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2009-09-07_074845_louis

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					1. Refer to the following information for Flowers, Inc. at the end of the periods noted:
              ;         2001       2000
Building …………………………………………………………………….. $95,000                                               $0
Equipment ………………………………………………………………… 60,000                                                   0
Bonds payable…………………………………………………………… 20,000                                               10,000
Common Stock –at par……………………………………………… 200,000                                       150,000
Paid-in Capital in excess at par………………………………….. 70,000                             30,000
Retained earnings……………………………………………………… 210,000 160,000

Net income for the year 2001 was 75,000 and cash dividends of 25,000 were declared and paid. Assume that
all transactions affecting the accounts listed above involved cash.
On the Statement of Cash Flows of year ended 2001, the net cash flows used for investing is $155,000 and
the net cash flow provided by financing activities is $100,000.

The net income for a company was $200,000 last year and is $180,000 this year. Horizontal analysis reflects
the percent of increase or decrease was____.
a. 1.11
b. 9
c. 10
d. 11

2. The net sales for a company were $2,500,000; gross profit was $500,000; and net income was $230,000.
The net income to net sales ratio would be___.
a. 9.2
b. 10.9
c. 27.7
d. 98.7

3. A fishing company has cash $75,000; temporary investments $20,000; net receivables $600,000; and
merchandise inventory $50,000. Current liabilities are $400,000. The quick or acid –test ratio is ____.
a. .54 to 1
b. .58 to 1
c. 1.74 to 1
d. 1.84 to 1

4. A fishing company has cash $75,000; temporary investments $20,000; net receivables $600,000; and
merchandise inventory $50,000. Current liabilities are $400,000. The current ratio is ____.
a. .54 to 1
b. .58 to 1
c. 1.74 to 1
d. 1.86 to 1
5. A company has cash $1,500,000. Net accounts receivables at the beginning of the year are $600,000; and
net accounts receivable at the end of the year $650,000. The accounts receivable turnover is ___.
a. .42
b. .53
c. 1.2
d. 2.4

6. A company has cash $1,500,000. Net accounts receivables at the beginning of the year are $600,000; and
net accounts receivable at the end of the year $650,000. The average number of days that accounts
receivables were on books was____.
a. 8.7
b. 152
c. 304
d. 439.8
7. The cost of goods sold for a company for the year ended was $1,900,000. Merchandise inventory at the
beginning of the year was $25,000 and merchandise inventory at the end of the year $33,000. The
merchandise inventory turnover for the year was ___.
a. 1.7
b. 7.4
c. 57.5
d. 65.5
         8. The cost of goods sold for a company for the year ended was $1,900,000. Merchandise inventory at the
         beginning of the year was $25,000 and merchandise inventory at the end of the year $33,000. The average
         number of days that the merchandise inventory was held during the year was ___.
         a. 2.7
         b. 5.6
         c. 39.6
         d. 41.0

         9. The net income for the current year ended was $230,000; total assets at the beginning of the year were
         $2,100,000. The return on the total assets would be___.
         a. 1.1
         b. 10.95
         c. 11.2
         d. 89.13

         10. The net income for the current year ended was $200,000. Common stockholders’ equity at the beginning
         of the year was $1,200,000; it was $1,400,000 at the end of the year. The return on common stockholders’
         equity would be
         a. 7
         b. 12.3
         c. 15.4
         d. 16.7

         = $200,000 / [($1,200,000 + $1,400,000) / 2]

         11. The Marks company 6,000 shares of common stock outstanding; total common stockholders’ equity is $
         1,500,000. The book value par share of common stock is ____.
         a. 250
         b. 300
         c. 400
         d. 6,000

         = $1,500,000 / 6,000 = $250

         12. The liabilities of a game company at the end of the year are $ 700,000, and the total stockholders’ equity
         at the end of the year is $1, 400,000. The ratio of liabilities to stockholders’ equity is ____.
         a. .33 to 1
         b. .5 to 1
         c. .67 to 1
         d. 2 to 1

Ratio of Liabilities to Equity = 700,000/1,400,000 = 0.5
         13. The net income of the fashion company for the current year ended is $230,000. Income tax is $190,000
         and interest expense is $20,000. The times interest earned ratio is___.
         a. .9
         b. 3.0
         c. 21.0
         d. 22.0

Times Interest Earned = (230,000+190,000+20,000)/20,000 = 22
14. Step Right Company shows gross sales of $ 730,600 for pants and $ 934,900 for shirts. It has determined that pants
cost $ 534,000 and that shirts cost $ 391,400. The total gross profit of Step right Company is ____.
a. 196,000
b. 543,500
c. 740,100
d. 925,400

Gross profit = 730,600 + 934,900-534,000-391,400 = 740,100
15. Step Right Company shows gross sales of $ 730,600 for pants and $ 934,900 for shirts. It has determined that pants
cost $ 534,000 and that shirts cost $ 391,400. The gross profit percentage for the pants department of Step Right
Company is ___.
a. 4.45
b. 26.9
c. 58.1
d. 73.0

Gross Profit percentage = 740,100/(730,600+934,900) = 44.4%
There is a typing error in the choices, please double check with the instructor
16. The estimated amount of uncollectible receivables at the end of the year (bases on aging of accounts receivable)
was 3,675.32 and the Allowance for the bad debits had a credit balance of 860.00 prior to the year-end adjustments, the
necessary adjusting entry would include:
a.   Crediting allowance for bad debts for 3,675.32
b.   Crediting factory overhead for 2,815.32
c.   Debiting bad debt expense for 2,815.32
d.   Debiting factory overhead for 3,675.32

				
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