Question 1
"Week 2 I)Frontier Park was started on April 1 by C.J Mendez and associates. The following selected events and transactions occurred during April. April 1 Stockholders invested $40,000 cash in the business in exchange for common stock. 4 Purchased land costing $30,000 for cash. 8 Incurred advertising expense of $1,800 on account. 11 Paid salaries to employee $1,500. 12 Hired park manager at a salary of $4,000 per month, effective May 1. 13 Paid $1,500 cash for a one ?year insurance policy. 17 Declared and paid a $1,000 cash dividend. 20 Received $5,700 in cash for admission fees. 25 Sold 100 coupon books for $25 each.Each book contains 10 coupons that entitle the holder to 1 admission per park. 30 Received $8,900 in cash admission fees. 30 Paid $900 on balance owed for advertisiing incurred on April 8. Mendez uses the following account: Cash;Prepaid Insurance;Land;Accounts payable;Unearned Admissions Revenue; Common Stock;Dividends; Admission Revenue; Advertising Expense; and Salaries Expense. II) Jane Kent is a Licensed CPA. During the first month of operations of her business, Jane Kent Inc, the following events and transactions occurred. May 1 Stockholders invested $25,000 cash in exchange for comon stock. 2 Hired a secretary-receptionist at a salary of $2,000 per month. 3 Purchased $2,500 of supplies on acount from Read Supply Company. 7 Paid office rent of $900 cash for the month. 11 Completed a tax assignment and billed client $2,100 for services provided. 12 Received $3,500 advance on a management consulting engagement . 17 Received cash of $1,200 for services completed for H. Arnold Co. 31 Paid Secretary-receptionist $2,000 salry for the month. 31 Paid 40% of balance due Read Supply Company. Jane uses the following chart accounts: No. 101 Cash, Mo. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 205 Unearned Revenue, No.311 Common Stock, No. 400 Service Revenue, no. 726 Salaries Expense, and No. 729, Rent Expense. Instructions (a) Journalize the transactions. (b) Post to the lefger accounts (c) Prepare a trial balance on May 31,2008. III)Tony Masasi started his own consulting firm, Masasi Company, Inc, on June 1 2008.The trial balance at June 30 is shown on page 129. MASASI COMPANY, INC Trial Balance June 30,2008 Account Number Debit Credit 101 Cash 7,150 112 Accounts Receivable 6000 126 Supplies 2000 130 Prepaid Insurance 3000 157 Office Equipent 15000 201 Accounts Payable 4500 209 Unearned Revenue 4000 311 Common Stock 21750 400 Service Revenue 7900 726 Salaries Expense 4000 729 Rent Expense 1000 38,150 38,150 In addition to those accounts listed on the trial balance , the chart of accounts for Masasi Company, Inc. also contains the following account numbers: No. 158 Accumulated Depreciation ?Office Equipment, No. 212 Salaries Payable, No. 631 Supplies Expense, No. 711 Depreciation Expense, no 722 Insurance Expense, and No. 732 Utilities Expense. Other Data: 1. Supplies on hand at June 30 are $600 2. A utility I bill for 4150 has not been recorded and will not be paid until next month. 3. The Insurance policy is for a year. 4. $2,500 of unearned service revenue has been earned at the end of the month. 5. Salaries of $2,000 are accrued at June 30. 6. The office equipment has 5-year life with no slavage value. It is being deperciated at $250 per month for 60 moths. 7. Invoicees representing $1,000 of services performed during the month have been recorded as of June 30. Instructions a)Prepare the adjusting entries for the month of June. Use J3 as the page number for your journal. b) Post the adjusting entries to the ledger accounts. Enter the total from the trial balane as beginning account balances and place a check mark in the posting reference clumn c)Prepare an adjusted trial balance at June 30,2008. IV) NEOSHO RIVER RESORT, INC. Trial Balance August 31,2008 Account Number Debit Credit 101 Cash $19,600 126 Supplies 3330 130 Prepaid Insurance 6000 140 Land 25000 143 Cottages 125000 149 Furniture 26000 201 Accounts Payable $6,500 208 Unearned Rent 7400 275 Mortgage Payable 80000 311 Common Stock 100000 332 Dividends 5000 429 Rent Revenue 80000 622 Repair Expense 3600 726 Salaries Expense 51000 732 Utilities Expense 9400 273,900 273,900 In addition to those accounts listed on the trial balance, the chart of accounts for Neosho River Resort also contains the following accounts and account numbers: No.112 Accounts Receivable, No. 144 Accumulated Depreciation-Cottages, no. 150 accumulated Depreciation-Furniture, No.212 Salaries payable, No 230 Interest Payable, No. 320 Retained Earnings, No.620 Depreciation Expense-Cottages No. 621 Depreciation Expense-Furniture , No.631 Supplies Expense , No 718 Interest Expense, and No. 722 Insurance Expense. Other Data: 1.Insurance expires the rate of $400 per month. 2.A count on August 31 shows $600 of supplies on hand. 3.Annual depreciation is $6,000 on cottages and $2400 on furniture 4.Uneraned rent of $4100 was earned prior to august 31. 5.Salaries of $400 were unpaid at August 31.(Use Accounts Receivable.) 7.The mortagage interest rate is 9% per year(The mortgage was taken out on august 1.) Instructions (a) Journalize the adjusting entries onaugust 31 for the 3-month period June 1-August 31 (b) Prepare a ledger using the three-column form of account. Enter the trial balance amounts and post the adjusting entries (Use J1 as the posting reference) (c) Prepare an adjusted trial balance on August 31. (d) Prepare an income statement and retained earnings statement for the 3 months ending August 31 and a balance sheet as of August 31. Week 3 1)Thomas Magnum began operations as a private investigator on January 1, 2008 . The trail balance columns of the worksheet for Thomas Magnum, P.I at March 31 are as follows. THOMAS MAGNUM, P.I., INC Work Sheet For the Quarter Ended March 31, 2008 TRIAL BALANCE Account Titles Dr. Cr. 11400 Cash 5620 Accounts Receivable 1050 Supplies 2400 Prepaid Insurance 30000 Equipment Notes Payable 10000 Accounts Payable 12350 Common stock 20000 Dividends 600 Service Revenue 13620 Salaries Expense 2200 Travel Expense 1300 Rent Expense 1200 Miscellaneous Expense 200 55,970 55970 Other data: 1. Supplies on hand total $380. 2. Depreciation is $1,000 per quarter. 3. Interest accrued on 6-month note payable, issued January 1, $300. 4. Insurance expires at the rate of $200 per month. 5. Services provided but unbilled at March 31 total $530. Instructions (a) Enter the trial balance on a worksheet and complete the worksheet. Prepare an income statement and a retained earnings statement for the quarter and classified balance sheet at March 31. Additional common stock was issued during the quarter ended March 31, 2008. (b) Journalize the adjusting entries from the adjustments columns of the worksheet. (c) Journalize the adjusting entries from the adjustments columns of the worksheet. (d) Journalize the closing entries from the financial statement columns of the worksheet. ii) II) The adjusted trial balance columns of the worksheet for Porter Company are as follows. PORTER COMPANY Worksheet For the Year Ended December 31, 2008 Adjusted Trial Balance Account No. Account Titles Dr. Cr. 101 Cash 4400 112 Accounts Receivable 44000 126 Supplies 130 Prepaid Insurance 151 Office Equipment 152 Accumulated Depreciation-Office Equipment 20000 200 Notes Payable 20000 201 Accounts Payable 8000 212 Salaries Payable 2600 230 Interest Payable 1000 311 Common Stock 30000 320 Retained Earnings 6000 332 Dividends 12000 400 Service Revenue 77800 610 Advertising Expense 12,000 631 Supplies Expense 3700 711 Depreciation Expense 8000 722 Insurance Expense 4000 726 Salaries Expense 39000 905 Interest Expense 1000 Totals 165400 165400 Instructions a)Complete the worksheet by extending the balances to the financial statement columns.(Net income $10,100) b)Prepare an income statement, a retained earnings statement, and a classified balance sheet.(Current assets $41700 Current liabilities $21,600). $10,000 of the notes payable become due in 2009.No additional issuance of common stock occurred during 2008. c)Prepare the closing entries. Use JI4 for the journal page. d)Post the closing entries. Use the three column form of account. Income Summary is account No. 350. e)Prepare a post closing-trial balance.(Post ?closing trial balance $85,700). iii)The completed financial statement columns of the worksheet for Woods Company Inc. are shown below: WOODS COMPANY, INC Worksheet For the Year Ended December 31,2008 Income Statement Balance Sheet Account No. Account Titles Dr. Cr. Dr. Cr. 101 Cash 8200 112 Accounts Receivable 7500 130 Prepaid Insurance 1800 157 Equipment 28000 167 Accumulated Depreciation 8600 201 Accounts Payable 11700 212 Salaries payable 3000 311 Common stock 20000 320 Retained Earnings 14000 332 Dividends 400 Service Revenue 44000 7200 622 Repair Expense 5400 711 Depreciation Expense 2800 722 Insurance Expense 1200 726 Salaries Expense 35200 732 Utilities Expense 4000 Totals 48600 44000 52700 57300 Net Loss 4600 4600 48600 48600 57300 57300 Instructions a) Prepare an income statement, a retained earnings statement, and classified balance sheet. No additional common stock was issued during 2008. b) Prepare the closing entries c) Post the closing entries and rule and balance the accounts . Use T accounts, Income Summary is account No.350. d) Prepare a post-closing trial balance.
Question 2
Choose one of these three strategies as a possible proposal for the CEO. Explain and justify your choice by including responses to the Learning Questions in your proposal. Possible Strategies 1. Employees will receive absolutely no raises, and performance management is eliminated throughout the economic crises. Therefore, employee wages will remain the same regardless of position held; no performance reviews are given; and there will be no adjustments of missions, goals, and duties during this period. 2. Performance, as well as revenue, is reviewed every 6 months. This way it allows JVA Corp. to cut or increase pay every 6 months and review its bottom line. Employees can also benefit by having the opportunity to earn pay raises potentially twice a year, rather than the typical annual reviews. 3. Review and make any necessary changes to the guidelines for performance management within JVA Corp. First review the mission and goals for JVA Corp. Then review the requirement of each employee. A review of compensation packages is also necessary, so evaluate commission packages, expenses covered, perks, and necessity of onsite amenities that are currently covered. Based on the costs that have been calculated, a net savings should be evident to allow for major or minor cost savings for JVA Corp. In the midst of calculating ways to save expenses for JVA Corp., don?t forget that your duty as an HR director is to also ensure the well-being of employees. It?s important to also represent the workers while looking out for the interest of the company. The paper should address the appraisal process, performance management systems, ways to make performance management systems more effective, various classifications of rewards, the goal of the compensation administration, and compensation programs. JVA Corporation JVA Corporation, established in 1995, is an international manufacturing firm based in Plano, Texas. JVA Corp. produces wireless technology devices such as cellular phones, walkie-talkies, intercoms, and GPS units. The JVA campus headquarters is an impressive 17-acre facility that includes manufacturing and office space. Employees enjoy the additional amenities of a break room lounge, fully equipped exercise room, kitchen, and cafeteria. In addition to the amenities onsite, employees are offered various discount tickets, discounts on various personal services such as cell phones, gym memberships, home and auto insurance, and JVA Corp. credit cards. JVA Corp. is a private company owned by the founders and private equity investors. JVA boasts 185,000 worldwide employees. Of these, 3,500 are full-time salaried managers, which includes department managers, warehouse managers, logistics managers, human resource managers, security managers, facility managers, and shift supervisors. The rest of the employees are either full time or part time and paid an hourly wage with bonuses based on the number of goods produced and number of goods marketed. Performance Management As we begin this journey into benefits restructuring and employee performance management, let's also consider the various aspects it entails. Performance management is often misunderstood to only mean performance appraisals or performance reviews. In actuality, performance management is a continuous process that consists of three steps: defining acceptable employee performance; facilitating employee performance; and encouraging employee performance. Performance management is accomplished through consistent and timely feedback about employee performance focused on achieving strategic objectives and meeting goals and mission of the organization. Compensation Packages It is often the case that an employee becomes eligible for compensation increases after a certain length of service time. In doing so, more often than not, employees are reviewed based on performance. Thus when an employee's performance is rated highly, then they may be offered additional compensations or compensation in the form of other means rather than monetary. Ultimately, the balancing of these three areas?external market, internal organization, and the individual's profile? is what determines what pay structure is equitable. Shortly after the terrorist attacks of 2001, JVA Corp.'s revenue soared by 60% for the next 5 years and stabilized for the last couple of years until the world faced sudden recession. As many industry businesses suffered and workers lost jobs, JVA Corp. is still in business and has been trying to achieve stability through the shakeup. Since the recent economic hardships, JVA Corp. has suffered from a net loss of $53 billion (17%) in the fiscal year. You have been in the position of HR Director since 1999, so the chief executive officer has full trust in your suggestions and final decisions. The CEO, Katelyn Van Michelson, has entertained the possibility of closing the doors to a few of their international factories, but it is not the preferred course of action. Before JVA Corp. proceeds to make such drastic cuts, you have suggested making some cuts in the compensation area of the company costs and the structure in which performance management was previously conducted. Ms. Van Michelson was intrigued by this idea and asked that you to submit a proposal of the cuts to take place and how those cuts will affect JVA Corp.'s future, as well as its employees. Using your education, expertise, and passion for making changes and improving the well-being of JVA Corp.'s employees, you will prepare a proposal to be reviewed by Ms. Van Michelson within 1 week. She will scrutinize it and thus make a final decision on how to save and preserve the overall profitability of this company. As an HR Director, you will review the cost of all additional compensation programs that JVA Corp. offers, exceeding the current base salaries for employees. The current package includes commissions, bonuses, profit sharing, and travel rewards. Based on the calculation of 150,000 employees within the United States and not counting international locations, JVA Corp. is currently spending 8% of its revenue for additional compensations or perks. Within the 150,000 employees, approximately 35% are eligible for all of those additional perks, and the rest are offered a base salary with no option for additional compensation. In order to cut costs, an alternate solution will be proposed with a goal of spending only 5% of revenue instead of the current 8%. Learning Questions In making your selection, be sure to consider the following concerns: 1. How permanent or temporary is the change? 2. How much will employees lose by the change? 3. How much will JVA Corp. save by the change? 4. How will it affect the employees? 5. How will it affect JVA Corp.? 6. How will it affect the community? 7. Should international employees be subject to the same changes? 8. Does it matter whether the employees are in its U.S. base or international locations? The total report must be between 500 and 750 words (use MS Word?s Word Count feature on the Review tab to ensure that your answer is not too brief or too verbose). Be sure to use the questions above as your guide in selecting a recommended strategy. You are not required to answer each and every question specifically as long as your report addresses how you considered and evaluated each of these eight concerns to determine the appropriate strategy, meets the word count range, and employs one of the three strategies above. Use 1.5 line spacing. Please remember that you will be using information supporting your position from sources such as the textbook, articles, and the Internet.
Question 4
Ratio Analysis 1. The current ratio for a company with current assets of $70,000, quick assets of $30,000, total assets of $150,000 current liabilities of $50,000 and net sales of $80,000 would be: A. 0.20. B. 1.40. C. 3.00. D. 1.00. 2. Rick?s has a cash balance of $80,000; short-term investments of $20,000; net receivables of $60,000; and inventory of $450,000. Current liabilities total $200,000. Ricks? acid test (quick ratio) is within: A. 3.05 to 1. B. 2.25 to 1. C. 0.80 to 1. D. 0.54 to 1. 3. Isaiah Company has net income of $720,000, beginning total assets of $2,100,000, and ending total assets of $2,300,000. Isaiah?s return on total assets is: A. 32.7%. B. 11.2%. C. 3.1%. D 31.3%. 4.Tammy Company has a beginning accounts receivable balance of $65,000 and an ending accounts receivable balance of $60,000. Net credit sales are $250,000. Tammy?s accounts receivable turnover rate is: A. 3.846. B. 4.167. C. 4.000. D. 2.000. 5. With a beginning accounts receivable balance of $80,000; an ending accounts receivable balance of $120,000; and net credit sales of $900,000, the accounts receivable turnover is: A. 9.00. B. 4.50. C. 7.50. D. 11.25. 6. Topiary?s Unlimited has a cost of goods sold of $1,600,000. The beginning merchandise inventory was $195,000 and the ending merchandise inventory is $205,000. Topiary?s merchandise inventory turnover ratio is: A. 8.21 times. B. 7.80 times. C. 8.00 times. D. 9.00 times. 7. Amanda?s has a cost of goods sold of $1,900,000. The beginning and ending merchandise inventories are $133,000 and $125,000, respectively. Amanda?s merchandise inventory turnover ratio is: A. 65.5 times. B. 33.8 times. C. 14.7 times. D. 29.4 times. 8. Walker Clothing Store had a balance in the Accounts Receivable account of $390,000 at the beginning of the year and a balance of $410,000 at the end of the year. Net credit sales during the year amounted to $2,000,000. The average collection period of the receivables in terms of days was a. 30 days. b. 365 days. c. 146 days. d. 73 days 9. Parr Hardware Store had net credit sales of $6,500,000 and cost of goods sold of $5,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The receivables turnover was a. 7.7 times. b. 10.8 times. c. 9.3 times. d. 10 times. 10. Waters Department Store had net credit sales of $16,000,000 and cost of goods sold of $12,000,000 for the year. The average inventory for the year amounted to $2,000,000. Inventory turnover for the year is a. 8 times. b. 14 times. c. 6 times. d. 4 times. 11. Waters Department Store had net credit sales of $16,000,000 and cost of goods sold of $12,000,000 for the year. The average inventory for the year amounted to $2,000,000. The average number of days in inventory during the year was a. 91 days. b. 61 days. c. 46 days. d. 26 days. 12.The current assets of Kile Company are $150,000. The current liabilities are $100,000. The current ratio expressed as a proportion is a. 150%. b. 1.5 : 1 c. .67 : 1 d. $150,000 ? $100,000 13. A company has a receivables turnover of 10 times. The average net receivables during the period are $400,000. What is the amount of net credit sales for the period? a. $40,000 b. $4,000,000 c. $480,000 d. Cannot be determined from the information given 14. Gold Clothing Store had a balance in the Accounts Receivable account of $820,000 at the beginning of the year and a balance of $880,000 at the end of the year. Net credit sales during the year amounted to $7,650,000. The receivables turnover ratio was a. 9.0 times. b. 4.5 times. c. 8.7 times. d. 9.3 times. 15. Gold Clothing Store had a balance in the Accounts Receivable account of $810,000 at the beginning of the year and a balance of $850,000 at the end of the year. Net credit sales during the year amounted to $6,640,000. The average collection period of the receivables in terms of days was a. 91.3 days. b. 45.6 days. c. 30 days. d. 46.7 days. 16. The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 45,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets $300,000 Liabilities and Stockholders? Equity Current liabilities $ 50,000 Long-term liabilities 90,000 Stockholders? equity?common 160,000 Total Liabilities and Stockholders? Equity $300,000 Income Statement Sales $ 120,000 Cost of goods sold 66,000 Gross margin 54,000 Operating expenses 30,000 Net income $ 24,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share .50 What is the current ratio for Soho? a. 1.80 b. 1.30 c. 1.40 d. .64 17. The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 45,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets $300,000 Liabilities and Stockholders? Equity Current liabilities $ 50,000 Long-term liabilities 90,000 Stockholders? equity?common 160,000 Total Liabilities and Stockholders? Equity $300,000 Income Statement Sales $ 120,000 Cost of goods sold 66,000 Gross margin 54,000 Operating expenses 30,000 Net income $ 24,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share .50 What is the receivables turnover for Soho? a. 2.1 times b. 2 times c. 4.8 times d. 9.6 times 18. The following financial statement information is available for Houser Corporation: 2011 2010 Inventory $ 44,000 $ 43,000 Current assets 81,000 106,000 Total assets 432,000 358,000 Current liabilities 30,000 36,000 Total liabilities 102,000 88,000 The current ratio for 2011 is a. .37:1. b. 2.7:1. c. .79:1. d. 4.24:1. Relevant Cost 1. Alvarez Company is considering the following alternatives: Alternative A Alternative B Revenues $50,000 $60,000 Variable costs 30,000 30,000 Fixed costs 10,000 16,000 What is the incremental profit? a. $10,000 b. $0 c. $6,000 d. $4,000 2. Seville Company manufactures a product with a unit variable cost of $42 and a unit sales price of $75. Fixed manufacturing costs were $80,000 when 10,000 units were produced and sold, equating to $8 per unit. The company has a one-time opportunity to sell an additional 2,000 units at $55 each in an international market which would not affect its present sales. The company has sufficient capacity to produce the additional units. How much is the relevant income effect of accepting the special order? a. $84,000 b. $10,000 c. $40,000 d. $26,000 3. It costs Lannon Fields $14 of variable costs and $6 of allocated fixed costs to produce an industrial trash can that sells for $30. A buyer in Mexico offers to purchase 3,000 units at $18 each. Lannon Fields has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income? a. Decrease $6,000 b. Increase $6,000 c. Increase $54,000 d. Increase $12,000 4. It costs Fortune Company $10 of variable and $4 of fixed costs to produce one bathroom scale, which normally sells for $28. A foreign wholesaler offers to purchase 1,000 scales at $12 each. Fortune would incur special shipping costs of $1 per scale if the order were accepted. Fortune has sufficient unused capacity to produce the 1,000 scales. If the special order is accepted, what will be the effect on net income? a. $1,000 increase b. $1,000 decrease c. $2,000 decrease d. $12,000 increase 5. A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: Direct materials $ 4 Direct labor 10 Variable overhead 8 Fixed overhead 6 A foreign company wants to purchase 1,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $2,000 in order to stamp the foreign company?s name on the product. The incremental income (loss) from accepting the order is a. $3,000. b. $1,000. c. $(3,000). d. $(1,000). 6. Chapman Company manufactures widgets. Embree Company has approached Chapman with a proposal to sell the company widgets at a price of $80,000 for 100,000 units. Chapman is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced: Direct materials $ 31,000 Direct labor 29,000 Manufacturing overhead 40,000 Total $100,000 The manufacturing overhead consists of $16,000 of costs that will be eliminated if the components are no longer produced by Chapman. From Chapman?s point of view, how much is the incremental cost or savings if the widgets are bought instead of made? a. $20,000 incremental savings b. $4,000 incremental cost c. $4,000 incremental savings d. $20,000 incremental cost 7. Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $36 each. If Truckel makes the wickets, variable costs are $22 per unit. Fixed costs are $16 per unit; however, $10 per unit is unavoidable. Should Truckel make or buy the wickets? a. Buy; savings = $50,000 b. Buy; savings = $20,000 c. Make; savings = $40,000 d. Make; savings = $20,000 Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $500,000 $200,000 $ 65,000 $765,000 Variable expenses 325,000 140,000 58,000 523,000 Contribution margin 175,000 60,000 7,000 242,000 Fixed expenses 75,000 35,000 22,000 132,000 Net income (loss) $100,000 $ 25,000 $(15,000) $110,000 8. Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped? a. $125,000 b. $103,000 c. $105,000 d. $140,000 9. Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if that line is dropped? a. $125,000 b. $103,000 c. $105,000 d. $140,000 10. If the total net income after dropping the hard rubber line is $105,000, hard rubber?s avoidable fixed expenses were a. $20,000. b. $2,000. c. $7,000. d. $5,000.,Ratio Analysis 1. The current ratio for a company with current assets of $70,000, quick assets of $30,000, total assets of $150,000 current liabilities of $50,000 and net sales of $80,000 would be: A. 0.20. B. 1.40. C. 3.00. D. 1.00. 2. Rick?s has a cash balance of $80,000; short-term investments of $20,000; net receivables of $60,000; and inventory of $450,000. Current liabilities total $200,000. Ricks? acid test (quick ratio) is within: A. 3.05 to 1. B. 2.25 to 1. C. 0.80 to 1. D. 0.54 to 1. 3. Isaiah Company has net income of $720,000, beginning total assets of $2,100,000, and ending total assets of $2,300,000. Isaiah?s return on total assets is: A. 32.7%. B. 11.2%. C. 3.1%. D 31.3%. 4.Tammy Company has a beginning accounts receivable balance of $65,000 and an ending accounts receivable balance of $60,000. Net credit sales are $250,000. Tammy?s accounts receivable turnover rate is: A. 3.846. B. 4.167. C. 4.000. D. 2.000. 5. With a beginning accounts receivable balance of $80,000; an ending accounts receivable balance of $120,000; and net credit sales of $900,000, the accounts receivable turnover is: A. 9.00. B. 4.50. C. 7.50. D. 11.25. 6. Topiary?s Unlimited has a cost of goods sold of $1,600,000. The beginning merchandise inventory was $195,000 and the ending merchandise inventory is $205,000. Topiary?s merchandise inventory turnover ratio is: A. 8.21 times. B. 7.80 times. C. 8.00 times. D. 9.00 times. 7. Amanda?s has a cost of goods sold of $1,900,000. The beginning and ending merchandise inventories are $133,000 and $125,000, respectively. Amanda?s merchandise inventory turnover ratio is: A. 65.5 times. B. 33.8 times. C. 14.7 times. D. 29.4 times. 8. Walker Clothing Store had a balance in the Accounts Receivable account of $390,000 at the beginning of the year and a balance of $410,000 at the end of the year. Net credit sales during the year amounted to $2,000,000. The average collection period of the receivables in terms of days was a. 30 days. b. 365 days. c. 146 days. d. 73 days 9. Parr Hardware Store had net credit sales of $6,500,000 and cost of goods sold of $5,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The receivables turnover was a. 7.7 times. b. 10.8 times. c. 9.3 times. d. 10 times. 10. Waters Department Store had net credit sales of $16,000,000 and cost of goods sold of $12,000,000 for the year. The average inventory for the year amounted to $2,000,000. Inventory turnover for the year is a. 8 times. b. 14 times. c. 6 times. d. 4 times. 11. Waters Department Store had net credit sales of $16,000,000 and cost of goods sold of $12,000,000 for the year. The average inventory for the year amounted to $2,000,000. The average number of days in inventory during the year was a. 91 days. b. 61 days. c. 46 days. d. 26 days. 12.The current assets of Kile Company are $150,000. The current liabilities are $100,000. The current ratio expressed as a proportion is a. 150%. b. 1.5 : 1 c. .67 : 1 d. $150,000 ? $100,000 13. A company has a receivables turnover of 10 times. The average net receivables during the period are $400,000. What is the amount of net credit sales for the period? a. $40,000 b. $4,000,000 c. $480,000 d. Cannot be determined from the information given 14. Gold Clothing Store had a balance in the Accounts Receivable account of $820,000 at the beginning of the year and a balance of $880,000 at the end of the year. Net credit sales during the year amounted to $7,650,000. The receivables turnover ratio was a. 9.0 times. b. 4.5 times. c. 8.7 times. d. 9.3 times. 15. Gold Clothing Store had a balance in the Accounts Receivable account of $810,000 at the beginning of the year and a balance of $850,000 at the end of the year. Net credit sales during the year amounted to $6,640,000. The average collection period of the receivables in terms of days was a. 91.3 days. b. 45.6 days. c. 30 days. d. 46.7 days. 16. The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 45,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets $300,000 Liabilities and Stockholders? Equity Current liabilities $ 50,000 Long-term liabilities 90,000 Stockholders? equity?common 160,000 Total Liabilities and Stockholders? Equity $300,000 Income Statement Sales $ 120,000 Cost of goods sold 66,000 Gross margin 54,000 Operating expenses 30,000 Net income $ 24,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share .50 What is the current ratio for Soho? a. 1.80 b. 1.30 c. 1.40 d. .64 17. The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 45,000 Accounts receivable (net) 25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets $300,000 Liabilities and Stockholders? Equity Current liabilities $ 50,000 Long-term liabilities 90,000 Stockholders? equity?common 160,000 Total Liabilities and Stockholders? Equity $300,000 Income Statement Sales $ 120,000 Cost of goods sold 66,000 Gross margin 54,000 Operating expenses 30,000 Net income $ 24,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share .50 What is the receivables turnover for Soho? a. 2.1 times b. 2 times c. 4.8 times d. 9.6 times 18. The following financial statement information is available for Houser Corporation: 2011 2010 Inventory $ 44,000 $ 43,000 Current assets 81,000 106,000 Total assets 432,000 358,000 Current liabilities 30,000 36,000 Total liabilities 102,000 88,000 The current ratio for 2011 is a. .37:1. b. 2.7:1. c. .79:1. d. 4.24:1. Relevant Cost 1. Alvarez Company is considering the following alternatives: Alternative A Alternative B Revenues $50,000 $60,000 Variable costs 30,000 30,000 Fixed costs 10,000 16,000 What is the incremental profit? a. $10,000 b. $0 c. $6,000 d. $4,000 2. Seville Company manufactures a product with a unit variable cost of $42 and a unit sales price of $75. Fixed manufacturing costs were $80,000 when 10,000 units were produced and sold, equating to $8 per unit. The company has a one-time opportunity to sell an additional 2,000 units at $55 each in an international market which would not affect its present sales. The company has sufficient capacity to produce the additional units. How much is the relevant income effect of accepting the special order? a. $84,000 b. $10,000 c. $40,000 d. $26,000 3. It costs Lannon Fields $14 of variable costs and $6 of allocated fixed costs to produce an industrial trash can that sells for $30. A buyer in Mexico offers to purchase 3,000 units at $18 each. Lannon Fields has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income? a. Decrease $6,000 b. Increase $6,000 c. Increase $54,000 d. Increase $12,000 4. It costs Fortune Company $10 of variable and $4 of fixed costs to produce one bathroom scale, which normally sells for $28. A foreign wholesaler offers to purchase 1,000 scales at $12 each. Fortune would incur special shipping costs of $1 per scale if the order were accepted. Fortune has sufficient unused capacity to produce the 1,000 scales. If the special order is accepted, what will be the effect on net income? a. $1,000 increase b. $1,000 decrease c. $2,000 decrease d. $12,000 increase 5. A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: Direct materials $ 4 Direct labor 10 Variable overhead 8 Fixed overhead 6 A foreign company wants to purchase 1,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $2,000 in order to stamp the foreign company?s name on the product. The incremental income (loss) from accepting the order is a. $3,000. b. $1,000. c. $(3,000). d. $(1,000). 6. Chapman Company manufactures widgets. Embree Company has approached Chapman with a proposal to sell the company widgets at a price of $80,000 for 100,000 units. Chapman is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced: Direct materials $ 31,000 Direct labor 29,000 Manufacturing overhead 40,000 Total $100,000 The manufacturing overhead consists of $16,000 of costs that will be eliminated if the components are no longer produced by Chapman. From Chapman?s point of view, how much is the incremental cost or savings if the widgets are bought instead of made? a. $20,000 incremental savings b. $4,000 incremental cost c. $4,000 incremental savings d. $20,000 incremental cost 7. Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $36 each. If Truckel makes the wickets, variable costs are $22 per unit. Fixed costs are $16 per unit; however, $10 per unit is unavoidable. Should Truckel make or buy the wickets? a. Buy; savings = $50,000 b. Buy; savings = $20,000 c. Make; savings = $40,000 d. Make; savings = $20,000 Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows: Wood Aluminum Hard Rubber Total Sales $500,000 $200,000 $ 65,000 $765,000 Variable expenses 325,000 140,000 58,000 523,000 Contribution margin 175,000 60,000 7,000 242,000 Fixed expenses 75,000 35,000 22,000 132,000 Net income (loss) $100,000 $ 25,000 $(15,000) $110,000 8. Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped? a. $125,000 b. $103,000 c. $105,000 d. $140,000 9. Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if that line is dropped? a. $125,000 b. $103,000 c. $105,000 d. $140,000 10. If the total net income after dropping the hard rubber line is $105,000, hard rubber?s avoidable fixed expenses were a. $20,000. b. $2,000. c. $7,000. d. $5,000. You believe that morning before 7am, is able to finish? I would appreciate your help and your reply, MARIA,Dear Michael I.; Thank's a lot for you help me with this. Cordially, MARIA,Thank's uou again and have a wonderfull night see u next week :-)
