The following information is available from the annual reports of Reser Company and
Trent Company
Instructions
(a)Based on the preceding information, compute the following values for each
company:
1)Asset turnover ratio
2)Return on assets
(b)What conclusion concerning the management of plant assets can be drawn from
these data?
All of the following are qualities of useful information except
a.faithful representation.
b.materiality.
c.relevance.
d.flexibility.
Charlene Cosmetics Company just began business and made the following four
inventory purchases in June:
A physical count of merchandise inventory on June 30 reveals that there are 210 units
on hand. Using the average cost method, the amount allocated to the ending inventory
on June 30 is
a.$1,229
b.$1,368
c.$1,323
d.$1,260
Gibson Company recorded the following cash transactions for the year:
Paid $180,000 for salaries.
Paid $80,000 to purchase office equipment.
Paid $20,000 for utilities.
Paid $8,000 in dividends.
Collected $310,000 from customers.
What was Gibson’s net cash provided by operating activities?
a.$110,000
b.$30,000
c.$130,000
d.$102,000
Redeker Company had the following records:
What is Redeker’s average days in inventory for 2014? (rounded)
a.67.6 days
b.66.4 days
c.68.9 days
d.68.25 days
A retail store credited the Sales Revenue account for the sales price and the amount of
sales tax on sales. If the sales tax rate is 5% and the balance in the Sales Revenue
account amounted to $420,000, what is the amount of the sales taxes owed to the taxing
agency?
a.$400,000
b.$420,000
c.$21,000
d.$20,000
Which sales accounts normally have a debit balance?
a.Sales Discounts
b.Sales Returns and Allowances.
c.Both Sales Discounts and Sales Returns and Allowances have debit balances.
d.Neither Sales Discounts or Sales Returns and Allowances have debit balances.
Tony’s Market recorded the following events involving a recent purchase of inventory:
Received goods for $40,000, terms 2/10, n/30.
Returned $800 of the shipment for credit.
Paid $200 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company’s inventory
a.increased by $38,416
b.increased by $39,400
c.increased by $38,612
d.increased by $38,616
A company purchased factory equipment on June 1, 2014, for $96,000. It is estimated
that the equipment will have a $6,000 salvage value at the end of its 10-year useful life.
Using the straight-line method of depreciation, the amount to be recorded as
depreciation expense at December 31, 2014, is
a.$9,000.
b.$5,250.
c.$4,500.
d.$3,750.
Which one of the following is not a reason that a company may sell it receivables?
a.The amount due from customers is relatively large compared to other assets owned by
a company.
b.A company determines it will be unable to collect all amounts due from customers.
c.Selling receivables is a reasonable source of cash, often less costly than loans.
d.Billing and collecting amounts due from customers is time-consuming and costly.
Dole Industries had the following inventory transactions occur during 2014:
The company sold 204 units at $126 each and has a tax rate of 30%. Assuming that a
periodic inventory system is used, what is the company’s gross profit using LIFO?
(rounded to whole dollars)
a.$19,528
b.$18,920
c.$6,784
d.$6,176
Bonds with a face value of $300,000 and a quoted price of 97¼ have a selling price of
a.$291,750.
b.$291,075.
c.$291,006.
d.$292,500.