Question1. In the year 20X1, the Afarian Companys cash receipts were $186,000 and its cash expenditures were $181,000. It reported 20X1 net income of $32,000 and total expensesof$124,000. What was Afarian Corporations revenues for 20X1?
(a) $5,000
(b) $62,000
(c) 156,000
(d) $186,000
(e) $213,000
2. The office manager at the Gallego Pediatric Clinic is reconciling its bank statement to its accounting records. The accounting records show a balance of $18,674 as of 6/30/20X3. The office manager has the following information:
*deposits in transit were $2,000
*outstanding checks totaled $2,500
*bank service charges were $75
*NSF check for $500 was included with the bank statement.
The clinics reconciled true balance as of 6/30/20X3 is:
(a) $17,099
(b) $18,099
(c) $19,174
(d) $18,174
3. On 01/01/20X1, the Stewart and Sole Company bought a truck with an estimated
useful life of 8 years for $80,000. Its estimated salvage value at the end of its useful life
is $8,000. At what amount should the truck be reported on the balance sheet of year
20X3 (make any assumptions you need)? [no commas or dollar signs]
4. On Dec 15, 20X1, Mid-Atlantic Medical Corporation (MAMC) properly recorded the
declaration of cash dividends of $5,000,000 to be paid to stockholders of record Jan 15,
20X2. What is the effect of the payment of these dividends in 20X2 on MAMCs assets,
liabilities, equity, and income?
Assets: Increase, Decrease, No Effect. ____________________
Liabilities: Increase, Decrease, No Effect. _________________
Equity: Increase, Decrease, No Effect. _________________
Income: Increase, Decrease, No Effect. _____________________
5. The Lisa Hausch Company sells 200,000 of its $0.50 par value common shares for $25 per share. Which of the following journal entries should the firm make to record this issue?
(a)Debit cash $5,000,000; credit common stock $100,000; credit retained earnings
$4,900,000
(b)Debit cash $5,000,000; credit common stock $1,000,000; credit additional paid-In
capital $4,000,000
(c)Debit cash $5,000,000; credit common stock $100,000; credit additional paid-In
capital $4,900,000
(d)Credit cash $5,000,000; debit common stock $100,000; debit additional paid-In capital
$4,900,000
6.Here is the accounts receivable as presented on the Mallow Corporations 20X9 balance
sheet.
12/31/X9 $173,200
12/31/X8 $236,400
Accounts receivable, less allowance for bad debts of $9,500 and $17,900 for X9 & X8
respectively
Mallow wrote off $10,650 of receivables as bad debts during 20X9. What amount of bad
debt expense was recognized for the year 20X9?
Answer:____________________ [no commas or dollar signs]
7. The Aisha Sparks Company experienced an accounting event that affected its financial
statements as indicated below:
Assets-Liabilities-Equity-RevenueNAExpenses+Income-Cash Flow-FA -OA
Which of the following accounting events could have caused these effects on Sparks
statements?
A. paid interest and principal on loan
B. borrowed funds through a line of credit
C. paid interest on bonds
D. repaid principal on bonds at maturity
8. The following is the Crawford & Afrasiabi Restaurant Corporations 20X0 balance
sheet.
Cash3,850
Accounts receivable5,150
Inventory10,150
Plant and equipment, net of depreciation19,500
Land11,600
Total assets50,250
Accounts payable2,310
Salaries payable9,040
Bonds payable (due 20X8)8,400
Capital stock no par15,800
Retained earnings14,700
Total liabilities + stockholders equity50,250
The company's debt to equity ratio is nearest to:
A. 28%
B. 53%
C. 65%
D. 125%
9. Which of the following is not normally a preference given to the holders of preferred
stock?
A. The right to vote before the common stockholders at the corporation's annual meeting.
B. The right to receive a specified amount of dividends prior to any being paid to
common stockholders.
C. The right to receive preference over common stockholders in the distribution of assets
during a liquidation process.
D. The right to receive preference over bondholders in bankruptcy proceedings.
10. Ravi Vij and Peter Yerkovich started a partnership on January 1, 2012. Vij invested
$25,000in the business, and Yerkovich invested $20,000. The partnership agreement
stated that profits would be divided between the partners based on their initial investment
in the partnership. The businesss net income for the year was $36,000. During the year,
Mr. Vij withdrew $8,000, andMr. Yerkovich withdrew $6,000. The balances in the
partners' accounts at the end of 2012 werechoice:
A $42,000$37,000
B $17,000$33,500
C $24,000$30,000
D $14,000$33,500
(a) Choice A
(b) Choice B
(c) Choice C
(d) Choice D
11. The Shah and Seigle Company sold merchandise costing $1,600 for $2,500 cash. All
of the merchandise was later returned by the customer. If the perpetual inventory method
is used, what effect will the sales return have on the accounting equation?
A. Total assets and total equity increase by $900.
B. Total assets increase by $1,600 and total equity is decreased by $900.
C. Total assets increase by $1,600 and total equity decrease by $2,500.
D. Total assets and total equity decrease by $900.
12. The Rizvi and Plaskett Corporation paid $150,000 for a purchase that included land,
building, and office equipment and furniture. An appraiser provided the following
estimates of the market values of the assets if they had been purchased separately:
Land: $20,000
Building: $120,000
Office equipment and furniture: $60,000
Based on this information the annual straight line depreciation on the office furniture
(estimated life 3 years, salvage value zero)would be
A. $17,500.
B. $20,000.
C. $25,000.
D. $15,000.
13. On Sept 1, 20X1, the Walter Peters Corporation (WPC) signed a 10 year, $75,000
promissory note at 6% interest, with interest being paid every 6 months. On its 20X1
annual financials, because of this debt, WPC will report:
(a) interest expense of $4,500 & interest payable of $4,500
(b) interest expense of $2,250 & cash payment of $2,250
(c) interest expense of $2,250 & cash receipts of $2,250
(d) interest expense of $3,000 & interest payable of $3,000
(e) interest expense of $1,500 & interest payable of $1,500
16. Sikka Company experienced a transaction that had the following effect on the
financial statements:
Which transaction would have this effect?
A. Freight-in cost incurred; payment to be made in 30 days
B. Return to a supplier of merchandise that was purchased on account
C. Return by a customer of a sale that was made on account
D. A loss on land that was sold for cash
18. During the month of January, the Pratt & Wallace Corporations assets increased by
$100and its liabilities increased by $50. If it paid dividends of $20 in January and it had
no othertransactions with owners, what was its net income for the month? [Hint: Use the
balance sheetequation to calculate the change in equity.]
(a) $20
(b) 50
(c) $70
(d) $80
19. During Dec 20X5, the balance in the supplies inventory account increased by $32,000
atthe Shawn Sarin Clinic. $125,000 of supplies were purchased during the month.
Supplies consumed in December were $[no commas or $ signs]
20. The Smith and Branch Medical Labs Corporation provides a 3 year warranty on the
infusion pumps it sells. When will the cost of a warranty appear on its cash flow
statement?
A. When there is a settlement of a warranty claim made by a customer.
B. When the warranty obligation is recognized.
C. When merchandise is sold.
D. Are you crazy? Its none of these.
21. If the firm of Shah and Bell has a high current ratio but a low acid-test ratio, one can
conclude that:
A. the company has a large outstanding accounts receivable balance.
B. the company has a large investment in inventory.
C. the company has a large amount of current liabilities.
D. the company's financial leverage is very high.
22.
The Franco Corporation had net income of $3,000,000. Depreciation was $500,000,
purchases of plant assets were $250,000, and disposals of plant assets with net book value
of$100,000 resulted in a $60,000 gain. Stock was issued in exchange for an outstanding
note payable of $125,000. Accounts receivable decreased by $25,000. Accounts payable
decreased by $40,000. Dividends of $30,000 were paid to shareholders. Franco had
interest expense of$5,000.
How much was Francos net cash flow from investing activities?
Answer:__________ [no dollar signs or commas]
24. Du Pont analysis analyzes the ROA into two multiplicative ratios. Calculate the
values for those ratios for 20X1. Fill in the values below. Express as 3 decimal digits
without rounding.
(a) Name of ratio: Calculated value of ratio:
(b) Name of ratio: Calculated value of ratio:________________