1) At the end of the first year of operations, the balance sheet of West Palm Beach
Industries had the following balances: Accounts Receivable, $5,000; Accounts Payable,
$6,000; Inventory, $3,000; and Unexpired Insurance, $2,000. The corporation reported
net income of $79,000 for the year, including depreciation expense of $5,000, and uses
the indirect method of computing net cash flow from operating activities. Based on this
information, net cash flow from operating activities is:
A.$82,000
B.$78,000
C.$80,000
D.$77,000
2) Which of the following statements with regard to large stock dividends is true?
A.As a result of the stock dividend, retained earnings is reduced by the par value of the
stock issued
B.Retained earnings is reduced by the market value of the stock issued in the stock
dividend
C.If the market price of the stock before a 50% stock dividend is $30, after the stock
dividend it will be $45
D.As the result of a 50% stock dividend, a stockholder who had previously held 20
shares will then hold 40 shares
3) Earnings per share is an indication of how much
A.the company paid as dividends for each share of stock held by stockholders.
B.the company earned for each share of outstanding common and preferred stock.
C.the company earned for each share of outstanding common stock.
D.cash the company has for each share of all outstanding stock.
4) If a company purchases $3,200 worth of inventory with terms of 2/10, n/30 on March
3 and pays April 2, then the amount paid to the seller would be
A.$3,136
B.$3,150
C.$3,168
D.$3,200
5) 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.
Marti and Sue want to buy a house in 4 years. If the house will cost $180,000, how
much must they deposit at the end of every year for the next 4 years at 5% compounded
annually in order to buy the house?
A.$32,040
B.$36,990
C.$41,763
D.$45,000
6) Spirit Corp. reported net sales (all on credit) of $1,600,000 and cost of goods sold of
$1,100,000 for 2014. Its beginning balance of Accounts Receivable was $150,000. The
accounts receivable balance decreased by $10,000 during 2014. Rounded to two
decimal places, what is Spirits accounts receivable turnover rate for 2014?
A.7.59
B.10.32
C.10.67
D.11.03
7) Presented below are items from Joplin Shoes statement of cash flows for 2014.
A) Determine whether Joplin Shoes cash increased or decreased during the year.
B) How much cash does Joplin Shoes have at the end of 2014?
C) What is the purpose of the statement of cash flows?
8) Chens Department Store
Chens Department Store is a merchandising company that uses the periodic inventory
system. Selected account balances are listed below:
Refer to the account information for Chens Department Store.
Determine Chens gross profit.
A.$68,000
B.$72,000
C.$78,000
D.$85,000
9) Satin Corporation
The data presented below is for Satin Corporation for the year ended December 31,
2014.
Refer to the data for Satin Corporation
If Satin uses the aging of accounts receivable approach to estimate its bad debts, what
amount will be reported as bad debt expense for 2014?
A.$28,000
B.$31,000
C.$34,000
D.$50,000
10) Which one of the following items would be subtracted from the balance per books
in a bank reconciliation
A.Outstanding checks
B.Deposit in transit
C.Service charges
D.Interest on customer note
11) Under the ____________________ method, the amount of cash paid to suppliers of
inventory is shown as a deduction in the operating activities category of the cash flow
statement.
12) When a weighted average cost assumption is applied with a perpetual system, it is
sometimes
called a __________________.
13) On September 1, 2014, Flavorful Corp. accepted a six-month, 6%, $65,000 interest
bearing note from Reagan Company in payment of an accounts receivable. Flavorfuls
year-end is December 31. Reagan paid the note and interest on the due date.
REQUIRED:
1> Who is the maker and who is the payee of the note?
2> What is the maturity date of the note?
3> Identify and analyze the effects of the transactions for Flavorful Corp. in connection
with this note.
14) Learning Tree, Inc.
The following data is available for one of the products sold by Learning Tree, Inc.,
which uses the perpetual inventory system:
Refer to the data for Learning Tree, Inc.
If the LIFO method is used, what is the amount assigned to the ending inventory on
May 30?
15) River Company wants to minimize the amount of time and effort its bookkeepers
spend on calculating depreciation. Since River has not been profitable, taxes are not an
issue, but maximizing the profit and minimizing reported losses are major concerns.
Recommend a course of action for River. Support your recommendation.
16) ______________________________________ is a line item on the income
statement to reflect the net income or loss of a discontinued business segment as well as
any gain or loss incurred from its disposal.
17) Can a company use the direct write-off method rather than the allowance method to
account for bad debts expense? Explain why or why not.
18) Under the ____________________ inventory system, the inventory account is
updated after each purchase or sale.
19) The accounts receivable turnover ratio is computed by dividing ____________ by
average accounts receivable.
20) Canal Industries has an intangible asset is being amortized over a ten-year time
period. However, a competitor has just introduced a new product that will have a
serious negative impact on the assets value. Should the company continue to amortize
the intangible asset over the ten-year life? Explain.