1) Pepperdine reported net sales of $8,600 million, net income of $126 million and
average accounts receivable of $890 million. Its accounts receivable turnover is:
A.37.8.
B.9.7.
C.68.3.
D.7.1.
E.51.7.
2) The F. Mercury, Capital account has a credit balance of $37,000 before closing
entries are made. Total revenues for the period are $55,200, total expenses are $39,800,
and withdrawals are $9,000. What is the correct closing entry for the expense accounts?
A.Debit Income Summary $39,800; credit Expense accounts $39,800.
B.Debit Expense accounts $37,000; credit F. Mercury, Capital $37,000.
C.Credit Expense accounts $39,800; debit F. Mercury, Capital $39,800.
D.Debit Expense accounts $39,800; credit Income Summary $39,800.
E.Debit Income Summary $39,800; credit F. Mercury Capital $39,800.
3) Salmone Company reported the following purchases and sales of its only product.
Salmone uses a perpetual inventory system. Determine the cost assigned to ending
inventory using LIFO.
A.$2,260
B.$3,180
C.$1,860
D.$3,580
E.$2,100
4) Calculating return on investment for an investment center is defined by the following
formula:
A.Contribution margin/Ending assets.
B.Gross profit/Ending assets.
C.Net income/Ending assets.
D.Income/Average invested assets.
E.Contribution margin/Average invested assets.
5) Three of the most common tools of financial analysis are:
A.Financial reporting, ratio analysis, vertical analysis.
B.Ratio analysis, horizontal analysis, financial reporting.
C.Horizontal analysis, vertical analysis, ratio analysis.
D.Trend analysis, financial reporting, ratio analysis.
E.Vertical analysis, political analysis, horizontal analysis.
6) Jordan Co. uses the allowance method of accounting for uncollectible accounts.
Jordan Co. accepted a $5,000, 12%, 90-day note dated May 16, from Beckam Co. in
exchange for its past-due account receivable. Make the necessary general journal
entries for Jordan Co. on May 16 and the August 14 maturity date, assuming that the:
a. Note is held until maturity and collected in full at that time.
b. Note is dishonored; the amount of the note and its interest are written off as
uncollectible.
7) Wichita Industries’ sales are 10% for cash and 90% on credit. Credit sales are
collected as follows: 30% in the month of sale, 50% in the next month, and 20% in the
following month. On December 31, the accounts receivable balance includes $12,000
from November sales and $42,000 from December sales. Assume that total sales for
January and February are budgeted to be $50,000 and $100,000, respectively. What are
the expected cash receipts for February from current and past sales?
A.$80,500.
B.$71,500.
C.$34,500.
D.$61,500.
E.$59,500.
8) Maxim manufactures a hamster food product called Green Health. Maxim currently
has 10,000 bags of Green Health on hand. The variable production costs per bag are
$1.80 and total fixed costs are $10,000. The hamster food can be sold as it is for $9.00
per bag or be processed further into Premium Green and Green Deluxe at an additional
$2,000 cost. The additional processing will yield 10,000 bags of Premium Green and
3,000 bags of Green Deluxe, which can be sold for $8 and $6 per bag, respectively. The
net advantage (incremental income) of processing Green Health further into Premium
Green and Green Deluxe would be:
A.$98,000.
B.$96,000.
C.$8,000.
D.$6,000.
E.$2,000.
9) Cox, North, and Lee form a partnership. Cox contributes $180,000, North contributes
$150,000, and Lee contributes $270,000. Their partnership agreement calls for the
income or loss division to be based on the ratio of capital invested. If the partnership
reports income of $150,000 for its first year, what amount of income is credited to Lee’s
capital account?
A.$50,000.
B.$67,500.
C.$45,000.
D.$54,000.
E.$60,000.
10) A company’s December 31 work sheet for the current period appears below. Based
on the information provided, what is net income for the current period?
A.$1,400.
B.$1,855.
C.$1,905.
D.$2,060.
E.$4,670.
11) Madison Corporation purchased 40% of Jay Corporation for $125,000 on January 1.
On June 20 of the same year, Jay Corporation declared total cash dividends of $30,000.
At year-end, Jay Corporation reported net income of $150,000. The balance in Madison
Corporation’s Long-Term Investment-Jay Corporation account as of December 31
should be:
A.$77,000.
B.$125,000.
C.$173,000.
D.$197,000.
E.$370,000.
12) The statement of cash flows helps analysts evaluate all but which of the following?
A.Ability of the company to generate profit.
B.Source of cash used for plant expansion.
C.Differences between net income and net operating cash flow.
D.Source of cash used to finance investing activities.
E.Source of cash used for debt repayments.
13) Use the financial data shown below to calculate the following ratios for the current
year:
(a) Current ratio.
(b) Acid-test ratio.
(c) Accounts receivable turnover.
(d) Days’ sales uncollected.
(e) Inventory turnover.
(f) Days’ sales in inventory.
14) ___________________ is the process of setting goals and making plans to achieve
them.
15) Glade, Marker, and Walters are partners with beginning-year capital balances of
$250,000, $150,000, and $100,000, respectively. Partnership net income for the year is
$192,000. Make the necessary journal entry to close Income Summary to the capital
accounts if partners agree to divide income based on their beginning-year capital
balances.
16) Bagger, Inc. uses a process costing system. The following operating and cost data
occurred during October:
Materials are added at the beginning of the process. Direct labor and overhead are
incurred evenly throughout the process. Prepare the October process cost summary
assuming the weighted average method of inventory costing.
17) The four building blocks of financial analysis are (1) _____________, (2)
____________, (3) ____________, and (4) _________________.
18) Zenith Company’s Merchandise Inventory account at the end of year 2015 has a
balance of $91,820, but a physical count reveals that only $90,450 of inventory exists.
The adjusting entry to record this $1,370 of inventory shrinkage is: