Hi, if someone can please help with this. Exam tom!!!! Question related to the cash flow statement (given attached ) : #21 Net cash used for finance activities?, #22 The old machine was sold for?

York University AP/ADMS2500.03 Introduction to Financial Accounting Final Examination Time: 3.0 hours Winter 2012 Questions: 50 Instructions: 1. Submit: Both the pink mark sense sheet and the exam will be collected. Ensure your name is on both. Marks will be deducted if you do not turn in your question paper. Record your name and ID# here NAME : _______________________________________ Paper ID# ____________ Student Number: ______________________________________________ 2. Mark Sense Sheet: Record your name and student number and answer all questions on the computer mark sense sheet provided with an HB (soft lead) pencil. Bring several pencils in case one breaks. The computer will not recognize ink or hard lead pencils. Test Form is for the exam version you are writing (A, B or C)' and Code is your Section (in the left column). Fill in the bubbles for your name and student number in pencil (your phone number is not required). Leave the last column of the student number BLANK . If you change an answer, use a high quality eraser to completely remove the previous mark. If the computer senses two answers to a question, only the first scanned will be recognized. 3. Exam Aids: Only calculators without alphanumeric programmable memories are allowed. It is strongly suggested you bring a couple of cheap 4 function computers to the exam in case one fails. Be prepared to be challenged by invigilators if you bring a \"fancy\" calculator. Compact foreign language/English dictionaries may be used. However, these will be examined by invigilators. If there are any loose pages or handwriting in the dictionary, it will be seized and you will be charged with academic dishonesty. In 2500, invigilators answer no questions of interpretation. They will pass along questions regarding possible errors/ typos/missing data to the head invigilator. If you believe a question contains an error and do not receive a response, make a detailed note on the back of your pink Scantron sheet and submit it with your paper. 4. Exam Strategy Careful budgeting of time on an accounting exam is essential. Bring a watch and check your progress regularly. Poor time management is the most common reason for poor exam performance in accounting. It is always a good idea to attempt the questions you deem easiest first. In an interrupted exam that is not restarted, your exam will be scored based on questions attempted. It is essential to transfer your answers to the grading sheet after each question in case the exam is interrupted by fire alarm. The last ten minutes of an exam should be devoted to double checking your transfers. What you submit is what is graded. If you have not transferred your answers to the mark sense sheet at the end of the exam, the invigilator will not wait. Your answer sheet will be seized and it will be graded based on whatever questions have choices filled in. 1 2012 York University All Rights Reserved Remember there is no penalty for guessing on a multiple choice computer graded exam. Submit a choice for every question. Also note that in 2500, None of the above does indeed represent a frequent correct choice to questions. 5. Exam room regulations: All personal belongings either on the floor or at the front of the exam room. All items on your desk will be examined by invigilators Bring appropriate ID as proof of registration. You will be required to sign in and show appropriate documentation. Students without ID will be allowed to write the exam, but will be photographed and asked to submit registration and photo ID to the School of Administrative Studies the next day. No student may leave the exam in the first hour. No student may start the exam after an hour. Students requiring restroom visits must be accompanied by an invigilator. The proctors will announce when there are 15 minutes remaining and any answers not transferred should be recorded at this time. No one is to leave their seat in the last 15 minutes. When time is called, the proctors will go down the rows collecting your answer sheets and this exam paper. They will not wait and they will not accept your sheet once they have passed. Any violation of this protocol will result in a grade of zero recorded for the exam. 6. Fire Alarms A frequent occurrence in York exams. In the event of a fire alarm, you are to leave your exam and answer sheet face down on your desk and immediately proceed outside with coats and all personal belongings. Print your surname on the back of the exam so you know which seat to return to. An invigilator will lead the group outside to a place of safety. There is to be no talking during the evacuation or outside. Most rooms are cleared so that exams can recommence, within 30 minutes of the alarm. You will be told after this time whether to reenter the room and recommence the exam or to go home. 7. Academic Dishonesty You are reminded that cheating is a serious offense which can result in expulsion from university. Exams at York are held in regular classrooms, which may involve tiered seating. Consequently, neck exercises are not allowed during exams. First instance of wandering eyes has the student relocated to the front of the room. Second instance results in seizure of paper. 8. Special Instructions Double check your transfers to the pink scantron sheet. The exam clearly indicates when a group of questions are related to a single data set. Otherwise, assume each question is independent of the others. There are four present value tables and a cheat-sheet of ratios for financial statement analysis appended to this exam in case you need to use them. With 180 minutes to do 50 questions, you should budget your time carefully and not spend more than 3 minutes on a question. If you do, you risk not finishing the exam. A time honoured exam strategy is to attempt the easiest questions first. This builds confidence, creates a bank of correct answers if the exam is terminated by fire alarm and also builds a time cushion to spend extra time on difficult questions. 9. Reminder This is a reminder to Submit: Both the pink mark sense sheet and the exam will be collected. your name is on both. Marks will be deducted if you do not turn in your question paper. 2 2012 York University All Rights Reserved Ensure 1). Which of the following is not an application of an accrual accounting? a). adjusting the accounts at the end of the period b). recognizing revenues when earned c). recognizing expenses when earned d). recording expenses when they are paid 2). Brady Inc., had credit card sales of $50,000 for the month of July. The credit card company charges a 3% service charge for processes the sale. How much will Brady Inc., receive when payment is received from the credit card company? a). $48,500 b). $50,000 c). $51,500 d). need more information 3). Wingert Co., purchased a new truck for $62,000. The truck is expected to have a salvage value of $12,000 four years later after using it for 100,000 kilometres. During the first and second years of operation, Wingert Co. put 25,000 and 10,000 kilometres respectively, on the truck. For the second year, depreciation expense would be: a). $5,000 b). $7,400 c). $12,500 d). $18,500 4). A company has credit sales of $150,000 and cash sales of $90,000 during the same year that the Accounts Receivable account decreased by $20,000. What was the total cash received from customers? a. $220,000 b. $260,000 c. $170,000 d. $130,000 5). Sales (in millions) for a three-year period are: Year 1 $4.0, Year 2 $4.6, and Year 3 $5.0. Using Year 1 as the base year, sales in Years 2 and 3 expressed as a percentage of the base year sales are, respectively: a. 115% and 125%. b. 115% and 109%. c. 15% and 25%. d. 87% and 80%. 6). Net credit sales are $4,000,000 and average gross receivables are $250,000. The collection period is: a. 16 times. b. 6.25 percent. c. 16 days. d. 22.8 days. 3 2012 York University All Rights Reserved 7). Earnings per share: a. is calculated by dividing profit by the number of common share issued in the year b. is a measure of the profit earned on each common share c. is not presented on the income statement for publicly traded companies d. is a measure of profit earned on each preferred share 8). On January 1, 2011, The Mayfair company has machinery on the books that originally cost $100,000. During the 2011, the following expenditures were made: Minor Repairs $ 5,000 Improvements $20,000 Installation costs $ 19,000 How much would be recorded in the machinery account on December 31, 2011? a). $105,000 b). $119,000 c). $120,000 d). $139,000 9). On January 1, 2011, Hoffman Company, a calendar year company, issued $75,000 of notes payable of which $15,000 is due on January 1 for each of the next 5 years. The proper Balance Sheet presentation on December 31, 2011, is a). Current Liabilities $75,000 b). Long term Liabilities $75,000 c). Current Liabilities $15,000 Long-Term Liabilities $60,000 d). Current Liabilities $60,000 Long-Term Liabilities $15,000 10). Dawson Corporation had profit of $120,000. Dawson paid $20,000 in dividends to the preferred shareholders and $40,000 in dividends to the common shareholders. Dawson had 15,000 preferred shares and 50,000 common shares issued all year. Earnings per share is: a. $1.20. b. $2.00. c. $1.85. d. $2.40. 11). The total cost of borrowing on a 10 year, 4%, $1,000 bond that is sold for $970 is: a. $370. b. $400. c. $430. d. $970. 4 2012 York University All Rights Reserved 12). Bonds with a face value of $1,000,000 and a carrying value of $975,000 are retired at 99, after paying semi-annual interest. The gain or loss is: a. $15,000 loss. b. $10,000 loss. c. $10,000 gain. d. $15,000 gain. 13). Castaway Corporation borrows $300,000 and signs a 6%, 5 year note. Monthly payments will include a fixed amount of principal, plus interest on the unpaid balance. The first payment will be: a. $5,000. b. $6,500. c. $18,000. d. $23,000. 14). Bush Corporation reacquired 2,000 shares of its own $10 par value common stock for $30 per share. If it reissues all of the treasury stock for $35 per share, the entry to record the reissue stock would be a). Cash $70,000 Treasury Stock $60,000 Paid-in Capital from Treasury Stock Transaction $10,000 b). Cash $70,000 Common Stock $70,000 c). Cash $70,000 Common Stock $10,000 Paid-in Capital in Excess of Par $60,000 d). Cash $70,000 Treasury Stock $70,000 15). The Cool Company on January 1, 2011 had a beginning Inventory of $800,000. During 2011, The Cool Company purchased $1,900,000 of additional inventory. On December 31, 2011, had $4,350,000 in recorded Sales and the ending inventory was $700,000. What was the inventory turnover for 2011? a). 1.33 b). 2.5 c). 2.67 d). 2.86 5 2012 York University All Rights Reserved Cash Flow Statement Questions: The information is for questions 16 to 30 for these multiple choice questions you will have to prepare both Direct and Indirect the cash flow statements from the information found below. Extra sheets will work working out of this problem will be found after the Income and Balance sheets. The income statement for the year ended December 31, 2011, for ABC Inc., contains the following information: ABC INC Income statement Year Ended December 31, 2011 In (000)'s Sale $ 6,583.0 Cost of goods Sold 3,572.0 Gross Profit 3,011.0 Operating expenses $ 2,289.0 Gain on sale of equipment (24.0) 2,265.0 Profit from operations 746.0 Other expenses Interest Expense 85.0 Profit before income tax 661.0 Income tax expense 298.0 Profit $ 363.0 ABC Inc comparative balance sheet at December 31, 2011 contained the following account balances: 2011 2010 $ (000)'s $ (000)'s Cash $ 204.5 $ 180.0 Account receivable 775.0 610.0 Inventory 834.0 917.0 Prepaid expenses 29.0 25.0 Machinery 6,906.0 7,065.0 (2,355.0) Accumulated depreciation - machinery ( 2,497.0) Total assets: $ 6,251.5 $6,443.0 Accounts payable Interest payable Income taxes payable Dividends payable Long-term notes payable Common shares Retained Earnings Total liabilities & shareholders' equity 517.0 6.0 24.5 5.0 1,500.0 3,075.0 1,124.0 $ 6,251.5 6 2012 York University All Rights Reserved 602.0 0.0 20.0 10.0 2,000.0 3,000.0 811.0 $ 6,443.0 Additional information: 1). Operating expenses include depreciation expense of $880.0 2). Accounts payable relate to the purchase of inventory 3). Machinery that cost $984.0 was sold at a gain of $24.0 4). New Machinery was purchased during the year for $825.0 6). Common shares were sold for $75.0 cash Following pages are left blank for you to create both Direct and Indirect Cash Flow Methods: 7 2012 York University All Rights Reserved Questions for the Cash Flow Statement: Direct: 16). The total amount of Cash Receipts from Customers are: a). $6,748.0 b). $6,583.0 c). $6418.0 d). $3,572.0 17). The total amount of Cash payments to the suppliers are: a). $3,572.0 b). $3,573.0 c). $3,656.0 d). $3,489.0 18). The total for operating expenses is: a). $1,413.0 b). $2,289.0 c). $1,409.0 d). $2,293.0 19). The total cash payments for interest is: a). $91.0 b). $85.0 c). $50.0 d). $79.0 20). The total Cash payments for Income Taxes are: a). $298.0 b). $24.5 c). $4.5 d). $293.5 21). The total Net cash used for finance activities is: a). -$480.0 b). -$640.0 c). -$520.0 d). -$630.0 22). The old machinery was sold for: a). $246.0 b). $738.0 c). $142.0 d). $270.0 8 2012 York University All Rights Reserved Indirect Method: Questions 23 to 30 pertain only to Indirect Method for Cash Flow 23). The Accumulated depreciation for the sold machinery was: a). $1,008.0 b). $801.0 c). $738.0 d). $159.0 24). The total cash payment of Dividends was a). $5.0 b). $55.0 c). $50.0 d). $65.0 25). The total sales proceeds on selling of the old machinery was: a). $24.0 b). $246.0 c). $984.0 d). $270.0 26). The Net Cash provided by Operating activities was: a). $1,250.5 b). $1,059.5 c). $1,426.5 d). $1,613.5 27). The Net cash used by Investing Activities is a). -$549.0 b). $1,170.0 c). $1,150.0 d). -$555.0 28). The Dividends declared for 2011 was: a). $55.0 b). $50.0 c). $60.0 d). $45.0 29). The Carrying amount (value) on the sold Machinery was: a). $984.0 b). $825.0 c). $246.0 d). $270.0 30). The Net Cash flow for the year was: a). -$23.5 b). $204.5 c). $24.5 d). $363.0 This is the end of the Cash Flow Question. 9 2012 York University All Rights Reserved Use the following data to answer Questions 31 to 33 The following transactions were selected from among those completed by The Grayson Group in 2011: April 3: Sold 37 Stereos to Jack for $3,000; terms 3/10, n/30. April 6: Jack paid in full the amount due for the purchase on April 3. April 13: Sold two Matresses to George, who charged the $500 sales amount on her credit card. The credit card company charges The Grayson Group a 2% credit card fee. April 17: Sold 10 Desks to Susan for $2,000; terms 2/10, n/30. May 12: Susan returned 5 of the items purchased on April 17; the item was defective, and credit was given to the customer. May 15: Susan paid the account balance in full. Assume that sales discounts and credit card fees (discounts) are treated as contra revenues; compute the following values to achieve the net sales for the two months ended May 31: Sales Revenue Less: Sales returns and allowances Sales discount Credit card fees (discounts) Net sales 31). The sales revenue amount should be: a). $500 b). $2,000 c). $3,000 d). $5,500 32). The sales discounts amount should be: a). $40 b). $90 c). $130 d). Cannot be calculated with the data provided 33). The credit card discounts amount should be: a). $0 b). $10 c). $20 d). Cannot be calculated with the data provided 10 2012 York University All Rights Reserved 34). Choose the term that best matches the following description: A cash discount offered to encourage prompt payment of an account receivable a). Installment Method b). Percentage of Completion Method c). Completed Contract Method d). Sales (or Cash) Discount 35). For L&M Company, accounts receivable is $20,000, Allowance for Bad Debts has a credit balance of $500.00. Net Sales for the year are $175,000. In the past, 2% of sales had proved uncollectable, and an aging of the receivables indicated $1,600 as uncollectible. What would be the adjusted balance of the allowance account under the income statement approach? a). $3,500 b). $3,000 c). $4,000 d). $1,600 36). If current assets are $1,500 and current liabilities are $1,000, the working capital is: a. ($500). b. $500. c. 0.7 to 1. d. 1.5 to 1. Information for questions 37 & 38 The following information is from the XYZ Company financial statements: Liabilities and Shareholders' Equity Current liabilities $ 30,000 Long-term Liabilities $ 70,000 Stockholders' Equity $100,000 Total Liabilities and Stockholders' Equity $200,000 Sales $120,000 Cost of Goods Sold $ 50,000 Gross Margin $ 70,000 Operating Expense $ 30,000 Net Income $ 40,000 37). For XYZ calculate the Return on Assets: a). 20% b). 33% c). 40% d). none of the above 11 2012 York University All Rights Reserved 38). For XYZ company calculate the Return on Equity: a). 25% b). 35% c). 40% d). none of the above 39). An investment of $100 today is worth $116.64 at the end of two years if it earns an annual interest rate of 8%. How much interest is earned in the first year and how much in the second year of this investment? a). The interest earned in year one is $8.32 and the interest earned in year two is $8.32. b). The interest earned in year one is $8.00 and the interest earned in year two is $8.64. c). The interest earned in year one is $8.64 and the interest earned in year two is $8.00. d). There is not enough information to solve this problem 40). Which of the following costs should NOT be considered a direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer? a). The cost of the heard drive installed in the computer. b). The cost of shipping the computer to the customer. c). The cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers d). The cost of packaging the computer for shipment 41). During the month of July, Reardon Company incurs $17,000 of direct labour and $8,500 of manufacturing overhead, and purchases $15,000 of raw materials. Between the beginning and end of the month, the raw materials inventory increases by $2,000, the finished goods inventory increased by $1,500, and the work-inprogress inventory decreases by $3,000. What is the cost of goods manufactured? a). $38,500 b). $40,500 c). $41,500 d). $43,500 42). In a proprietorship, owner's equity increases when: a. the owner withdraws money for personal use. b. money is borrowed from the bank. c. cash is collected from a customer who had previously been billed for services. d. a service is provided to a customer on account. 12 2012 York University All Rights Reserved Use the following data to answer Questions 43 and 44 The records at the end of June 2011 for SunBlush Technologies showed the following for a particular kind of merchandise: Inventory, May 31, 2011, at FIFO: 20 units @ $14 = $280 Inventory, May 31, 2011, at Weighted-Average: 20 units @ $7 = $140 Transactions Purchase, June 9, 2012 Purchase, June 20, 2012 Sale, June 11, 2012 Sale, June 27, 2012 Units 50 50 20 80 Unit Cost $14 $18 Total Cost $700 $900 43). Compute the inventory turnover ratio under the FIFO costing method and a periodic inventory system (round to two decimal places). a). less than 75 days b). more than 75 days c). less than 3 times per year d). more than 5 times per year 44). Compute the inventory turnover ratio under the Weighted-Average costing method and a periodic inventory system (round to two decimal places). a). 6.55 days b). 6.55 times c). 4 days d). 4 times 45). Your finance professor suggests that you should have $2,500,000 in your retirement portfolio before you even THINK about retiring. Recently, your uncle sold valuable California real estate and handed you a check for $400,000. (This is the amount you have after paying taxes. He is now your favorite uncle.) How much of the $400,000 must you set aside today if you invest a portion of the money at an annual rate of 8.0% and you wish to retire in 25 years with the amount suggested by your finance professor? a). $365,045 b). $34,197 c). $234,196 d). At an annual rate of return of 8.0%, $400,000 is not a large enough investment to reach the goal amount of $2,500,000 in 25 years. 13 2012 York University All Rights Reserved 46). For a manufacturing company, which of the following is an example of a period rather than a product cost? a). Amortizing of factory equipment b). Wages of salespersons c). Wages of machine operators d). Insurance on factory equipment 47). If the ending inventory is overstated: a. profit will be understated. b. profit will be overstated. c. profit will be correct. d. gross profit will be understated. 48). In a period of rising prices, a. Cost of Goods sold is higher using average, compared with FIFO. b. Compared with averge, FIFO results in lower gross profit. c. Compared with average, FIFO has lower ending inventory. d. Compared with FIFO, average has higher owner's equity. 49). If a company has 300,000 common shares authorized, and has 250,000 shares issued at $3 a share, the Common Shares account would have a balance of: a. $250,000. b.$300,000. c. $750,000. d. $900,000. 50). Cooper Corporation has 100,000 common shares issued at an average price of $20 per share. Cooper reacquires 1,000 shares for $19,500 and cancels them. The journal entry would include: a. a $19,500 debit to cash. b. a $500 debit to Loss on Reacquisition of Common Shares. c. a $500 credit to Gain on Reacquisition of Common Shares. d. a $20,000 debit to Common Shares. End of Exam 14 2012 York University All Rights Reserved Appendix 1 Key Financial Ratios Equity Ratio = Common Shareholders' Equity / Total Assets Bond Interest Coverage = Operating Income / Annual Bond Interest Preferred Dividend Coverage = Operating Income / (Bond Interest + Preferred Dividend Requirements) Working Capital Turnover = Sales / Working Capital Current Ratio = Current Assets / Current Liabilities Quick Ratio = Quick Assets / Current Liabilities Inventory Turnover = Cost of Sales / Average Inventory Accounts Receivable Turnover = Trade Receivables / Sales Average Collection Period = (Trade Accounts Receivable / Sales) * 365 Return on Assets = Operating Income / Total Average Assets Return on Common Shareholders Equity = (Net Income - Preferred Dividend Requirement) / Average Common Shareholders E Return on Sales = Net Income / Net Sales Earnings Per Share = (Net income - Preferred Div. Requirement) / Weighted Average # of common shares Price Earnings Ratio = Market Price of Common Share / EPS Dividend Yield = Dividends per Share / Market Price per share Dividend Payout Ratio = Common Dividends per Share / Earnings per Share 15 2012 York University All Rights Reserved APPENDIX 2 PRESENT VALUE TABLES 16 2012 York University All Rights Reserved 17 2012 York University All Rights Reserved Correct answers - ADMS2500 Final Exam Winter 2012 Question 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Answer D A A B A D B B C B C A B A C C B A D D A D C B D Question 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 Answer B D B C C D B B D C B A C B C C D B B A B B A C D For a detail of calculations to answer questions 16 to 30 please see the excel file containing the complete solution to the cash flow statements under both methods. 18 2012 York University All Rights Reserved