1) Airtex Company budgeted the following credit sales during the current year:
September, $90,000; October, $123,000; November, $105,000; December, $111,000.
Experience has shown that cash from credit sales is received as follows: 10% in the
month of sale, 50% in the first month after sale, 35% in the second month after sale,
and 5% is uncollectible. How much cash should Airtex Company expect to collect in
November from all current and past credit sales?
2) Clarity Corporation had the following transactions involving investments in trading
securities during the year. Prior to these transactions, Clarity had never had any
investments in trading securities. Prepare the required general journal entries to record
these transactions.
3) Identify and describe three common tools of financial statement analysis.
4) Selected information from Michaels Company’s flexible budget is presented below:
Michaels Company applies overhead to production at a rate of $31.25 per unit based on
a normal operating level of 80% of capacity. For the current period, Michaels Company
produced 5,400 units and incurred $62,000 of fixed overhead costs and $96,000 of
variable overhead costs. The company used 11,000 labor hours to produce the 5,400
units. Calculate the variable overhead spending and efficiency variances, and the fixed
overhead spending and volume variances. Indicate whether each variance is favorable
or unfavorable.
Variable overhead
5) The document the purchasing department sends to the vendor that is used to place an
order is the _________________________.
6) The three general categories of accounts in a general ledger are
_________________, ________________, and _________________________.
7) A company purchased office equipment for $4,300 by trading in old equipment with
a cost of $2,000 and that had accumulated depreciation of $1,900 as of the exchange
date. The company received a $75 trade-in allowance for the old equipment with the
balance of $4,225 paid in cash. Prepare the journal entry to record the exchange,
assuming the transaction had commercial substance.
8) The debt ratio, the equity ratio, pledged assets to secured liabilities, and times
interest earned are all ___________________ ratios.
9) ____________________ is the process of monitoring plans and evaluating an
organization’s activities and employees.
10) During the current year, a company acquired a new computer with a cash price of
$12,800 by exchanging an old one on which the company received a $1,500 trade-in
allowance (with the balance of $11,300 paid in cash). The old computer cost $9,000 and
its accumulated depreciation was $5,500 as of the exchange date. Assuming the
exchange transaction had commercial substance, prepare the journal entry to record the
exchange.