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Question:
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1.
The following data came from the balance sheet of Han Company as of December 31, 20X2.
Dec. 31, 20X2
Dec. 31, 20X1
Machine
$3,500
$2,950
Accumulated depreciation on machines
1,400
1,300
Cash
135
180
The following additional data were found in Han Companys financial statements for 20X2.
Sales
$10,000
Cash dividends paid
65
New machine purchases (for cash)
1,000
Net income
300
Depreciation expense
270
gain on sale of old machines
140
How much cash did Han Company receive from the sale of old machines during the year?
(Assume that all machine sales were cash transactions.)
$210
$420
$490
$590
$360
2.
On December 31, 20X1, Thomson Company had the following account balances:
Accounts receivable
$15,000
Sales revenues
845,000
Gain on sale of equipment
14,000
Retained earnings (beginning of year, January 1, 20X1)
120,000
Accounts payable
25,000
Loan payable
45,000
Cost of goods sold
650,000
Cash
65,000
Inventory
11,000
Common stock
41,000
Operating expenses
210,000
Dividends
34,000
Unearned revenue
55,000
Property, plant, and equipment
145,000
Prepaid rent
50,000
Bonds payable
35,000
Given these data, what is Thomsons DEBT-TO-EQUITY RATIO as of December 31, 20X1?
1.27
1.00
1.88
0.99
1.01
0.78
0.79
0.56
3.
Derrald Company's financial statements show the following items.
Sales
$200,000
Wage expense
80,000
Accounts receivable increase
36,000
Loss on sale of equipment
13,000
Unearned rent income
22,000
Rent revenue
50,000
Dividends (declared and paid)
40,000
Wages payable increase
26,000
Depreciation expense
25,000
Derrald has no other revenues or expenses. What is Derralds net cash flow from operating
activities?
$196,000
$182,000
$154,000
$231,000
$132,000
Use the following information in answering the following 4 questions. Below are balance sheet and income statement data for Howard Bannister Company. Note: For the balance sheet data, the end-of-year information is in the left column.
Balance Sheet Data
20X2
20X1
Accounts Payable
165
95
Accumulated Depreciation
520
339
Cash
200
100
Common Stock
1,000
700
DIVIDENDS PAYABLE
40
25
Equipment
2,700
2,395
Income Tax Payable
100
135
Inventory
1,120
890
Mortgage Payable
900
1,265
Prepaid General Expenses
300
350
Retained Earnings (ending balance, after closing)
1,545
1,098
Unearned Sales Revenue
50
78
Income Statement Data (for 20X2)
Sales
10,000
Loss on sale of PPE
100
Cost of Goods Sold
6,000
General Expense
2,000
Depreciation Expense
330
Income Tax Expense
700
Total Expenses
9,130
Net Income
870
Additional Information:
Equipment with a book value of $300 was sold during 20X2.
All accounts payable relate to inventory purchases.
Equipment costing $160 was purchased with a mortgage during 20X2. This fact is already
reflected in the balance sheet numbers reported above. All other purchases of Equipment in
20X2 were cash transactions.
4.
Compute the amount of Cash Paid for Inventory Purchases in 20X2.
$6,100
$5,700
$6,160
$6,230
$5,840
$6,300
$6,280
5.
Compute the total CASH FROM OPERATING ACTIVITIES in 20X2.
$1,183
$1,200
$1,300
$927
$697
$1,027
$1,227
$1,127
6.
Compute the total CASH FROM INVESTING ACTIVITIES in 20X2.
net outflow of $394
net outflow of $343
net outflow of $455
net inflow of $500
7.
Compute the CASH PAID FOR DIVIDENDS in 20X2.
$422
$458
$378
$428
$408
8.
Portland Company sold equipment with a book value of $600 for $850 cash. Total depreciation expense for the entire company for the year was $500. The beginning and ending balances in the Accumulated Depreciation account are $1,000 and $700, respectively. The beginning and ending balances in the Equipment account are $3,500 and $3,700 respectively. In the journal entry to record the sale of the equipment for $850 cash, which ONE of the following items would appear? Note: No other equipment was sold during the year.
Credit to Equipment for $1,400
Debit to Accumulated Depreciation for $500
Debit to accumulated Depreciation for $300
Debit to Loss on Sale of Equipment for $250
Debit to Equipment for $200
9.
The following data come from the financial statements of Tarazi Aina Company for 20X8.
Dividends declared and paid during the year
$65
Increase in stockholder's equity during the year
100
Depreciation expense for the year
40
Increase in interest payable during the year
11
Total cash received from operating activities during the year
124
Increase in accumulated depreciation during the year
32
Increase in cash during the year
15
Net income for the year
90
Interest expense for the year
55
Total cash paid for investing activities during the year
185
What was the amount of cash received through the issuance of new shares of stock by Tarazi Aina
Company during the year 20X8?
$100
$55
$75
$35
$10
$25
$115
$60
10.
Which ONE of the following accounts will be CREDITED when making closing entries?
Unearned Revenue
Cash
Interest Revenue
Accounts Payable
Cost of Goods Sold
Prepaid Rent Expense
Inventory
Paid in Capital
11.
The following information is for Byrne Dareid Company:
20X2
20X1
Loans Payable
$10,000
$20,000
Retained Earnings
85,000
78,000
Common Stock
25,000
17,000
Net Income
18,000
20,000
Net cash paid for financing activities
27,000
21,000
Using this information, compute the cash paid to repurchase shares of stock in 20X2.
$19,000
$10,000
$5,000
$14,000
$21,000
12.
Harry Company's statement of cash flows shows the following items scattered among the three
sections of the statement.
Accounts receivable decrease
$36,000
Gain on sale of equipment
13,000
Prepaid rent increase
22,000
Cash used to repay long-term loans
80,000
Accounts payable decrease
18,000
Inventory decrease
50,000
Dividends (declared and paid)
40,000
Interest payable decrease
26,000
Cash paid to purchase new equipment
125,000
Depreciation expense
25,000
Net cash flow from operating activities
positive 100,000
This is not a list of all of the items in Harrys statement of cash flows, but Harry has no other
items reported in the operating activities section of its statement of cash flows (prepared using
the indirect method). What is Harrys net income?
$28,000
$42,000
$68,000
$118,000
$92,000
$290,000
$108,000
$132,000
13.
Lily Company had the following account totals as of December 31, 20X2.
Cost of goods sold
$150,000
Accounts receivable
100,000
Rent revenue
10,000
Accounts payable
25,000
Sales
200,000
Inventory
50,000
Bank Loan Payable*
20,000
Cash
18,000
Retained earnings (beginning of year, January 1, 20X2)
80,000
Prepaid insurance (6-month insurance policy)
15,000
Paid-in capital
38,000
Equipment
45,000
Unearned rent revenue (9-month contract)
5,000
*Of the $20,000 bank loan payable, $3,000 will be repaid in 20X3. What is Lily Companys
CURRENT RATIO?
5.74
6.14
4.06
5.90
5.55
14.
The following items have been extracted from the financial statements of Lorien Company for the
year 20X1.
Total liabilities
$700
Net income
50
Gross profit
400
EBIT (also called operating income)
220
Sales
1,000
Total assets
1,600
Income tax expense
40
Cost of goods sold
600
Note: This list does not include all of the items in Loriens 20X1 financial statements. However,
the list does include all of the items you need to correctly answer the question below. What is the
value of Lorien Companys TIMES INTEREST EARNED ratio for 20X1?
1.69
3.08
3.38
3.00
1.29
5.50
4.40
2.69
15.
Rocky Company borrowed $10,000 on February 1, 20X1. The loan has an annual interest rate of 14%. Rocky Company repaid the loan in full (both principal and interest) on January 31, 20X2; no payments were made on the loan between February 1, 20X1 and January 31, 20X2. [Note: The correct adjusting entry with respect to this loan was recorded on December 31, 20X1.] The single journal entry to record the repayment of the loan (both principal and interest) on January 31, 20X2 includes a
Debit to Interest Expense for $1,283
Credit to Interest Expense for $1,283
Debit to Interest Expense for $1,167
Credit to Interest Expense for $1,167
Debit to Interest Expense for $1,400
Credit to Interest Expense for $1,400
Debit to Interest Payable for $1,283
Credit to Interest Payable for $1,283
16.
On June 1, 20X1, MaScare Company paid $3,600 for an insurance policy on some equipment that will be in effect for the 12 months from June 1, 20X1 through May 31, 20X2. MaScare recorded this payment on June 1 by debiting Insurance Expense. On September 1, 20X1, MaScare paid an additional $4,800 for an insurance policy on a building that will be in effect for the 12 months from September 1, 20X1 through August 31, 20X2. MaScare recorded this payment on September 1 by debiting Prepaid Insurance. On December 31, 20X1, MaScare makes one summary adjusting entry to make sure that the amount of Insurance Expense for 20X1 and the Prepaid Insurance amount as of December 31, 20X1 are both correct. The necessary summary adjusting entry includes a
Debit to Insurance Expense of $1,500
Debit to Insurance Expense of $100
Debit to Insurance Expense of $2,100
Debit to Insurance Expense of $1,600
17.
The following information is for Yosef Company:
20X2
20X1
Sales
$260,000
$320,000
Accounts Payable
10,000
20,000
Retained Earnings
125,000
78,000
Inventory
40,000
50,000
Accounts Receivable
25,000
20,000
Cost of Goods Sold
180,000
200,000
For 20X2, compute the average number of days that elapse from the time Yosef purchases
inventory until the time Yosef sells that inventory.
59.7 days
122.9 days
32.2 days
91.3 days
105.2 days
Use the following information to answer the following 5 questions. XYZ Company Balance Sheet as of December 31, 20X7 & 20X8
ASSETS:
20X7
20X8
Current assets:
Cash
$10,000
$12,000
Accounts receivable
20,000
25,000
Inventory
16,000
24,000
Prepaid insurance
4,000
3,000
50,000
64,000
Property & equipment
76,000
84,000
Total assets
$126,000
$148,000
LIABILITIES AND STOCKHOLDERS EQUITY:
Current liabilities:
Accounts payable
$15,000
$17,000
Other payables
3,000
7,000
18,000
24,000
Long term notes payable
35,000
40,000
Total liabilities
53,000
64,000
Stockholder's equity
Capital stock, 2,400 shares outstanding
24,000
24,000
Retained earnings
49,000
60,000
73,000
84,000
Total liabilities and stockholders equity
$126,000
$148,000
XYZ Company Income Statement for the years ended December 31, 20X7 & 20X8
20X7
20X8
Sales revenues
$200,000
$250,000
Cost of goods sold
120,000
140,000
80,000
110,000
Selling and admin. expenses
40,000
65,000
40,000
65,000
Income tax expense
15,000
25,000
Net income
$25,000
$40,000
Dividends paid in 20X8 amounted to $29,000. Calculate the 12/31/X8 current ratio (round to
nearest tenth).
18.
Calculate the 12/31/X8 current ratio (round to nearest tenth).
1.5
2.7
2.5
.5
none of the above
19.
Calculate the 20X8 accounts receivable turnover assuming all sales during the year are made on account (round to the nearest tenth).
8.9
10.0
11.1
12.5
none of the above
20.
Calculate the 20X8 average number of days of inventory on hand (round to the nearest tenth of a day).
7.0
52.1
56.2
62.6
21.
Calculate the 20X8 EPS (round to nearest penny).
$25.00
$10.42
$4.58
$16.67
none of the above
22.
Calculate the % increase in accounts receivable during the year ended 20X8.
10%
20%
50%
125%
none of the above
23.
Which of the following best measures a company's liquidity?
vertical analysis of the income statement
debt to equity ratio
acid-test ratio
book value per share
24.
A companys P/E ratio
is calculated by dividing the companys book value per share by its EPS.
measures a companys leverage.
measures a companys liquidity.
is used to measure a companys stock price relative to its earnings.
is rarely used by value oriented investors.
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