ACCOUNTING INFORMATION SYSTEMS 1 1. Cal Farms reported supplies expense of $2 000 000 this year. The supplies.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account decreased by $200 000 during the year to an ending balance of $400 000. What was the cost of supplies the Cal Farms purchased during the year? A.$1 600 000 B.$2 200 000 C.$1 800 000 D.$2 400 000 2. Listed below are.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts except the last two that have yet to be closed. The installment receivables are current. Symphony uses a perpetual inventory system. .0/msohtmlclip1/01/clip_image001.gif” alt=”https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif”> What is the amount of working capital for Symphony? A.$98 B.$113 C.$143 D.$128 3. On December 31 2011 the end of Larry’s Used.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>Cars first year of operations the accounts receivable was $53 600. The company estimates that $1 200 of the year-end receivables will not be collected. Accounts receivable in the 2011 balance sheet will be valued at A.$53 600. B.$54 800. C.$52 400. D.$1 200. 4. In its first year of operations Best Corp. had income before.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>tax of $500 000. Best made income tax payments totaling $210 000 during the year and has an income tax rate of 40%. What was Best’s net income for the year? A.$294 000 B.$290 000 C.$300 000 D.$306 000 5. Yummy Foods purchased a two-year fire and extended coverage.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>insurance policy on August 1 2011 and charged the $4 200 premium to Insurance expense. At its December 31 2011 year-end Yummy Foods would record which of the following adjusting entries? a. Insurance expense 875 Prepaid insurance 875 b. Prepaid insurance 875 Insurance expense 875 c. Insurance expense 875 Prepaid insurance 3 325 Insurance payable 4 200 d. Prepaid insurance 3 325 Insurance expense 3 325 A.Option b B.Option d C.Option c D.Option a 6. Janson Corporation Co.’s trial balance included the following.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account balances at December 31 2011: Accounts payable $25 000 Bond payable due 2020 22 000 Salaries payable 16 000 Note payable due 2012 20 000 Note payable due 2016 40 000 What amount should be included in the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>current liability section of Janson’s December 31 2011 balance sheet? A.$41 000 B.$101 000 C.$61 000 D.$63 000 7. On June 1 Royal Corp. began operating a service company with an initial cash investment by shareholders of $2 000 000. The company provided $6 400 000 of services in June and received full payment in July. Royal also incurred expenses of $3 000 000 in June that were paid in August. During June Royal paid its shareholders cash dividends of $1 000 000. What was the company’s income before income taxes for the two months ended July 31 under the following methods of.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>accounting? Cash Basis Accrual Basis a. $3 400 000 $3 400 000 b. $5 400 000 $2 400 000 c. $6 400 000 $3 400 000 d. $6 400 000 $2 400 000 A.Option c B.Option b C.Option a D.Option d 8. Temporary accounts would not include A.cost of goods sold. B.depreciation expense. C.salaries payable. D.supplies expense. 9. On November 1 2011 Tim’s Toys borrows $30 000 000 at 9% to finance the holiday sales season. The note is for a six-month term and both principal and interest are payable at maturity. What should be the balance of interest payable for the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>loan as of December 31 2011? A.$1 350 000. B.$112 500. C.$450 000. D.$225 000. 10. A cause-and-effect relationship is implicit in the A.historical cost principle. B.going concern assumption. C.matching principle. D.realization principle. 11. The mostlikely important flaw leading to the demise of the APB was the perceived lack of A.importance. B.competence. C.independence. D.confidence. 12. An example of a contra.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account is A.sales revenue. B.accounts receivable. C.depreciation expense. D.accumulated depreciation. 13. Janson Corporation Co.’s trial balance included the following.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account balances at December 31 2011: Accounts receivable $12 000 Inventories 40 000 Patent 12 000 Investments 30 000 Prepaid.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>insurance 6 000 Note receivable due 2014 50 000 Investments consist of treasury bills that were purchased in November and mature in January. Prepaid insurance is for the next two years. What amount should be included in the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>current asset section of Janson’s December 31 2011 balance sheet? A.$135 000 B.$55 000 C.$88.000 D.$85 000 14. In its first year of operations Best Corp. had income before.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>tax of $500 000. Best made income tax payments totaling $210 000 during the year and has an income tax rate of 40%. What was Best’s net income for the year? A.$290 000 B.$306 000 C.$294 000 D.$300 000 15. Based on recent financial statement data for Harmony Health Foods Inc. (HHF) shown below HHF’s debt-to-equity ratio is (rounded) .0/msohtmlclip1/01/clip_image002.gif” alt=”https://my.pennfoster.com/exams/images/061500NR_Q36-38.gif”> A.0.53. B.0.75. C.1.13. 16. Pat’s Custom.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>Tuxedo Shop maintains its records on the cash basis. During this past year Pat’s collected $42 000 in tailoring fees and paid $14 000 in expenses. Depreciation expense totaled $2 000. Accounts receivable increased $1 500 supplies increased $4 000 and accrued liabilities increased $2 500. Pat’s accrual basis net income would be A.$29 000. B.$23 000. C.$18 000. D.$34 000. 17. SFAC No.5 focuses on A.objectives of financial reporting. B.qualitative characteristics of accounting information. C.elements of financial statements. D.recognition and measurement concepts in accounting. 18. Which of the following was the first private sector entity that set.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>accounting standards in the United States? A.AICPA B.Committee on Accounting Procedure C.Accounting Principles Board D.Financial Accounting Standards Board 19. Dave’s Duds reported cost of goods sold of $2 000 000 this year. The inventory.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account increased by $200 000 during the year to an ending balance of $400 000. What was the cost of merchandise that Dave purchased during the year? A.$1 800 000 B.$1 600 000 C.$2 400 000 D.$2 200 000 20. Ace Bonding Company purchased merchandise inventory on.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account. The inventory costs $2 000 and is expected to sell for $3 000. Indicate how Ace should record the purchase by selecting one of the options listed below. a. Inventory 2 000 Accounts payable 2 000 b. Cost of goods sold 2 000 Deferred revenue 1 000 Sales in advance 3 000 c. Cost of goods sold 2 000 Inventory payable 2 000 d. Cost of goods sold 2 000 Profit 1 000 Sales payable 3 000 A.Option b B.Option a C.Option d D.Option c 21. Listed below are.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts except the last two that have yet to be closed. The installment receivables are current. Symphony uses a perpetual inventory system. .0/msohtmlclip1/01/clip_image001.gif” alt=”https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif”> What would Symphony report as total assets? A.$2 338 B.$2 318 C.$2 303 D.$2 323 22. The full disclosure principle requires a balance between A.relevance and cost effectiveness. B.timeliness and predictive value. C.comparability and consistency. D.reliability and neutrality. 23. Based on recent financial statement data for Harmony Health Foods Inc. (HHF) shown below HHF’s times interest earned ratio is (rounded): .0/msohtmlclip1/01/clip_image002.gif” alt=”https://my.pennfoster.com/exams/images/061500NR_Q36-38.gif”> A.3.47 B.2.47. C.1.73. 24. Listed below are.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account balances (in $millions) taken from the records of Symphony Stores. All of these are permanent accounts except the last two that have yet to be closed. The installment receivables are current. Symphony uses a perpetual inventory system. .0/msohtmlclip1/01/clip_image001.gif” alt=”https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif”> What would Symphony report as total.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>current assets? A.$843 B.$838 C.$1 696 D.$823 25. In its first year of operations Acme Corp. had income before.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>tax of $400 000. Acme made income tax payments totaling $150 000 during the year and has an income tax rate of 40%. What would be the balance in income tax payable at the end of the year? A.$10 000 debit. B.$150 000 credit. C.$160 000 credit. D.$10 000 credit ACCOUNTING INFORMATION SYSTEMS 2 1. Cendant Corporation’s results for the year ended December 31 2011 include the following material items: Sales revenue $6 200 000 Cost of goods sold 3 800 000 Selling and administrative expenses 1 300 000 Loss on sale of investments 200 000 Loss on discontinued operations 500 000 Loss on expropriation (unusual and infrequent event) 800 000 Restructuring costs 80 000 Overstatement of amortization expense in 2010 caused by mathematical error 60 000 Cendant Corporation’s income from continuing operations before income.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>taxes for 2011 is A.$900 000. B.$880 000. C.$820 000. D.$320 000. 2. Reliable Enterprises sells distressed merchandise on extended.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>credit terms. Collections on these sales aren’t reasonably assured and bad debt losses can’t be reasonably predicted. It’s unlikely that repossessed merchandise will be in salable condition. Therefore Reliable uses the cost recovery method. Merchandise costing $30 000 was sold for $55 000 in 2010. Collections on this sale were $20 000 in 2010 $15 000 in 2011 and $20 000 in 2012. In its 2010 year-end balance sheet Reliable would report installment receivables (net) of A.$20 000. B.25 909. C.$35 000. D.$10 000. 3. On October 28 2011 Mercedes Company committed to a plan to sell a division that qualified as a component of the entity according to GAAP regarding discontinued operations and was properly classified as held for sale on December 31 2011 the end of the company’s fiscal year. The division’s loss from operations for 2011 was $2 000 000. The division’s book value and fair value less cost to sell on December 31 were $3 000 000 and $3 500 000 respectively. What before-tax amount(s) should Mercedes report as loss on discontinued operations in its 2011.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>income statement? A.$500 000 gain included in continuing operations and a $2 000 000 loss from discontinued operations B.$2 000 000 loss C.None D.$2 500 000 loss 4. Lake Power.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>Sports sells jet skis and other powered recreational equipment. Customers pay 1/3 of the sales price of a jet ski when they initially purchase the ski and then pay another 1/3 each year for the next two years. Because Lake has little information about collectibility of these receivables they use the installment methodfor revenue recognition. In 2010 Lake began operations and sold jet skis with a total price of $900 000 that cost Lake $450 000. Lake collected $300 000 in 2010 $300 000 in 2011 and $300 000 in 2012 associated with those sales. In 2011 Lake sold jet skis with a total price of $1 500 000 that cost Lake $900 000. Lake collected $500 000 in 2011 $400 000 in 2012 and $400 000 in 2013 associated with those sales. In 2013 Lake also repossessed $200 000 of jet skis that were sold in 2011. Those jet skis had a fair value of $75 000 at the time they were repossessed. In 2013 Lake would record a loss on repossession of A.$120 000. B.$80 000. C.$200 000. D.$45 000. 5. Chancellor Ltd. sells an asset with a $1 million fair value to Sophie Inc. Sophie agrees to make 6 equal payments one year apart commencing on the date of sale. The payments include principal and 6% annual interest. Compute the annual payments. A.$191 852 B.$166 651 C.$203 351 D.$135 252 6. Elmore Co. purchased an offset press on January 1 2008 at a cost of $120 000. The press had an estimated eight-year life with no residual value. Elmore uses straight-line depreciation. At January 1 2011 Elmore estimated that the press would have only three more years of remaining life with no residual value. For 2011 Elmore would report depreciation of A.$25 000. B.$20 000. C.$30 000. D.$15 000. 7. First Financial Auto.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>Loan Department wishes to know the payment required at the first of each month on a $10 500 48-month 11% auto loan. To determine this amount First Financial would A.Multiply $10 500 by the present value of an ordinary annuity of 1. B.Divide $10 500 by the present value of an annuity due of 1. C.Multiply $10 500 by the present value of 1. D.Divide $10 500 by the future value of an ordinary annuity of 1. 8. Present and future value tables of $1 at 3% are presented below: .0/msohtmlclip1/01/clip_image004.jpg” alt=”https://my.pennfoster.com/exams/images/061501NR_Q23.gif”> Shane wants to invest money in a 6% CD.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account that compounds semiannually. Shane would like the account to have a balance of $100 000 four years from now. How much must Shane deposit to accomplish his goal? A.$22 510 B.$25 336 C.$88 849 D.$78 941 9. Lake Power.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>Sports sells jet skis and other powered recreational equipment. Customers pay 1/3 of the sales price of a jet ski when they initially purchase the ski and then pay another 1/3 each year for the next two years. Because Lake has little information about collectibility of these receivables they use the installment methodfor revenue recognition. In 2010 Lake began operations and sold jet skis with a total price of $900 000 that cost Lake $450 000. Lake collected $300 000 in 2010 $300 000 in 2011 and $300 000 in 2012 associated with those sales. In 2011 Lake sold jet skis with a total price of $1 500 000 that cost Lake $900 000. Lake collected $500 000 in 2011 $400 000 in 2012 and $400 000 in 2013 associated with those sales. In 2013 Lake also repossessed $200 000 of jet skis that were sold in 2011. Those jet skis had a fair value of $75 000 at the time they were repossessed. In 2010 Lake would recognize realized gross profit of A.$0. B.$150 000. C.$300 000. D.$450 000. 10. Freda’s Florist reported the following before-.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>tax income statement items for the year ended December 31 2011: Operating income $250 000 Extraordinary gain $70 000 All income statement items are subject to a 40% income tax rate. In its 2011 income statement Freda’s separately stated income tax expense and total income tax expense would be A.$100 000 and $128 000 respectively. B.$128 000 and $100 000 respectively. C.$128 000 and $128 000 respectively. D.$100 000 and $100 000 respectively. 11. Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay 1/3 of the sales price of a jet ski when they initially purchase the ski and then pay another 1/3 each year for the next two years. Because Lake has little information about collectibility of these receivables they use the installment methodfor revenue recognition. In 2010 Lake began operations and sold jet skis with a total price of $900 000 that cost Lake $450 000. Lake collected $300 000 in 2010 $300 000 in 2011 and $300 000 in 2012 associated with those sales. In 2011 Lake sold jet skis with a total price of $1 500 000 that cost Lake $900 000. Lake collected $500 000 in 2011 $400 000 in 2012 and $400 000 in 2013 associated with those sales. In 2013 Lake also repossessed $200 000 of jet skis that were sold in 2011. Those jet skis had a fair value of $75 000 at the time they were repossessed. In its December 31 2011 .pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>balance sheet Lake would report A.installment receivables (net) of $900 000. B.deferred gross profit of $700 000. C.deferred gross profit of $1 050 000. D.installment receivables (net) of $750 000. 12. Quaker State Inc. offers a new employee a lump sum signing bonus at the date of.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>employment. Alternatively the employee can take $8 000 at the date of employment plus $20 000 at the end of each of his first three years of service. Assuming the employee’s time value of money is 10% annually what lump sum at employment date would make him indifferent between the two options? A.$57 737 B.$23 026 C.$8 000 D.$62 711 13. On May 1 Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>completed on December 31 2011. The following additional facts pertain to the transaction: * The Footwear Division qualifies as a component of the entity according to GAAP regarding discontinued operations. * The book value of Footwear’s assets totaled $48 million on the date of the sale. * Footwear’s operating income was a pretax loss of $10 million in 2011. * Foxtrot’s income tax rate is 40%. Suppose that the Footwear Division’s assets had not been sold by December 31 2011 but were considered held for sale. Assume that the fair value of these assets at December 31 was $80 million. In the 2011 income statement for Foxtrot Co. under discontinued operations it would report a A.16% gain. B.$6 million loss C.$10 million loss D.$13.2 million income 14. Indiana Co. began a construction project in 2011 that will provide it $150 million when it is.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>completed in 2013. During 2011 Indiana incurred $36 million of costs and estimates an additional $84 million of costs to complete the project. Using the percentage-of-completion method Indiana recognized _______ on the project in 2011. A.$36 million loss B.$6 million loss C.$9 gross profit D.no gross profit or loss 15. Lucia Ltd. reported net.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>income of $135 000 for the year ended December 31 2011. January 1 balances in accounts receivable and accounts payable were $29 000 and $26 000 respectively. Year-end balances in these accounts were $30 000 and $24 000 respectively. Assuming that all relevant information has been presented Lucia’s cash flows from operating activities would be A.$136 000. B.$134 000. C.$132 000. D.$138 000 16. Fenland Co. plans to retire $100 million in bonds in five years so it wishes to create a fund by making equal investments at the beginning of each year during that period in an.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account it expects to earn 8% annually. What amount does Fenland need to invest each year? A.$17 045 650 B.15 783 077 C.$23 190 400 D.The amount can’t be determined from the given information. 17. Shady Lane’s income tax payable.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account decreased from $14 million to $12 million during 2011. If its income tax expense was $80 million what would be shown as an operating cash flow under the direct method? A.A cash outflow of $80 million B.A cash outflow of $82 million C.A cash outflow of $12 million D.A cash outflow of $78 million 18. Misty Company reported the following before-tax items during the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>current year: Sales $600 Operating expenses 250 Restructuring charges 20 Extraordinary loss 50 Misty’s effective tax rate is 40%. What would be Misty’s net income for the current year? A.$112 B.$148 C.$168 D.$198 19. Reliable Enterprises sells distressed merchandise on extended.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>credit terms. Collections on these sales aren’t reasonably assured and bad debt losses can’t be reasonably predicted. It’s unlikely that repossessed merchandise will be in salable condition. Therefore Reliable uses the cost recovery method. Merchandise costing $30 000 was sold for $55 000 in 2010. Collections on this sale were $20 000 in 2010 $15 000 in 2011 and $20 000 in 2012. In 2010 Reliable would recognize gross profit of A.$8 090. B.$25 000. C.$0. D.$8 333. 20. On October 28 2011 .pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>Mercedes Company committed to a plan to sell a division that qualified as a component of the entity according to GAAP regarding discontinued operations and was properly classified as held for sale on December 31 2011 the end of the company’s fiscal year. The division’s loss from operations for 2011 was $2 000 000. The division’s book value and fair value less cost to sell on December 31 were $3 000 000 and $2 500 000 respectively. What before-tax amount(s) should Mercedes report as loss on discontinued operations in its 2011 income statement? A.None B.$2 500 000 loss C.$500 000 impairment loss included in continuing operations and a $2 000 000 loss from discontinued operations D.$2 000 000 loss 21. Indiana Co. began a construction project in 2011 that will provide it $150 million when it is.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>completed in 2013. During 2011 Indiana incurred $36 million of costs and estimates an additional $84 million of costs to complete the project. In 2012 Indiana incurred costs of $58.5 million and estimated an additional $40.5 million in costs to complete the project. Using the percentage-of-completion method Indiana recognized _______ on the project in 2012. A.$1.5 million gross profit B.$6 million gross profit C.$15 million gross profit D.$13.5 million gross profit 22. On May 1 Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>completed on December 31 2011. The following additional facts pertain to the transaction: * The Footwear Division qualifies as a component of the entity according to GAAP regarding discontinued operations. * The book value of Footwear’s assets totaled $48 million on the date of the sale. * Footwear’s operating income was a pretax loss of $10 million in 2011. * Foxtrot’s income tax rate is 40%. Suppose that the Footwear Division’s assets had not been sold by December 31 2011 but were considered held for sale. Assume that the fair value of these assets at December 31 was $40 million. In the 2011 income statement for Foxtrot Co. it would report a loss from discontinued operations of A.$3 million loss B.$18 million loss C.$10.8 million loss D.$10 million loss 23. Misty Company reported the following before-tax items during the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>current year: Sales $600 Operating expenses 250 Restructuring charges 20 Extraordinary loss 50 Misty’s effective tax rate is 40%. What would be Misty’s income before extraordinary item(s)? A.$198 B.$210 C.$360 D.$330 24. Kunkle Company wishes to earn 20% annually on its investments. If it makes an investment that equals or exceeds that rate it considers it a success. Assume that it invests $2 million and gets $500 000 in return at the end of each year for xyears. What is the minimum value of xfor which it will consider the investment a success? Assume that it can’t invest for fractional parts of a year. A.7 years B.6 years C.9 years D.4 years 25. Hong Kong Clothiers reported revenue of $5 000 000 for its year ended December 31 2011. Accounts receivable at December 31 2010 and 2011 were $320 000 and $355 000 respectively. Using the direct method for reporting.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>cash flows from operating activities Hong Kong Clothiers would report cash collected from customers of A.$4 965 000. B.$5 035 000. C.$5 045 000. D.$5 000 000. ECONOMIC RESOURCES 1 1. Alliance Software began 2011 with accounts receivable of $115 000. All sales are made on.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>credit. Sales and cash collections from customers for the year were $780 000 and $700 000 respectively. Cost of goods sold for the year was $450 000. What was Alliance’s receivables turnover ratio (rounded) for 2011? A.6.78 B.2.90 C.5.03 D.4.00 2. Chez Fred Bakery estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2011 Chez Fred’s credit sales and collections were $125 000 and $131 000 respectively. What was the balance of accounts receivable on January 1 2011 if $180 in accounts receivable were written off during 2011 and if the allowance.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account had a balance of $750 on 12/31/11? A.$31 000 B.$5 820 C.$31 180 D.138 000 3. Data below for the year ended December 31 2011 relates to Houdini Inc. Houdini started business January 1 2011 and uses the LIFO retail method to estimate ending inventory. Cost Retail Beginning inventory $66 000 $104 000 Net purchases 280 000 420 000 Net markups 20 000 Net markdowns 40 000 Net sales 375 000 .pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>Current period cost-to-retail percentage is A.63.6%. B.63.5%. C.68.7%. D.70.0%. 4. Sullivan Corporation has determined its year-end inventory on a FIFO basis to be $500 000. Information pertaining to that inventory is as follows: Selling price $520 000 Disposal costs 30 000 Normal profit margin 60 000 .pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>Replacement cost 440 000 What should be the carrying value of Sullivan’s inventory? A.$490 000 B.$440 000 C.$430 000 D.$500 000 5. Ramen Inc. adopted dollar-value LIFO (DVL) as of January 1 2011 when it had a cost inventory of $600 000. Its inventory as of December 31 2011 was $667 800 at year-end costs and the cost index was 1.06. What was DVL inventory on December 31 2011? A.$667 800 B.$631 800 C.$636 000 D.$630 000 6. Cashmere Soap Corporation had the following items listed in its trial balance at 12/31/11: Currency and coins $ 650 Balance in checking.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>account 2 600 Customer checks waiting to be deposited 1 200 Treasury bills purchased on 11/1/11 mature on 4/30/12 3 000 Marketable equity securities 10 200 Commercial paper purchased on 11/1/11 mature on 1/30/12 5 000 What amount will Cashmere Soap include in its year-end balance sheet as cash and cash equivalents? A.$9 450 B.$12 450 C.$19 650 D.$7 450 7. On July 8 a fire destroyed the entire merchandise inventory on hand of Larrenaga Wholesale Corporation. The following information is available: Sales January 1 through July 8 $700 000 Inventory January 1 130 000 Purchases January 1 through July 8 640 000 Gross profit ratio 30% What is the estimated inventory on July 8 immediately prior to the fire? A.$192 000 B.$280 000 C.$490 000 D.$510 000 8. Baker Inc. acquired equipment from the manufacturer on 10/1/11 and gave a noninterest-bearing note in exchange. Baker is obligated to pay $918 000 on 4/1/12 to satisfy the obligation in full. If Baker accrued interest of $9 000 on the note in its 2011 year-end financial statements what is its imputed annual.pennfoster.com/StudentLMS/Student/Exams/Random.aspx” title=”Powered by Text-Enhance”>interest rate? A.4% B.5% C.6% D.2% 9. False Value Hardware began 2011 with a credit balance of $32 000 in the allowance for sales re
