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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.