FE 367 Midterm | Course Paper

Unlock access to all the studying documents.

View Full Document

The solution to this problem requires time value of money calculations. Reference to

Tables 9-1 through 9-4 in the text is necessary to complete the calculations.

If Garrett has $5,000 per year to invest for 10 years and wants to accumulate $87,745 at

the end of that time, he must find an investment that is earning at a rate of

a.6%

b.15%

c.12%

d.11%

For the following items Questions 220-227, indicate whether each should be (a)

included or (b) excluded from the line item titled Cash and cash equivalents on the

balance sheet.

a.Included

b.Excluded

Certified check

Kingston Company’s accounts receivable turned over nine times during the year. This

translates into strict adherence of the company’s net/30 credit terms by Kingston’s

customers.

a.True

b.False

Given the following list of methods of depreciation, select the method that is best for

the situation or purpose given. Some answers may be used more than once, while others

may not be used at all.

a.Straight-line

b.Units-of-production

c.Double-declining-balance

d.MACRS

This method minimizes taxable income (early in the asset’s life)

Long-term assets are $5,000, current liabilities are $700, and long-term liabilities are

$3,000. If the current ratio is 3 to 1, then current assets are

a. $4,300

b. $2,100

c. $9,000

d. $6,900

Listed below are selected accounts from the financial statements of Bargain Mart for

the year ended December

31, 2014. In the blank space provided for each account, indicate what type of account it

is, its normal balance, and the debit/credit rules for increasing and decreasing it. Use the

following abbreviations for your answers:

Type of Account Normal Account Balance Rules to Increase or Decrease the Account

A = Asset Dr = Debit Dr = Debit

L = Liability Cr = Credit Cr = Credit

SE = Stockholders’ Equity

R = Revenue

E = Expense

Example: Cash Type of Account A Normal Balance Dr Rule to Increase Dr Rule to

Decrease Cr

(a) Income Taxes _______ _______ _______ _______

(b) Accounts Payable _______ _______ _______ _______

(d) Prepaid Expenses _______ _______ _______ _______

(e) Sales Revenues _______ _______ _______ _______

(f) Long-term Debt _______ _______ _______ _______

(g) Intangibles _______ _______ _______ _______

(h) Common Stock _______ _______ _______ _______

Flannery Company uses a worksheet to prepare its statement of cash flows. The

company also uses the indirect method for the Operating Activities section of its

statement. For each of the following changes in the balance sheet, indicate what activity

it affects and whether it is an addition or deduction.

a.Deducted from Operating activity

b.Added to Operating activity

c.Deducted from Investing activity

d.Added to Investing activity

e.Deducted from Financing activity

f.Added to Financing activity

Accounts payable decreased

From the following choices, select the answer that describes the effect on working

capital as a result of the transaction.

a.Working capital will increase

b.Working capital will decrease

c.Working capital will not change

Paid cash for supplies

Refer to the data for Benton Corporation.

If the aging approach is used to estimate bad debts, what amount should be recorded as

bad debt expense for 2015?

a. $ 2,900

b. $11,500

c. $23,500

d. $26,900

A company has $200 in cash, $500 in accounts receivable, and $700 in inventory. If

current liabilities are $400, then the current ratio would be

a.1.75 to 1

b.3.50 to 1

c.2.25 to 1

d.3.00 to 1