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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 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 C E B D B B A E D B A C A C C B B D B A B B B C D B A A D D C C D C B C D D C D B A C A B D A C 49 50 51 52 53 54 55 56 57 58 59 60 B D D C E D B A A A D C THE 2015 Fall Accounting Tribe The Final Battle Version D (Write this on top left of answer sheet above your name) Rules: Same as always - No cheating If you write your answers large next to the questions on the exam, you will get a 0. ______________________________________ Name (Print) ________________________ PID Instructor (circle) Dr. Kirch Mrs. Freeland Ms. Keifer ______________________________ Days & Time of your class 1) 2) 3) 4) Pledge: By signing my name below, I am promising that: The work I complete is my own, I did not and will not give aid to others, I will not share any information about the examination with those who are taking it later, and I will report any others that I observe violating these rules. Signature __________________________________________________________________ Multiple Choice (5 points each) 1) A \"capital lease\" is really A. A temporary rental of something B. A better lease than a non-capital lease C. A purchase of the asset D. A current asset E. A purchase of a net present value 2) When a business issues bonds for cash, which of the following occurs? A. A revenue account increases and an asset account increases B. An asset account increases and a liability account decreases C. An expense account increases and an asset account decreases D. An asset account decreases and a liability account increases E. An asset account increases and a liability account increases 3) If beginning Rent Payable is $6,000 and the Company paid 15 months' rent of $15,000 (and continues to rent the space through year-end), the ending financial statements would include A. B. C. D. E. Rent Payable of $15,000 Rent Payable of $ 3,000 Prepaid Rent of $15,000 Rent Expense of $3,000. None of the above 4) Darby purchased a new machine on January 1, for $210,000. Darby paid $10,000 down with the rest payable in 5 equal annual payments, beginning in one year, which include interest at 10%. The amount of each payment would be: A. B. C. D. E. $ 40,000 + interest $ 26,379.75 $ 55,397.47 $ 52,759.50 Cannot be determined from information given 5) You want to have $100 in the bank in ten years, bank pays interest at 10% compounded semi-annually, how much do you need to put in today? 6) A. $ 38.55 B. $ 37.69 C. $ 14.86 D. $ 10.00 E. none of these Anna Bella's Dress Shoppe, had a fire. The entire inventory was lost. The owners are putting together a claim for the insurance company. Sales this year were $1,000,000 up until the fire. Last year's sales were $2,000,000. The average markup percentage is 100%. The inventory at the beginning of the year was $300,000 (at cost). Anna owed suppliers $200,000 last year. The company had purchased $600,000 of dresses this year (at cost) up until the date of the fire. How much can Anna Bella's claim as lost during the fire? A. B. C. D. E. 7) $ 440,000 $ 400,000 $ 240,000 $ 362,220 $ 640,000 CoJo Co. issues 2,000 shares of $10 par value stock for $80,000, the credit to \"Paid-in capital\" would be A. B. $ 60,000 $ 80,000 C. D. E. 8) Josh will sell you a Goalie for $20,000 (must not be a very good Goalie!). The deal is 10% down and the rest payable in four equal annual payments that include interest at 2%. You called the bank and they said that they would charge you 10% for a similar loan. How much are the payments if you take Josh's deal? A. B. C. D. E. 9) $ 78,000 $ 2,000 None of these $ 5,252.48 $ 2,626.24 $ 5,000.00 + interest $ 2,374.18 $ 4,727.23 Still on Josh - How much are you really paying for the Goalie under Josh's deal? A. B. C. D. E. $ 14,984.68 $ 16,649.64 $ 18,649.64 $ 16,984.68 Some other number Use the following information for questions 10-24. BE SURE YOUR CALCULATOR IS SET TO AT LEAST 4 DIGITS PAST THE DECIMAL! (2nd Format, 4, Enter) BobKat Enterprises, Inc. Income Statement For the Year Ended December 31, 2015 Sales $ 900,000 Cost of Goods Sold 400,000 Gross Margin 500,000 Operating Expenses Wage Expense $250,000 Rent Expense 36,000 Depreciation Expense 30,000 Bad Debt Expense 18,000 Total Operating Expenses 334,000 Operating Income 166,000 Other Revenues & Interest Expense Taxable Income 150,000 Tax Expense 45,000 Net Income $ 105,000 EPS $ 1.95 BobKat Enterprises, Inc. Balance Sheet December 31, 2015 2014 Assets Current Assets Cash $ 140,000 $ 170,000 Accounts Receivable 80,000 85,000 8,000 Less: Allowance for Doubtful Accounts (10,000) (5,000) Net Accounts Receivable 70,000 80,000 Inventory 90,000 70,000 Total Current Assets 300,000 320,000 Property and Equipment Equipment 420,000 340,000 Less: Accumulated Depreciation ( 90,000) ( 60,000) Net Property & Equipment 330,000 280,000 Other Assets Security Deposit 10,000 10,000 Total Assets $ 640,000 $ 610,000 2015 2014 $ 78,000 9,000 $ 149,000 Interest Payable Taxes Payable Total Current Liabilities 3,000 12,000 102,000 5,000 10,000 172,000 Long-Term Debt Note Payable Total Liabilities 100,000 202,000 100,000 272,000 Liabilities Current Liabilities Accounts Payable Wages payable Owners' Equity Common Stock ($1 per share) 60,000 50,000 Retained Earnings 378,000 288,000 Total Owners' Equity 438,000 338,000 Total Liabilities and Owners' Equity $ 640,000 $ 610,000 The paragraph prior to question 10 is part of this problem. Some of the equipment was acquired on June 30, 2015 by exchanging 5,000 shares of common stock worth $5,000. The additional shares of common stock were issued on September 30, 2015. The Note Payable is interest only at 10% and will be paid in 2020. The company did not sell any equipment during the year. The retained earnings balance for both years is after all closing entries have been made. 10) At December 31, 2015, the current ratio was approximately A. B. C. D. E. 11) 3.56 2.94 6.27 1.86 some other number At December 31, 2015 the book value per share was approximately A. B. C. D. E. $ 7.30 $ 6.30 $ 7.52 $ 10.00 some other number 12) For 2015, the return on assets was approximately A. B. C. D. E. 13) For 2015, return on equity was approximately A. B. C. D. E. 14) 27.06% 31.53% 23.97% 16.41% some other number At December 31, 2015, the Debt to Equity Ratio was approximately A. B. C. D. E. 15) 22.58% 33.87% 16.80% 16.41% some other number 22.83% 37.92% 46.12% 31.56 % None of the above At December 31, 2015, the stock price was $ 39 per share. The Price Earnings Ratio was approximately A. B. C. D. E. 16) 26 40 20 10 None of the above At December 31, 2015, the inventory turn was approximately A. 4.44 B. 5.00 C. 5.71 D. 10.00 E. 11.25 17) How much in dividends did the company pay during the year? A. B. C. D. E. 18) What was the Cash Flow from Operating Activities for the year? A. B. C. D. E. 19) ($ 10,000) ($ 35,000) ($ 15,000) $ 15,000 Some other number At December 31, 2015, the acid test (quick) ratio was approximately A. B. C. D. E. 22) $ 2,000 ($75,000) ($80,000) ($68,000) Some other number What was the Cash Flow from Financing Activities for the year? A. B. C. D. E. 21) $ 215,000 $ 25,000 $ 80,000 $ 55,000 Some other number What was the Cash Flow from (used by) Investing Activities for the year? A. B. C. D. E. 20) $ -0$ 15,000 $ 20,000 $ 30,000 Unable to determine from information given 3.56 2.06 2.10 1.86 some other number The Supplemental Cash Flow section will include a statement: A. B. C. D. E. describing the exchange of common stock for cash. describing the exchange of common stock for equipment. describing the exchange of cash for a note payable. both A and C none of the above. 23) In the Supplemental Cash Flow section, how much will \"Cash paid for taxes\" be? A. B. C. D. E. 24) $ 45,000 $ 43,000 $ 55,000 $ 57,000 Some other number In the Supplemental Cash Flow section, how much will \"Cash paid for interest\" be? A. B. C. D. E. $ 16,000 $ 21,000 $ 18,000 $ 14,000 Some other number 25) At December 31, 2015, Johnson Co. stock price was $ 30 per share. If the EPS was $5. The Current (Earnings) Yield was approximately A. B. C. D. E. 10.90% 15.48% 6.00% 16.67% None of the above Use the following information for the next three questions Page Co. is introducing a new product expected to sell for $20 and to have variable costs of $12. Page expects to sell 30,000 units per year. Making the product requires machinery that costs $600,000 that will last for 10 years (no salvage value). Making the product will increase fixed cash operating costs by $50,000 per year. The tax rate is 30% and the required rate of return is 16%. 26) The net present value of the proposed project is A. B. $ 28,319.57 $ 129,817.35 C. D. E. ($ 160,176.30) $ 910,000.00 none of these 27) The payback on the project is approximately A. B. C. D. E. 4 years 3 years 5 years 2 years 6 years 28) If you assume the after tax cash flow is $120,000 per year, the approximate IRR of the project is: A. B. C. D. E. 29) 15.10% 8.10 % 10.10% you need more information to solve this some other answer that is not here Baker Company bought a new pickup for $50,000 to use in their business. They estimate the truck will be useful for 5 years and then will be worth $5,000. If Baker uses the straight-line method of depreciation, how much would depreciation expense be for the fourth year? A. B. $ 6,000 $ 7,000 C. D. E. $ 18,000 $ 9,000 $ 10,000 30) Melton Co. issues 5,000 shares of $1 par value stock for $100,000. The credit to \"common stock\" would be A. B. C. D. E. 31) $ 98,000 $ 105,000 $ 95,000 $ 5,000 None of these \"Current Portion of Long-Term Debt\" is A. B. C. D. E. the total payment on a loan due in the next 12 months an example of a significant non-cash investing and financing transaction the principal payment which is due on a loan in the next 12 months subtracted from current assets to get the book value of the long-term debt None of these Use the following data to answer the next three questions: On January 1, 2015, Kylie's Plumbing, Inc. declared a $2.00 per share dividend payable on February 1, to holders of record on January 15. Before the dividend was declared, the company had 100,000 shares of $10 par value stock outstanding. 32) On the date of declaration, the journal entry to record the dividend would include A. B. C. D. E. 33) On the date of record, the journal entry would include a A. B. C. D. E. 34) a credit to Retained Earnings of $ 200,000. a credit to Cash of $ 200,000. a credit to Dividends Payable of $ 200,000. There would be no journal entry on this date. None of the above credit to Dividends Payable of $200,000. credit to Common Stock of $200,000. debit to Dividends Payable of $200,000. There would be no journal entry on this date. None of these is correct. On the date of payment, the journal entry would include a A. B. C. D. E. 35) Probel Corp has a beginning balance on January 1, 2015 in Accounts Receivable of $200,000 and a beginning credit balance in the Allowance for Doubtful Accounts of $4,000. During 2015, Probel sold $1,000,000 of goods on credit and collected $800,000. If Probel estimates that 2% of their ending accounts receivable will eventually not be collected, the adjusting journal entry for the Bad Debt Expense will include a credit to Allowance for Doubtful Accounts of A. B. C. D. E. 36) credit to Dividends Payable of $200,000. credit to Common Stock of $200,000. debit to Dividends Payable of $200,000. There would be no journal entry on this date. None of these is correct. $ 16,000 $ 4,000 $ 8,000 $ 6,980 $ none of these Susie Corporation is buying all the assets and assuming all the liabilities of John's Barbeque Company. The following information is available for John's at the date of the purchase: Accounts Receivable Inventory Land 250,000 100,000 300,000 Accounts payable 150,000 Note Payable 100,000 Common Stock 200,000 Retained Earnings 400,000 The accounts receivable are worth $200,000, the inventory is worth $75,000 and the land is worth $500,000. The Accounts Payable are worth book value. Additionally, the Note Payable debt is payable interest only at 10% per year for the next 5 years and then the principal is due. The current interest rate for similar debt is 12%. Susie will pay $650,000 for John's. How much of the purchase price will Susie debit to goodwill? A. B. C. D. E. 37) $ 125,000.00 $ 129,804.45 $ 117,790.45 $ 120,196.45 Some other number which is not here A method of calculating interest which puts more interest to the beginning payments is: A. B. C. D. E. a ponzie scheme an aging schedule Simple interest The rule of 78s Some other thing 38) Spacely Company sells sprockets for $25. The following is the projected income statement for 2015. Variable costs are the cost of the sprockets, $10 each, plus a 10% sales commission paid to the worker. Sales Cost of Goods Sold Gross Margin Operating Expenses Salaries and Commissions Rent Other Fixed Expenses Total Operating Expenses Net Income $200,000 80,000 120,000 50,000 24,000 8,750 82,750 $ 37,250 For Spacely, the number of sprockets he needs to sell to break even are A. B. C. D. E. 5,517 4,220 6,620 5,020 none of these 39)Still Spacely, the sales (in dollars) of sprockets necessary to make $150,000 per year is approximately: A. B. C. D. E. 40) A 7-year, $1,000,000 zero coupon bond is priced to yield 9%. The amount the issuing company will receive when it is issued is: A. B. C. D. E. 41) $405,500 $350,000 $425,500 $500,000 none of these $ 543,933.74 $ 1,000,000.00 $ 621,921.32 $ 547,034.24 None of the above If the above zero bond was sold on January 1, 2015, the interest expense for 2016 (the second year) would be A. B. C. D. $ $ $ $ 49,233.08 53,664.06 53,359.90 60,173.77 E. Some other number Use the following information for the next 6 questions. Jetson's Dynamics makes scooters. The company has three models of scooters, the Astro, the Elroy and the Rosie. The controller has prepared the following estimates for next year. (All projections are on a per scooter basis). Selling Price Variable costs Astro Elroy Rosie $120 60 $150 90 $300 120 Estimated sales are: Astro, $48,000,000, Elroy $60,000,000, and Rosie, $12,000,000. Estimated fixed costs are $ 17,600,000. 42)The estimated weighted average contribution margin is A. B. C. D. E. 46.0% $36.00 $26.00 54.0% none of these 43)The sales needed to make $5,000,000 are: A. B. C. D. E. $ 18,518,518.52 $ 30,000,000.00 $ 49,130,434.78 $ 32,608,695.65 None of the above 44)The number of units of Astro sold at break-even are approximately: A. B. C. D. E. 45) 127,536 163,768 60,620 66,667 none of these What will happen to total profit if Jetson drops Rosie? A. B. C. D. E. Profits will decrease by $4,800,000 Profits will decrease by $7,200,000 The Fixed costs will decrease by $1,000,000 The Fixed Costs will increase by $1,000,000 none of these 46) Jetson believes they can increase the sales of Elroy by 5,000 units by spending $20,000 on additional advertising. If they do this and the sales do increase as planned, what will be the effect on profits? 57) 58) 59) 60) 47) A. Profits will increase by $300,000 B. Profits will increase by $340,000 C. Profits will increase by $320,000 D. Profits will increase by $280,000 E. none of these Go back to the last question. What will be the effect on profits if Jetson spends the $20,000 on advertising and the sales of Elroy increases 5,000 units, but the sales of Rosie decreases by 1,000 units? 44) 45) 46) 47) 48) A. Profits will increase by $100,000 B. Profits will decrease by $100,000 C. Profits will increase by $140,000 D. Profits will decrease by $140,000 E. none of these Treasury Stock is a(an) A. B. C. D. E. 49) expense account liability account owners' equity account revenue account asset account Morgan Company had wages payable at the beginning of the year of $10,000. During the year, her company paid cash for wages of $80,000 and at the end of the year she owed wages of $12,000. Her income statement for the year will show wage expense of A. B. C. D. E. $ 80,000 $ 82,000 $ 78,000 $ 88,000 $ 86,000 50) Which of the following changes describes the declaration of $1,000 in cash dividends payable next month? E. A. Assets and owners' equity increase by $1,000 B. Assets and owners' equity decrease by $1,000 C. Liabilities increase and owners' equity increases by $1,000 D. Liabilities increase and owners' equity decreases by $ 1,000 No changes in total assets, liabilities, or owners' equity 51) Acme's variable costs are 60% of revenue. If fixed costs are $150,000, what is the breakeven point in dollars? A. B. C. D. E. $ 60,000 $ 90,000 $ 250,000 $ 375,000 none of these 52) The thing the brain wants most is: A. B. C. D. E. sex to learn to survive to be in control None of these 53)Annabella Co. issued a 10-year, $100,000 face, 8% coupon rate bond to yield 10%. The journal entry to record the issuance of the bond would include: A. B. C. D. E. 54) A credit to interest payable of $8,771.09 A debit to cash of $100,000.00 A credit to premium on bonds payable of $ 12,289.13 A credit to bonds payable of $ 87,710.87 A debit to bond discount of $12,289.13 For Annabella Co.'s bonds, if they were issued the first day of 2014 (8% face priced to yield 10%) and the first year's interest was paid on December 31, 2014, the entry to record that interest would include: A. B. C. D. E. 55) The common set of accounting rules used in the US is known as: A. B. C. D. E. 56) A credit to cash of $ 8,771.09 A debit to interest expense of $10,000.00 A credit to bond discount of $ 8,771.09 A credit to cash for $ 8,000.00 A debit to interest payable of $4,385.54 The World Wide Financial Standards GAAP IFRS The Commonality Initiative International Generally Accepted Accounting Principles According to the article \"What It Takes to be Great\