| e. The master budget should only be prepared by top management. All of the following are true of the financial statement analysis report, except it: | a. contains ambiguities and qualifications. | | b. forces preparers to organize their reasoning and to verify the logic of analysis. | | c. serves as a method of communication to users. | | d. helps users and preparers to refine conclusions based on evidence from key building blocks. | | e. enables readers to see the process and rationale of analysis. A company issued 70 shares of $30 par value preferred stock for $4,000 cash. The journal entry to record the issuance is: | a. Debit Cash $2,100; credit Preferred Stock $2,100. | | b. Debit Investment in Preferred Stock $2,100; credit Cash $2,100. | | c. Debit Cash $4,000; credit Preferred Stock $4,000. | | d. Debit Preferred Stock $2,100, debit Investment in Preferred Stock $1,900; credit Cash $4,000. | | e. Debit Cash $4,000; credit Paid-in Capital in Excess of Par Value, Preferred Stock $1,900, credit Preferred Stock $2,100. A company had net income of $2,660,000, net sales of $25,000,000, and average total assets of $8,000,000. Its return on total assets equals: | a. 3.01%. | | b. 10.64%. | | c. 32.00%. | | d. 33.25%. | | e. 300.75%. Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost. Jobs are marked up 20% above cost to determine the selling price. If Job M-47 used $350 of materials and took 20 hours of labor to complete, what is the selling price that should be assigned to the job? | a. $852 | | b. $1,140 | | c. $456 | | d. $720 | | e. $708 A company has earnings per share of $9.60. Its dividend per share is $0.50, its market price per share is $110, and its book value per share is $96. Its price-earnings ratio equals: | a. 1.15. | | b. 0.87. | | c. 19.2. | | d. 10.0. | | e. 11.46. A company issued 8%, 15-year bonds with a par value of $550,000 that pay interest semi-annually. The current market rate is 8%. The journal entry to record each semiannual interest payment is: | a. Debit Bond Interest Expense $22,000; credit Cash $22,000. | | b. Debit Bond Interest Expense $44,000; credit Cash $44,000. | | c. Debit Bond Interest Payable $22,000; credit Cash $22,000. | | d. Debit Bond Interest Expense $550,000; credit Cash $550,000. | | e. No entry is needed, since no interest is paid until the bond is due. Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company declared a $27,000 dividend on its noncumulative, nonparticipating preferred stock. There were no other stock transactions. The company's earnings per share is: | a. $1.65. | | b. $1.99. | | c. $1.31. | | d. $0.34. | | e. $4.89. | | | | | | | |
