Accounting Exercise: Recording Transactions and Calculating Financial Ratios, Exams of Marketing Business-to-business (B2B)

Download Accounting Exercise: Recording Transactions and Calculating Financial Ratios and more Exams Marketing Business-to-business (B2B) in PDF only on Docsity! 1/14 ACCT EXAM SOLUTION GUIDE Questions and Answers Latest Updates 2024 Company Giga declared a cash dividend in December 2016, payable in March 2017. Retained Earnings would Select one: a. decrease on the date of payment. b. increase on the date of payment. c. increase on the date of declaration. d. decrease on the date of declaration. Your answer is correct. The correct answer is: decrease on the date of declaration. Correct Marks for this submission: 10.00/10.00. (T/F) When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Equipment. Select one: True False Motor vehicle licenses should not be charged to Equipment account. The correct answer is 'False'. Incorrect Marks for this submission: 0.00/5.00. Question 2 Incorrect Mark 0.00 out of 5.00 Question 1 Correct Mark 10.00 out of 10.00 2/14 Ramirez Company acquires land for $240,000 cash. Additional costs are as follow. Removal of shed $ 2,000 Filling and grading 6,000 Salvage value of lumber of shed 1,280 Broker commission 4,520 Paving of parking lot 40,000 Closing costs 3,400 Ramirez will record the acquisition cost of the land as Select one: a. $254,640. b. $345,000 c. $257,200. d. $240,000. e. $255,920. Solution: $240,000 + ($2,000 - $1,280) + $6,000 + $4,520 + $3,400 = $254,640 Your answer is incorrect. The correct answer is: $254,640. Incorrect Marks for this submission: 0.00/10.00. The following transactions occurred during November: Nov. 1 Sent bills to clients for services provided in August in the amount of $12,000. Nov. 9 Purchased office furniture of $4,000 and office supplies of $150 from Office Depot receiving an invoice for $4,150. The invoice is due in 60 days. Nov. 15 Paid for the office furniture and supplies purchased from Office Depot. Nov. 23 Received a $350 bill from WKRP Radio for advertising. The bill is due in 30 days. Nov. 30 Paid salaries of $2,500 to employees. The journal entry to record the bills sent to clients will include a debit of $12,000 to Select one: a. cash b. service revenue c. accounts receivable d. retained earnings Your answer is correct. The correct answer is: accounts receivable Correct Marks for this submission: 10.00/10.00. Question 4 Correct Mark 10.00 out of 10.00 Question 3 Incorrect Mark 0.00 out of 10.00 5/14 Jay Inc. estimates uncollectible accounts using the percentage-of-receivables method and expects that 3.5% of outstanding receivables will be uncollectible for 2016. The balance in Accounts Receivable is $243,000, and the Allowance for Doubtful Accounts has a credit balance of $4,300 before adjustments at year-end. The Bad Debt Expense for 2016 will be: Select one: a. $4,300 b. $4,205 (243,000*3.5%)-4,300=4,205 c. $8,505 d. $5,423 Your answer is correct. The correct answer is: $4,205 Correct Marks for this submission: 10.00/10.00. Newell Company purchased a machine with a list price of $160,000. They were given a 10% discount by the manufacturer. They paid $1,000 for shipping and sales tax of $7,500. Newell estimates that the machine will have a useful life of 10 years and a salvage value of $50,000. If Newell uses straight-line depreciation, annual depreciation will be Select one: a. $10,180. b. $15,250. c. $10,250. Solution: [($160,000 ´ .90) + $1,000 + $7,500 - $50,000] ¸ 10 = $10,250 d. $9,400. e. $23,000 Your answer is correct. The correct answer is: $10,250. Correct Marks for this submission: 10.00/10.00. Question 10 Correct Mark 10.00 out of 10.00 Question 9 Correct Mark 10.00 out of 10.00 6/14 RZM Store sells jeans. During January 2014, its inventory records for one brand of designer jeans were as follows: Quantity Price per pair Total Using this information, periodic FIFO cost of goods sold is Select one: a. $330 b. $250 c. $300 d. $430 Your answer is correct. The correct answer is: $330 Correct Marks for this submission: 10.00/10.00. (T / F) The price-earnings ratio equals the current market price per share of common stock divided by EPS. The price-earnings ratio indicates how confident investors feel about a stock's future income potential as compared to other stocks. Select one: True False Correct. The correct answer is 'True'. Correct Marks for this submission: 5.00/5.00. Question 12 Correct Mark 5.00 out of 5.00 Question 11 Correct Mark 10.00 out of 10.00 Beginning Inventory 10 pairs $20 = $200 January 6 Purchase 4 pairs $25 =$100 January 10 Sale 5 pairs N/A January 15 Purchase 7 pairs $30 =$210 January 20 Sale 10 pairs N/A January 25 Purchase 4 pairs $30 =$120 7/14 Question 13 Correct The following information is available for Patterson Company: 2017 2016 Mark 10.00 out of 10.00 Accounts receivable $ 360,000 $ 340,000 Inventory 280,000 320,000 Net credit sales 3,150,000 2,600,000 Cost of goods sold 1,800,000 840,000 Net income 300,000 170,000 The accounts receivable turnover for 2017 is Select one: a. 9.0 times. b. 4.5 times. c. 8.8 times. d. 11.2 times e. 9.3 times. Your answer is correct. The correct answer is: 9.0 times. Correct Marks for this submission: 10.00/10.00. The following data is available for BOX Corporation at December 31, 2017: Common stock, par $10 (authorized 30,000 shares) $270,000 Treasury stock (at cost $15 per share) $ 1,200 Based on the data, how many shares of common stock are issued? Select one: a. 29,920. b. 26,920. c. None of the options is correct answer. d. 27,000. e. 30,000. Your answer is correct. The correct answer is: 27,000. Correct Marks for this submission: 10.00/10.00. Question 14 Correct Mark 10.00 out of 10.00 10/14 Under the accrual basis of accounting: Select one: a. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles. b. net income is calculated by matching cash outflows against cash inflows. c. events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. d. cash must be received before revenue is recognized. e. None of the answer choices are correct. Your answer is correct. The correct answer is: events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. Correct Marks for this submission: 10.00/10.00. The following transactions occurred during November: Nov. 1 Sent bills to clients for services provided in August in the amount of $12,000. Nov. 9 Purchased office furniture of $4,000 and office supplies of $150 from Office Depot receiving an invoice for $4,150. The invoice is due in 60 days. Nov. 15 Paid for the office furniture and supplies purchased from Office Depot. Nov. 23 Received a $350 bill from WKRP Radio for advertising. The bill is due in 30 days. Nov. 30 Paid salaries of $2,500 to employees. The journal entry to record the purchase of office equipment and supplies will include a credit to Select one: a. delivery expense b. furniture & supplies c. cash d. accounts payable Your answer is correct. The correct answer is: accounts payable Correct Marks for this submission: 10.00/10.00. Question 20 Correct Mark 10.00 out of 10.00 Question 19 Correct Mark 10.00 out of 10.00 11/14 Company Giga pays 5 shares of stock in Company Jojo to each of Giga's shareholder. This is an example of: Select one: a. A property dividend b. A compensatory dividend c. A liquidating dividend d. A stock dividend Your answer is correct. The correct answer is: A property dividend Correct Marks for this submission: 10.00/10.00. Which of the following entities is charged with the development and promulgation of financial accounting standards in the United States? Select one: a. IASB b. SEC c. GASB d. FASB Your answer is correct. The correct answer is: FASB Correct Marks for this submission: 10.00/10.00. Question 22 Correct Mark 10.00 out of 10.00 Question 21 Correct Mark 10.00 out of 10.00 12/14 Below is selected financial information for Panettone, Inc. Balance Sheet ($ in Millions) Income Statement ($ in Millions) Assets Liabilities and Equity Sales 700 Current Assets Current Liabilities Cost of Goods Sold 700 Cash 500 Accounts Payable 400 Administrative Expenses 100 Accounts Receivable 200 Notes Payable 300 Depreciation 348 Inventory 500 Total Current Liabilities 700 Earnings Before Interest and Taxes -448 Total Current Assets 1200 Long-Term Liabilities Interest Expense 100 Long-Term Debt 600 Taxable Income -548 Fixed Assets Total Long-Term Liabilities 600 Taxes -172 Property, Plant and Equip. 1000 Net Income -376 Less Acc. Depreciation 300 Owners' Equity Dividends 0 Net Fixed Assets 700 Common Stock ($1 Par) 200 Addition to Retained Earnings -376 Capital Surplus 300 Retained Earnings 100 Other Information Total Owners' Equity 600 No. of Shares Outstanding (Millions) 200 Total Assets 1900 Total Liab. and Equity 1900 Price per Share 1.24 In the answer boxes below, select the right answer from the drop-down menu. Each answer is worth 2 points. Answers are rounded to two decimals. Ratio Answer Days Sales in Inventory 260.71 Average Collection Period 104.29 Debt to Equity Ratio 2.17 AR Turnover 3.5 Current Ratio 1.71 Ratio Answer Days Sales in Inventory 260.71 Average Collection Period 104.29 Debt to Equity Ratio 2.17 AR Turnover 3.5 Current Ratio 1.71 Correct Marks for this submission: 10.00/10.00. Question 23 Correct Mark 10.00 out of 10.00