BUSACC 0030 Study Guide - Midterm Guide: Net Income, Earnings Before Interest And Taxes, Accounts Receivable

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jadehorse306

18 Dec 2015

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Chapter 5 communicating and interpreting accounting information. The mission of the sec is to protect investors and maintain the integrity of the securities markets. The sec oversees the work of the fasb. Pcaob sets auditing standards for the independent auditors (cpa"s) of public. Operating income = net sales costs of goods sold and other operating expenses. Pretax earnings = revenue all expenses except tax expense. Eps = net income / average number of common stock outstanding during the. Amount of stock shares = shares x par value. Gross profit = sales revenue cost of goods. Net sales revenue = gross sales sales discounts, returns, and allowances. Goods available for sale = ending inventory + cgs. Ending for fifo inventory = remaining inventory x amount of units last companies period purchased. Chapter 6 reporting and interpreting sales revenue, receivables, and cash.

Related Questions

Multiple Choice Question 119

The following information pertains to Sampson Company. Assumethat all balance sheet amounts represent both average and endingbalance 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 Stockholdersâ Equity
Current liabilities		$ 50,000
Long-term liabilities		90,000
Stockholdersâ equityâcommon		160,000
	Total Liabilities and Stockholdersâ Equity	$300,000

Income Statement
Sales		$ 120,000
Cost of goods sold		66,000
Gross profit		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 Sampson?

1.40

1.80

.64

1.30

Multiple Choice Question 123

The following information pertains to Sampson Company. Assumethat all balance sheet amounts represent both average and endingbalance 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		310,000
	Total Assets	$400,000

Liabilities and Stockholdersâ Equity
Current liabilities		$ 50,000
Long-term liabilities		90,000
Stockholdersâ equityâcommon		260,000
	Total Liabilities and Stockholdersâ Equity	$400,000

Income Statement
Sales		$300,000
Cost of goods sold		66,000
Gross profit		234,000
Operating expenses		30,000
	Net income	$204,000

Number of shares of common stock		6,000
Market price of common stock		$20
Dividends per share		.50

What is the profit margin for Sampson?

68%

115%

51%

	28.2%

Multiple Choice Question 129

The following information pertains to Eura Company. Assume thatall balance sheet amounts represent both average and ending balancefigures. Assume that all sales were on credit.

Assets
Cash and short-term investments		$ 40,000
Accounts receivable (net)		30,000
Inventory		25,000
Property, plant and equipment		215,000
	Total Assets	$310,000

Liabilities and Stockholdersâ Equity
Current liabilities		$ 60,000
Long-term liabilities		75,000
Stockholdersâ equityâcommon		175,000
	Total Liabilities and Stockholdersâ Equity	$310,000

Income Statement
Sales		$ 90,000
Cost of goods sold		45,000
Gross profit		45,000
Operating expenses		25,000
	Net income	$ 20,000

Number of shares of common stock		5,000
Market price of common stock		$22
Dividends per share		1.00

What is the price-earnings ratio for Eura?

7.3 times

4.0 times

5.5 times

	5 times

Multiple Choice Question 134

The following amounts were taken from the financial statementsof Plant Company:

	2013	2012
Total assets	$800,000	$1,000,000
Net sales	720,000	650,000
Gross profit	352,000	320,000
Net income	150,000	117,000
Weighted average number of common shares outstanding	60,000	90,000
Market price of common stock	$67.50	$39

The price-earnings ratio for 2013 is

27 times.

11 times.

2.5 times.

	45 times.

Multiple Choice Question 164

In vertical analysis, the base amount for each income statementitem is

sales.

gross profit.

net income.

net sales.

carminewalrus586

24. Jones Co. invests $10,000 @ 10% per year, compounded annually for six years. 4 points The PV of 1 is .7903 and the amount or future value of 1 is 1.7716. $_________

25. Jones Co. wants $25,000 in 6 years. The PV of 1 is .7903 and the amount of 1 is 1.7716. 4 points How much should he invest in Year 1? ____________

26. Assume you invest 1,000 each year for 5 years? How much will be in the fund on 12/31 Year 5? The FV of an annuity is 5.5256 and the PV of an annuity is 5.8019. 3 pts

$_________

28. The following is a comparative balance sheet for Top Ten Clothiers Inc. for the years 2016 and 2015: 14 points

Top Ten Clothiers Inc. Comparative Balance Sheet December 31, 2016 and 2015

*Assets*	2016	2015
Cash ..................................	$ 43,000	$ 240,000
Accounts receivable ...................	390,000	210,000
Inventory .............................	360,000	450,000
Long-term investments .................	0	120,000
Total assets ........................	$ 793,000	$1,020,000
*Liabilities and Equities*
Accounts payable ......................	$ 150,000	$ 240,000
Operating expenses payable ............	48,000	30,000
Bonds payable .........................	140,000	200,000
Common stock ..........................	250,000	250,000
Retained earnings .....................	205,000	300,000
Total liabilities and equities ......	$ 793,000	$1,020,000

The income statement for the year ended December 31, 2016, follows:

Top Ten Clothiers Income Statement For the Year Ended December 31, 2016

Sales		$1,120,000
Cost of goods sold:
Beginning inventory, January 1, 2016	$ 450,000
Purchases ...........................	660,000
Cost of goods available .............	$1,110,000
Less ending inventory, December 31, 2016 ...............................	360,000	750,000
Gross profit on sales .................		$ 370,000
Operating expenses ...		360,000
Operating income ......................		$ 10,000
Other revenues and expenses:
Loss on sale of long-term investment		(15,000)
Net loss ..............................		$ (5,000)

After paying cash dividends, the decrease in retained earnings totaled $95,000. Management is alarmed by the shrinkage in the company's cash position during 2016. Prepare a partial statement of cash flows for 2016 using the direct method.

Top Ten Clothiers Inc. Statement of Cash Flows For the Year Ended December 31, 2016

Cash flows from operating activities:
Cash receipts from customers ......?		$ ,000
Cash payments for:
Finished Goods Inventory ...... ?
Operating expenses except 18,000 were in cash..	,000	,000
Net cash used in operating activities .		$

Sales ..........................................	$ ,000
Accounts Receivable, beginning .................
Accounts Receivable, ending ....................
Cash collected from customers ................	$

Purchases ......................................	$ ,000
Accounts Payable, beginning ....................
Accounts Payable, ending .......................
Cash payments for inventory ....................	$ ,000

redturtle216

37. Berton Company reported assets totaling $870,000 as of December 31, 2016. The following information relates to those assets: 8 points

(a)	Breakstone Labs, a rival company, recently offered to give a $100,000 signing bonus to the head of Berton's fabrication department if she would leave Berton and join Breakstone. She declined. Berton has consequently recorded a long-term asset, "Employees Under Contract," for $100,000.
(b)	Berton purchased a patent from a small research firm for $75,000. Subsequent research has shown that the patented technology doesn't work as well as originally thought and the technology actually has no economic use. Berton reports the patent at its amortized cost of $60,000.
(c)	An independent appraiser recently set Berton's market value at $500,000. This exceeded the book value of equity by $120,000. Accordingly, Berton recorded Goodwill totaling $120,000.

(d)	When Berton started business three years ago, it was required to deposit $5,000 with the local electric utility. The deposit is refundable if Berton cancels its electric service. Berton earns no interest on the deposit. The deposit is recorded as an "Other Long-Term Asset."

After considering the items above, what should be the total of Berton's reported assets?

Organize your answer as follows: Put NA if no adjusting entry is required.

$870,000

a. + or -

b. + or â

c. + or -

d. + or -

Adjusted Total Assets are $_____________

38. Provo Water Products had sales during 2016 of $895,000. Provo's gross profit percentage is 55 percent. Purchases of inventory during 2016 totaled $466,250 and a physical count of inventory on hand at the end of the year totaled $189,500. Selling expenses are 18 percent of sales, and general and administrative expenses are equal to 80 percent of selling expenses. Provo's income tax rate is 30 percent and the company has 60,000 shares of common stock outstanding.

Prepare an income statement, including earnings per share data, for the year ended December 31, 2016. 30 points Provo Water Products Income Statement For the Year Ended December 31, 2016

Sales .......................................
Cost of goods sold:
Beginning inventory .......................	$126,000
Purchases .................................	466,250
Goods available for sale .................
Less ending inventory .....................	189,500
Cost of goods sold .......................
Gross margin 55% of sales....................
Expenses:
Selling expenses ....18% of sales..........
General & Admin. expenses 80% of selling expenses
Operating income ............................
Income tax expense 30% of operating income....
Net income ..................................

Earnings per common share ($ /60,000 shares) ..................

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BUSACC 0030 Study Guide - Midterm Guide: Net Income, Earnings Before Interest And Taxes, Accounts Receivable

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