500The receipt of interest on January 1, X2.a. Debit Cash $500, Credit Interest Income $500b. Debit Cash, $500, Credit Interest Receivable $500c. Debit Interest Receivable $500, Credit Cash $500d. Debit Interest Receivable $500, Credit Interest Income $500The sale of the bond on January 2, x2 for $10,300 (ignore any interest that accruesduring the first twodaysof the year).a. DebitCash $10,300, Credit Bond Investment $10,000, Credit Gain $300.b. Debit Cash, $10,300, Credit Bond Investment $10,300c. Debit Cash $10,300, Credit Gain $10,300d. Debit Cash, $10,300, Credit Interest Income $10,300

2. Accounting 205Test 3Name ________________________________4. ASF, Inc., holds the following portfolio of securitiesat December 31, X1. All of the securities were purchased during the year.CostMarketMagnum Hunter Resources$14,200$17,000SiriusXM6,8004,000Microsoft11,5008,200$32,500$29,200Selectthe entry required at December 31, 20x1 to adjustthe portfolio to market (the entry to record the purchase of the investments has already been recorded).a. Debit Realized Loss $3,300, Credit Investments $3,300b. Debit Allowance to Adjust to Market $3,300, Credit Unrealized Gain $3,300c. Debit Unrealized Loss $3,300, Credit Allowance to Adjust to Market $3,300d. Debit Allowance to Adjust to Market $3,300, Credit Realized Gain $3,300Selectthe entry to record the sale of all of the Magnum Hunter stock on July 2, 20x2 for $18,300.a. Debit Cash $4,100, Credit Investments $4,100b. Debit Cash $18,300, Credit Investments $14,200, Credit Realized Gain $4,100c. Debit Cash $18,300, Credit Investments $17,000, Credit Realized Gain $1,300d. Debit Cash $18,300, Credit Investments $18,3005. On which financial statement would any unrealized gains or losses from tradingsecurities be shown?a. Balance Sheetb. Income Statementc. Statement ofOwners Equity6. On which financial statement would any unrealized gains or losses from available for salebe shown?a. Balance Sheetb. Income Statementc. Statement of Owners Equity

3. Accounting 205Test 3Name ________________________________For the questions 7 and 8, use the financial statements and financial ratios located on the last three pages.7. Prepare a statement of Cash Flows for NCM, Inc. for 20X2. NCM INC.Statement of Cash Flows -20x2CASH FLOWS FROM OPERATING ACTIVITIES_________Total Cash Flow from Operating activitiesCASH FLOWS FROM INVESTING ACTIVITIES_________Total Cash flow from Investing ActivitiesCASH FLOWS FROM FINANCING ACTIVITIES_________Total Cash flow from financing activities

4. Accounting 205Test 3Name _________________________________________Net Change in CashCash -Jan.1, 20X2_________Cash -Dec. 31, 20X2_________8. Calculate the following financial measures for NCM,Inc.Show all calculations!Place your answers in the right hand column.a. Working Capital__________b. Current Ratio __________c. Account Receivable Turnover __________d. Days Sales in Receivables __________e. Inventory Turnover __________f. Days Sales in Inventory __________g. Times Interest Earned __________h. Net Sales to Assets __________i. Return on Total Assets __________

5. Accounting 205Test 3Name ________________________________j. Return on Stockholder Equity __________ NCMInc.BALANCE SHEETASSETS20X220X1Current AssetsCash$110,000$ 90,000Accounts Receivable30,00020,000 Marketable Securities10,00015,000Prepaid Expenses25,00030,000Inventory75,00060,000250,000215,000Property and EquipmentLand50,00050,000Buildings120,000120,000Equipment92,00086,000Less Accumulated Depreciation(82,000)(76,000)180,000180,000Total Assets430,000395,000LIABILITIES AND EQUITYCurrent LiabilitiesAccounts Payable22,00040,000Accrued Expenses34,00015,00056,00055,000Long-term Debt120,000170,000Total Liabilities176,000225,000Common Stock130,000120,000Paid-in Capital15,000-0-Retained Earnings109,00050,000

6. Accounting 205Test 3Name ________________________________Total Stockholder Equity254,000170,000Total Liabilities and Equity430,000395,000NCMInc.INCOME STATEMENT20X2Sales$ 500,000Cost of Goods Sold200,000Gross Profit300,000Operating Expenses200,000Interest Expense11,000 Depreciation Expense6,000217,000Income from Operations83,000Other Income 7,000Net Income90,000Income Tax Expense28,000Net Income$62,000Other Information:a. Other Income is a gain fromthe sale of securities which cost $5,000 and which were sold for $12,000.b. Dividends in the amount of $3,000 were paid during the year. c. The company issued additional stock for $25,000 during the year.

7. Accounting 205Test 3Name ________________________________Financial RatiosWorking Capital= Current Assets -Current LiabilitiesCurrent AssetsCurrent Ratio= Current Liabilities Net Credit SalesA/R Turnover=Average A/R 365Days Sales in Rec.=A/R Turnover Cost of Goods SoldInventory Turnover = Average Inventory365Days Sales in Inv.= Inv.Turnover Net Income +Taxes + Interest ExpenseTimes Interest Earned=Interest Expense Net Sales