QUESTION 1

The accompanying information are accessible for a bond

Face value8435

Coupon Rate345.345%

A long time to Maturity76345

Reclamation value4345

Respect maturity345.56%

What is the current market value, span and unpredictability of this security? Figure the normal market cost, if expansion in required yield is by 56 premise focuses.

2. Bannon Corp. transferred financial assets to Chapman, Inc. The transfer meets the conditions to be accounted for as a sale. As the transferor, Bannon should do each of the following, except

a.Remove all assets sold from the balance sheet.

b.Record all assets received and liabilities incurred as proceeds from the sale.

c.Measure the assets received and liabilities incurred at cost.

d.Recognize any gain or loss on the sale.

3. Which method of recording uncollectible accounts expense is consistent with accrual accounting? Allowance Direct write-off

a.Yes Yes

b.Yes No

c.No Yes

d.No No

4. A department store sells gift certificates that may be redeemed for merchandise. Each certificate expires 3 years after issuance. The revenue from the gift certificates should be recognized

a.Evenly over 3 years from the date of issuance.

b.In the period the certificates are sold.

c.In the period the certificates are sold.

d.In the period the certificates are redeemed or in the period they expire if they are allowed to lapse.

5. A statement of financial position provides a basis for all of the following except

a.Computing rates of return.

b.Evaluating capital structure.

c.Assessing liquidity and financial flexibility.

d.Determining profitability and assessing past performance.

6. Synthia Corp. factored $750,000 of accounts receivable to Thomas Company on December 3, year 2. Control was surrendered by Synthia. Thomas accepted the receivables subject to recourse for nonpayment. Thomas assessed a fee of 2% and retains a holdback equal to 4% of the accounts receivable. In addition, Thomas charged 12% interest computed on a weightedaverage time to maturity of the receivables of fifty-one days. The fair value of the recourse obligation is $15,000. Assuming all receivables are collected, Synthia?s cost of factoring the receivables would be

a.$12,575

b.$15,000

c.$27,575

d.$42,575

7. Which of the following is not an objective for each entity accounting for transfers of financial assets?

a.To derecognize assets when control is gained.

b.To derecognize liabilities when extinguished.

c.To recognize liabilities when incurred.

d.To derecognize assets when control is given up.

8. A change in credit policy has caused an increase in sales, an increase in discounts taken, a decrease in the amount of bad debts, and a decrease in the investment in accounts receivable. Based upon this information, the company?s

a.Average collection period has decreased.

b.Percentage discount offered has decreased.

c.Accounts receivable turnover has decreased.

d.Working capital has increased.

9. An increase in sales resulting from an increased cash discount for prompt payment would be expected to cause

a.An increase in the operating cycle.

b.An increase in the average collection period.

c.A decrease in the cash conversion cycle.

d.A decrease in purchase discounts taken.

10. Snug-fit, a maker of bowling gloves, is investigating the possibility of liberalizing its credit policy. Currently, payment is made on a cash-on-delivery basis. Under a new program, sales would increase by $80,000. The company has a gross profit margin of 40%. The estimated bad debt loss rate on the incremental sales would be 6%. Ignoring the cost of money, what would be the return on sales before taxes for the new sales?

a.34.0%

b.36.2%

c.40.0%

d.42.5%