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Les Miserables
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pre-week in AP Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. ____ 1. Mejarus Co.'s adjusted trial balance at December 31, 2001, includes the following account balances: Common Stock, $3 par ............................... $360,000 Additional Paid-In Capital.......................... 480,000 Treasury Stock, at cost............................. 30,000 Net Unrealized Loss on Available-for-Sale Securities 12,000 Retained Earnings: Appropriated for Uninsured Earthquake Losses ................................. 90,000 Retained Earnings: Unappropriated................... 120,000 What amount should Mejarus report as total stockholders' equity in its December 31, 2001, balance sheet? a. $1,008,000 b. $1,032,000 c. $1,068,000 d. $1,092,000 ____ 2. Hogi-Yogi Co. has total debt of $252,000 and stockholders' equity of $420,000. Hogi-Yogi is seeking capital to fund an expansion. Hogi-Yogi is planning to issue an additional $180,000 in common stock, and is negotiating with a bank to borrow additional funds. The bank requires a maximum debt ratio of .75. What is the maximum additional amount Hogi-Yogi will be able to borrow after the common stock is issued? a. $639,000 b. $852,000 c. $1,236,000 d. $1,548,000 b. c. 20 percent d. 24 percent ____ 21. Barney Co.'s current ratio is 2:1. Which of the following transactions would normally increase Barney's current ratio? a. Purchasing inventory on account b. Borrowing money by signing a long-term note c. Collecting an account receivable d. Purchasing land for cash ____ 22. The accounts and balances shown below were gathered from Paynter Corporation's trial balance on December 31, 2001. All adjusting entries have been made. Wages Payable ........................................... $ 25,600 Cash .................................................... 17,700 Mortgage Payable ........................................ 151,600 Dividends Payable ....................................... 14,000 Prepaid Rent ............................................ 13,600 Inventory ............................................... 81,800 Sinking Fund Assets ..................................... 52,400 Short-Term Investments .................................. 15,200 Premium on Bonds Payable ................................ 4,600 Stock Investment in Subsidiary .......................... 102,400 Taxes Payable ........................................... 22,800 Accounts Payable ........................................ 24,800 Accounts Receivable ..................................... 36,600 The amount that should be reported as current assets on Paynter Corporation's balance sheet is a. $151,300. b. $164,900. c. $217,300. d. $267,300. ____ 23. Neptune Corporation's trial balance contained the following account balances at December 31, 2001: Accumulated Depreciation--Equipment ..................... $45,000 Short-Term Investments .................................. 15,000 Prepaid Insurance ....................................... 3,000 Cash .................................................... 33,000 Inventory of Merchandise ................................ 90,000 Equipment and Furniture ................................. 54,000 Patent .................................................. 12,000 Accounts Receivable (net) ............................... 48,000 Land Held for Future Business Site ...................... 75,000 On Neptune's December 31, 2001, balance sheet, the current assets total should be a. $189,000. b. $201,000. c. $219,000. d. $243,000. ____ 24. The accounts and balances shown below were gathered from Paynter Corporation's trial balance on December 31, 2001. All adjusting entries have been made. Wages Payable ........................................... $ 25,600 Cash .................................................... 17,700 Mortgage Payable ........................................ 151,600 Dividends Payable ....................................... 14,000 Prepaid Rent ............................................ 13,600 Inventory ............................................... 81,800 Sinking Fund Assets ..................................... 52,400 Short-Term Investments .................................. 15,200 Premium on Bonds Payable ................................ 4,600 Stock Investment in Subsidiary .......................... 102,400 Taxes Payable ........................................... 22,800 Accounts Payable ........................................ 24,800 Accounts Receivable ..................................... 36,600 The amount that should be reported as current liabilities on Paynter Corporation's balance sheet is a. $87,200. b. $91,800. c. $73,200. d. $238,800. ____ 25. The accounts and balances shown below were gathered from Paynter Corporation's trial balance on December 31, 2001. All adjusting entries have been made. Wages Payable ........................................... $ 25,600 Cash .................................................... 17,700 Mortgage Payable ........................................ 151,600 Dividends Payable ....................................... 14,000 Prepaid Rent ............................................ 13,600 Inventory ............................................... 81,800 Sinking Fund Assets ..................................... 52,400 Short-Term Investments .................................. 15,200 Premium on Bonds Payable ................................ 4,600 Stock Investment in Subsidiary .......................... 102,400 Taxes Payable ........................................... 22,800 Accounts Payable ........................................ 24,800 Accounts Receivable ..................................... 36,600 Paynter Corporation's working capital is a. $62,500. b. $73,100. c. $77,700. d. $125,700. ____ 26. Baggins Company prepared a draft of its 2001 balance sheet. The draft statement reported total assets of $437,500. Included in this total assets figure were the following items: Treasury stock of Baggins Company at cost, which approximates market value on December 31 ................ $12,000 Unamortized patents ..................................... 5,600 Cash surrender value of life insurance on corporate executives .............................................. 6,850 Unrealized holding losses on available-for-sale securities ............................................ 4,200 At which amount should Baggins' total assets be correctly reported in the December 31, 2001, balance sheet? a. $420,850 b. $421,300 c. $425,050 d. $425,500 ____ 27. Maryk Electronics Inc. reported the following items on its December 31, 2001, trial balance: Accounts Payable ........................................ $108,900 Advances to Employees ................................... 4,500 Unearned Rent Revenue ................................... 28,800 Estimated Liability Under Warranties .................... 25,800 Cash Surrender Value of Officers' Life Insurance ........ 7,500 Bonds Payable ........................................... 555,000 Discount on Bonds Payable ............................... 22,500 Trademarks .............................................. 3,900 The amount that should be recorded on Maryk's balance sheet as total liabilities is a. $696,000. b. $700,500. c. $703,500. d. $741,000. ____ 28. Troy Co. began operations on January 1, 2001, with $100,000 from the issuance of stock and borrowed funds of $15,000. Net income for 2001 was $5,000 and Troy paid a $400 cash dividend on December 15. No additional activities affected owners' equity in 1999. At December 31, 2001, Troy's liabilities had increased to $18,800. In Troy's December 31, 2001, balance sheet, total assets should be reported at a. $119,600. b. $120,000. c. $123,400. d. $138,400. ____ 29. Eagle Co. prepared a draft of its 2001 balance sheet. The draft statement reported current liabilities totaling $200,000. However, none of the following items were included in this preliminary total at December 31, 2001: Accounts payable ........................................ $30,000 Bonds payable, due 2002 ................................. 50,000 Discount on bonds payable, due 2002 ..................... 6,000 Dividends payable on January 31, 2002 ................... 16,000 Notes payable, due 2003 ................................. 40,000 At which amount should Eagle's current liabilities be correctly reported in the December 31, 2001, balance sheet? a. $230,000 b. $290,000 c. $296,000 d. $302,000 ____ 30. The December 31, 2001, balance sheet of Madden Inc., reported total assets of $1,050,000 and total liabilities of $680,000. The following information relates to the year 2002: • Madden Inc. issued an additional 5,000 shares of common stock at $25 per share on July 1, 2002. • Madden Inc. paid dividends totaling $80,000. • Net income for 2002 was $110,000. • No other changes occurred in stockholders' equity during 2002. The stockholders' equity section of the December 31, 2002, balance sheet would report a balance of a. $400,000. b. $525,000. c. $685,000. d. $835,000. ____ 31. Information from Blain Company's balance sheet is as follows: Current assets: Cash .................................................... $ 1,200,000 Investment securities ................................... 3,750,000 Accounts receivable ..................................... 28,800,000 Inventories ............................................. 33,150,000 Prepaid expenses ........................................ 600,000 Total current assets .................................... $67,500,000 Current liabilities: Notes payable ........................................... $ 750,000 Accounts payable ........................................ 9,750,000 Accrued expenses ........................................ 6,250,000 Income taxes payable .................................... 250,000 Payments due within one year on long-term debt .......... 1,750,000 Total current liabilities ............................... $18,750,000 What is Blain's quick (acid-test) ratio? a. 0.26 to 1 b. 0.30 to 1 c. 1.80 to 1 d. 3.60 to 1 ____ 32. Seahawk Company's adjusted trial balance at December 31, 2001, includes the following account balances: Common Stock, $3 par .................................... $300,000 Additional Paid-In Capital .............................. 400,000 Treasury Stock, at cost ................................. 25,000 Net Unrealized Holding Loss on Available-For-Sale Securities ............................................ 10,000 Retained Earnings--Appropriated for Uninsured Earthquake Losses ................................................ 75,000 Retained Earnings--Unappropriated ....................... 100,000 What amount should Seahawk report as total owners' equity in its December 31, 2001, balance sheet? a. $840,000 b. $860,000 c. $890,000 d. $910,000 ____ 33. Martin Corporation was organized on January 3, 2001. Martin was authorized to issue 50,000 shares of common stock with a par value of $10 per share. On January 4, Martin issued 30,000 shares of common stock at $25 per share. On July 15, Martin issued an additional 10,000 shares at $20 per share. Martin reported income of $33,000 during 2001. In addition, Martin declared a dividend of $.50 per share on December 31, 2001. The amount reported on Martin Corporation's December 31, 2001, balance sheet as additional paid-in capital was a. $400,000. b. $550,000. c. $563,000. d. $950,000. ____ 34. Martin Corporation was organized on January 3, 2001. Martin was authorized to issue 50,000 shares of common stock with a par value of $10 per share. On January 4, Martin issued 30,000 shares of common stock at $25 per share. On July 15, Martin issued an additional 10,000 shares at $20 per share. Martin reported income of $33,000 during 2001. In addition, Martin declared a dividend of $.50 per share on December 31, 2001. The amount reported on Martin Corporation's December 31, 2001, balance sheet as stockholders' equity was a. $400,000. b. $550,000. c. $950,000. d. $963,000. ____ 35. Information from Blain Company's balance sheet is as follows: Current assets: Current assets: Cash .................................................... $ 1,200,000 Investment securities ................................... 3,750,000 Accounts receivable ..................................... 28,800,000 Inventories ............................................. 33,150,000 Prepaid expenses ........................................ 600,000 Total current assets .................................... $67,500,000 Current liabilities: Notes payable ........................................... $ 750,000 Accounts payable ........................................ 9,750,000 Accrued expenses ........................................ 6,250,000 Income taxes payable .................................... 250,000 Payments due within one year on long-term debt .......... 1,750,000 Total current liabilities ............................... $18,750,000 What is Blain's current ratio? a. 0.26 to 1 b. 0.30 to 1 c. 1.80 to 1 d. 3.60 to 1 ____ 36. What is the effect of the collection of accounts receivable on the current ratio and net working capital, respectively? Current Ratio Net Working Capital a. No effect No effect b. Increase Increase c. Increase No effect d. No effect Increase ____ 37. Which of the following is an appropriate computation for return on investment? a. Net income divided by total assets b. Net income divided by sales c. Sales divided by total assets d. Sales divided by stockholders' equity ____ 38. Which item describes whether the following accounts would be included in the calculation of the acid-test (quick) ratio? Accounts Receivable Inventories a. No No b. No Yes c. Yes No d. Yes Yes Problem 39. Below are selected accounts and their balances for the Stonefly Company as of December 31, 2001: Accounts Payable ........................................ $ 98,000 Accounts Receivable ..................................... 216,000 Allowance for Doubtful Notes and Accounts ............... 25,000 Cash .................................................... 22,400 Wages Payable ........................................... 10,800 Trademarks .............................................. 45,000 Long-Term Advances to Officers .......................... 150,000 Inventory ............................................... 83,000 Income Taxes Payable .................................... 72,000 Notes Receivable (short-term) ........................... 97,000 Bond Redemption Fund .................................... 180,000 Bonds Payable ........................................... 500,000 Premium on Bonds Payable ................................ 40,000 Treasury Stock .......................................... 57,600 Based on the above information, determine the amount of working capital at December 31, 2001. 40. Account balances and supplemental information for the Bighorn Corporation as of December 31, 2001, are given below: Accounts Payable ....................................... $ 75,900 Accounts Receivable .................................... 141,600 Accumulated Depreciation--Equipment .................... 84,000 Bonds Payable .......................................... 300,000 Cash ................................................... 243,900 Common Stock ........................................... 1,560,000 Deferred Income Tax Liability (noncurrent) ............. 6,900 Dividends Payable ...................................... 45,000 Equipment .............................................. 840,000 Income Taxes Payable ................................... 91,500 Inventory .............................................. 395,100 Investment in Land ..................................... 510,000 Investment in Stock of Subsidiary ...................... 492,000 Note Payable ........................................... 120,000 Notes Receivable ....................................... 150,000 Prepaid Insurance ...................................... 7,200 Retained Earnings ...................................... 453,600 Salaries and Wages Payable ............................. 42,900 (a) $300,000 of 12% bonds were sold on November 1, 2001, at par. (b) 40,000 shares of $30 par value common stock were sold for $1,560,000. (c) All the equipment was purchased on January 2, 2000. The depreciation rate is 10 percent per year. (d) 5 percent of accounts receivable are expected to be uncollectible. (e) A two-year insurance policy was purchased on May 1, 2001, for $7,200. (f) Accrued interest on $150,000 of short-term notes receivable from customers was $5,100 at December 31, 2001. (g) $120,000 was borrowed from the bank on a 5-year, 10% note payable dated December 31, 2001. The loan is to be repaid in 10 semiannual payments of $12,000 plus interest, with the first payment due June 30, 2002. Prepare a properly classified balance sheet in report form for Bighorn Corporation as of December 31, 2001. 41. McMaster, Inc., a nonpublic enterprise, is negotiating a loan for expansion purposes and the bank requires audited financial statements. Before closing the accounting records for the year ended December 31, 2001, McMaster's controller prepared the following comparative financial statements for 2001 and 2000: McMaster, Inc.Balance SheetsDecember 31, 2001 and 2000 2001 2000 Cash ...................................... $ 550,000 $ 300,000 Investment securities (reported at market; cost, $142,000) ......................... 156,000 0 Accounts receivable ....................... 974,000 784,000 Allowance for doubtful accounts ........... (100,000) (64,000) Inventories ............................... 850,000 770,000 Property and equipment .................... 620,000 434,000 Accumulated depreciation .................. (300,000) (242,000) Total assets ............................ $2,750,000 $1,982,000 Accounts payable .......................... $ 180,000 $ 154,000 Accrued expenses .......................... 160,000 40,000 Note payable, 5-year ...................... 600,000 600,000 Estimated contingent liability ............ 200,000 0 Common stock, $10 par ..................... 420,000 420,000 Additional paid-in capital ................ 260,000 260,000 Retained earnings ......................... 930,000 508,000 Total liabilities & owners' equity ...... $2,750,000 $1,982,000 McMaster, Inc.Income StatementsFor the Years Ended December 31, 2001 and 2001 2001 2000 Net sales ................................. $3,160,000 $2,500,000 Operating expenses: Cost of sales ............................. $1,510,000 $1,380,000 Selling & administrative .................. 984,000 730,000 Depreciation .............................. 58,000 36,000 Estimated loss from lawsuit ............... 200,000 0 $2,752,000 $2,146,000 Operating income .......................... $ 408,000 $ 354,000 Unrealized gain on investment securities .. 14,000 0 Net income ................................ $ 422,000 $ 354,000 During the audit, the following additional information was obtained: (a) The investment portfolio consists of investments in trading securities with a total market value of $156,000 at December 31, 2001. The securities were purchased February 3, 2001, at a cost of $142,000. (b) As a result of errors in physical count, inventories were overstated by $30,000 at December 31, 2001. (c) On January 2, 2001, the cost of equipment purchased for $80,000 was mistakenly charged to repairs and maintenance. McMaster depreciates this type of equipment over a 5-year life using the straight-line method, with no residual or salvage value. (d) McMaster was named as a defendant in a lawsuit in October 2001. McMaster's counsel is of the opinion that McMaster has a good defense and does not anticipate any impairment of McMaster's assets or that any significant liability will be incurred. However, McMaster's counsel admits that loss of the suit is "possible." McMaster's management wished to be conservative and established a loss contingency of $200,000 at December 31, 2001. (e) On January 24, 2002, before the 2001 financial statements were issued, McMaster was notified that one of its largest customers had filed for bankruptcy as the result of a flood that destroyed a substantial portion of the company's assets on January 16, 2002. The customer's accounts receivable balance at December 31, 2001, was $144,000. (f) $100,000 of 5-year notes payable will mature September 30, 2002. In view of McMaster's plans for expansion, management is seriously considering refinancing the notes when they become due. (1) Prepare a properly classified balance sheet for McMaster, Inc., as of December 31, 2001. (Income tax considerations should be ignored.) (2) Identify the events and other information that should be disclosed in the notes to McMaster's financial statements. (Do not prepare the notes.) 42. The following balance sheet was prepared by the accountant for Logan Farms Corp.: Logan Farms Corp.Balance SheetDecember 31, 2001 Assets Cash ................................................... $ 271,500 Investment securities .................................. 315,000 Accounts receivable .................................... 270,000 Inventories ............................................ 501,000 Total current assets ................................. $1,357,500 Land, buildings, and equipment ......................... 1,452,000 Total assets ........................................... $2,809,500 Liabilities and Stockholders' Equity Accounts payable ....................................... $ 342,420 Estimated losses from future crop failures ............. 360,000 Salaries payable ....................................... 150,000 Total current liabilities ............................ $ 852,420 10% Bonds payable (due in 10 years) .................... 525,000 Capital stock .......................................... 450,000 Retained earnings ...................................... 982,080 Total liabilities and stockholders' equity ............. $2,809,500 Additional information: (a) Cash is held in a checking account and a savings account with balances of $69,450 and $202,050, respectively. The cash in the savings account will be used to support operations in the event of a crop failure. (b) A loan to the president for $180,000 that is to be repaid in quarterly installments of $15,000 is included in "Accounts receivable." Other accounts receivable are considered to be 95 percent collectible. (c) Inventories include: Finished products ................................ $390,000 Supplies ......................................... 19,500 Storage buildings (net of $30,480 depreciation) .. 91,500 Total .......................................... $501,000 (d) "Land, buildings, and equipment" includes 5 tractors that were purchased near the end of the year for $360,000 (shown net of a $300,000, 5-year loan used to buy the tractors). The balance of the account consists of land that was purchased for $1,200,000 and buildings that were purchased for $255,000 (shown net of depreciation of $63,000). (e) Included in "Accounts payable" are $105,000 of advances from customers for delivery of goods in August of the next year. (f) The company has 90,000 shares of $5 par common stock issued and outstanding. The common stock was originally sold for $7 per share, and the premium was included in "Retained earnings." (g) After reading a U.S. Meteorological Service report, the president believes that next year will be a bad crop year due to freak hailstorms and estimates the company will lose about $360,000. An appropriation of Retained Earnings has been made for this amount. Using the balance sheet and the additional information, prepare a properly classified and corrected balance sheet. 43. The following totals are taken from the December 31, 2001, balance sheet of Streamer Company: Current assets ....................................... $350,000 Long-term assets ..................................... 800,000 Current liabilities .................................. 240,000 Long-term liabilities ................................ 270,000 Additional information: (a) Cash of $38,000 has been placed in a fund for the retirement of long-term debt. The cash and long-term debt have been offset and are not reflected in the financial statements. (b) Long-term assets include $50,000 in treasury stock. (c) Cash of $14,000 has been set aside to pay taxes due. The cash and taxes payable have been offset and do not appear in the financial statements. (d) Advances on salespersons' commissions in the amount of $21,000 have been made. Also, sales commissions payable total $24,000. The net liability of $3,000 is included in Current Liabilities. After making any necessary changes, what are the totals for Streamer's current assets and current liabilities? 44. The following totals are taken from the December 31, 2001, balance sheet of Bartholomew Company: Current assets ....................................... $350,000 Long-term assets ..................................... 800,000 Current liabilities .................................. 240,000 Long-term liabilities ................................ 270,000 Additional information: (a) A building costing $100,000 was purchased by taking out a $100,000 mortgage. Since the building serves as collateral on the mortgage loan, both have been excluded from the financial statements. (b) Cash in the amount of $45,000 is in a restricted fund for the purchase of equipment. This cash has been included in Current Assets. (c) Long-term liabilities include a bank loan of $80,000. Of this loan, $15,000 must be repaid within the coming year. (d) Investment securities totaling $27,000 are included in Current Assets. These securities represent stock purchases made as a long-term equity investment in a major supplier. After making any necessary changes, what are the totals for Bartholomew's long-term assets and long-term liabilities? 45. Berton Company reported assets totaling $870,000 as of December 31, 2001. The following information relates to those assets: (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.
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Paper Information
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Title: Les Miserables
Words: 15858
Rating: None
Pages: 63.4
submitted by: borcksolid15
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