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1) The internal rate of return method differs from the net present value method in that it
results in finding the ___________________ of the potential investment.
2) 1>Picket Industries had 300,000 common shares and 10,000 preferred shares
outstanding throughout 2014. The preferred stock is not cumulative and received
dividends of $40,000 for the year. If net income was $280,000, earnings per share
equals:
$.
2>Powder Corporation declared, but had not yet paid, dividends on the 10,000 shares of
6%, $10 par value cumulative preferred stock it had outstanding for the year. The
weighted average number of common shares outstanding and net income for the year
were 50,000 shares and $90,000, respectively. Earnings per share equals:
$.
3) Trent Divisions operating results include:
Controllable margin, $300,000
Sales revenue, $2,400,000
Operating assets, $1,000,000
Trent is considering a project with sales of $240,000, expenses of $168,000, and an
investment of $360,000. Trent required rate of return is 15%.
Instructions
Determine whether Trent should accept this project.
4) On January 1, Chan & Chan, CPAs received a $15,000 cash retainer for accounting
services to be rendered ratably over the next 3 months. The full amount was credited to
the liability account Unearned Service Revenue. Assuming that the revenue is
recognized equally over the 3-month period, what adjusting journal entry should be
made at January 31?
5) For each of the following, determine the missing amounts.
Sales Cost of GrossOperatingNet
RevenueGoods Sold_Profit ExpensesIncome
1>$100,000_______________$30,000$12,000
2>________$135,000$125,000_______$80,000
6) Aire Corporation reports the following selected financial statement information at
December 31, 2014:
Total Assets$120,000
Total Liabilities75,000
Net Income20,000
Interest Revenue1,600
Interest Expense800
Income Tax Expense400
Instructions
Calculate the debt to assets and times interest earned ratios.
7) Exercising good judgment in performing the managerial functions and choosing
among alternative courses of action is called ______________.
8) Free _______________ equals cash provided by operations less capital expenditures
and cash dividends.
9) If accounts receivable increase during a period, revenues on an accrual basis are
______________ than revenues on a cash basis.
10) In developing an accounting information system, it is important to establish
procedures whereby all transactions that affect the components of the accounting
equation are recorded. Why then, is it often necessary to adjust the accounts before
financial statements are prepared even in a properly designed accounting system?
Identify the major types of adjustments that are frequently made and give a specific
example of each.
