Final Test

Final doc
1 Teague Company's working capital was $112,000 and total current liabilities were one-second of
that amount. What was the current ratio?
Teague Company's working capital was $52,000 and total current liabilities were one-second of that
amount. What was the current ratio?
a. 4
b. 3
c. 2
d. 1
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Ans is b 3
Current Assets / current liabilities = current ratio
current assets-current liabilities = working capital
current liabilities = 52000*1/2 = 26000
current assets = 52000+26000 = 78000
CR = 78000/26000 = 3
answer:3
2 Which of the following statements correctly describes a treasury stock transaction?

A treasury stock purchase for an amount equal to the amount of the stock's original issue cost
results in no change to total stockholders' equity.
A treasury stock purchase for less than the amount of the stock's original issue cost results in a
decrease in total stockholders' equity.
A treasury stock purchase for less than the amount of the stock's original issue cost results in an
increase in total stockholders' equity.
A treasury stock purchase for more than the amount of the stock's original issue cost results in an
3. A company's assets and stockholders' equity both decrease when a cash dividend is declared by
the company's board of directors.
True
False
4.
The records of Marshall Company include the following:
Average total assets $3,550,000
Average total liabilities 1,270,000
Total revenue 4,630,000
Total expense (including income tax) 4,090,000
Interest expense (included in total expenses) 91,000
Income tax rate 35%

The return on assets is closest to: (The company uses the 'net of interest' method of
calculating ROA.)
rev: 12_07_2018_QC_CS-150761
15.21%.
16.88%.
26.28%.
42.52%.
5 Darwin Company, a manufacturer, has provided the following information pertaining to its recent
year of operation:
● Net income, $196,000

● Accounts receivable increased $17,500
● Prepaid insurance increased $6,500
● Depreciation expense was $23,000
● Loss on sale of a building was $21,500
● Wages payable increased $13,500
● Unearned revenue decreased $19,000
Using the indirect method, how much was Darwin's net cash provided by operating activities?
$168,000.
$211,000.
$181,000.
$219,000.
6 The following information is provided for Bold Company for the year 2017:
● Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding
● Common stock, $100 par value, 2,000 shares issued and outstanding
● Dividends in arrears for three prior years (2014–2016)
● Total dividends declared and paid in 2017 were $50,000.
How much of the 2017 dividend payment was paid to the common stockholders assuming the
preferred stock is noncumulative?
$47,000.
$38,000.
$12,000.
$3,000.
The following information is provided for Bold Company for the year 2017:
$51,200.
$19,200.
$36,800.
$4,800.
Answer 51,200
7 The records of Everyday Electronics Corporation for a particular period include the following:
Average total assets $790,000
Average total liabilities 515,000
Total revenue 206,500
Total expenses (including income tax) 138,000
The return on equity ratio is closest to:
13.30%.
5.25%.
24.91%.
8.67%.
8 Main Street Company paid out $3.90 in dividends per share of common stock and had
earnings per share of $6.60 during 2014. The market price of the stock on December 31, 2014
was $22.60 per share. There were 16,600 shares of stock outstanding for the entire year. The
dividend yield as of December 31, 2014 is closest to:
59.09%
29.20%
5.79%
17.26%
Answer is 17.26
9 A company reported net income of $201,600 during 2016. The company reported
depreciation expense of $43,000, patent amortization of $14,000 and a $6,600 loss on the
sale of equipment. Using the indirect method, how much is the company's net cash flow from
operating activities?
$252,000.
$244,600.
$265,200.
$258,600.
ANSWER :265,200
Shares of stock held as treasury stock do not have voting rights or the right to receive dividends.
True
False
11 The Apple Pie Company had net income of $49,500 and earnings per share of $5.17.
Apple Pie declared dividends of $4.00 per share of common stock during 2016. On December
31, 2016, the stock had a market price of $16.50 per share. Apple Pie's price/earnings ratio is
closest to:
4.12
5.46
0.31
3.19
The Apple Pie Company had net income of $48,100 and earnings per share of $3.77. Apple Pie
declared dividends of $2.60 per share of common stock during 2016. On December 31, 2016, the
stock had a market price of $17.90 per share. Apple Pie's price/earnings ratio is closest to:
a. 4.75
b. 7.02
c. 0.21
d. 6.88
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Answer: price/earnings ratio =4.74
Working notes for the above answer is as under

We have been provided with the information that,
Apple Pie Company had net income of $48,100
EPS =earnings per share of $3.77.
Apple Pie declared dividends of $2.60 per share of common stock during 2016.
On December 31, 2016, the stock had a market price of $17.90 per share.
Now we need to find out price/earnings ratio
The calculation of price/earnings ratio are as follow
PE ratio =
Markate Value per share / Earning Per Share
=17.90 /3.77
=4.75
Answer 3.19
11 The payment of interest on a note payable is a cash flow from a financing activity.
True
False
12. The Apple Pie Company had net income of $49,500 and earnings per share of $5.17.
Apple Pie declared dividends of $4.00 per share of common stock during 2016. On December
31, 2016, the stock had a market price of $16.50 per share. Apple Pie's price/earnings ratio is
closest to:
4.12
5.46
0.31
3.19
13. Which of the following statements about earnings per share (EPS) is correct?
EPS is calculated using the number of common shares of stock outstanding.
Issuance of more common shares would cause earnings per share to increase.
Purchasing treasury shares would cause earnings per share to decrease.
Increased net income would cause earnings per share to decrease.
Cash flows associated with property, plant, and equipment acquisition and disposition are reported
as cash flows from investing activities.
True
False
15 Burich Co. reported short-term borrowings of $3.00 million, long-term borrowings of $6.85 million,
repayments of long-term borrowings of $3.75 million, interest payments of $780,500, purchase of
common stock shares for treasury of $1.00 million, and cash dividends declared of $2.35 million.
What is the cash flow from financing activities?
$2,750,000 net cash inflow.

$-250,000 net cash inflow.
$5,100,000 net cash inflow. D
16 A company acquired some land (independently appraised at $12,200) and paid for it by
issuing 1,020 shares of its common stock (par $10 per share; no market price was quoted).
How should this be reported on the statement of cash flows?
Report $12,200 as an inflow of cash.
Report $12,200 as inflow and outflow of cash.
The transaction should not be reported on the statement of cash flows.
Report in a schedule of significant noncash investing and financing activities.
17 A company reported the following asset and liability balances at the end of 2015 and 2016:
2015 2016
$ 6,800,0 $ 7,600,0
Total Assets
00 00
3,200,0 3,600,0
Total Liabilities
00 00
During 2016, cash dividends of $50,000 were declared and paid, and common stock was issued for
$100,000. What was the amount of net income for 2016?
$300,000.
$450,000.
$400,000.
$350,000.
Answer 450,000
18.
Lee Company has provided the following information:
● Cash flow from operating activities, $248,000
● Interest expense, $28,000
● Interest cash payments, $18,000
● Income tax payments, $148,000
● Income tax expense, $144,000
Lee’s earnings quality ratio is closest to:
1.27
0.85
1.72
0.79
Answer 1.27
19 On December 15, 2016, the board of directors of Cross Corporation declared a cash dividend,
payable on January 8, 2017, of $0.99 per share on the 2,000,000 common shares outstanding. On
December 15, 2016, Cross Corporation should
not prepare a journal entry because the event had no effect on the corporation's financial
position until 2017.
decrease cash $1.98 million and decrease retained earnings $1.98 million.
decrease retained earnings $1.98 million and increase liabilities by $1.98 million.
decrease retained earnings $1.98 million and increase expenses $1.98 million.
d
20
Potaw Company reported the following data at the end of 2016:
Sales revenue (70% on credit) $460,000
Expenses (27% on credit) 76,000
Accounts receivable, net at December 31, 2016 (a

decrease of $12,000 during 2016) 16,000
Total assets 360,000
Stockholders' equity 160,000
The average number of days to collect receivables during 2016 is closest to: (Do not round your
intermediate calculations. Use 365 days a year.)
31.21.
17.46.
24.94.
12.70.
Answer:12.70.
21. A company repurchased shares of its common stock for $19,200. The stock was initially issued
for $12,500 and had a $5,200 par value. Which of the following statements correctly describes the
effects of the repurchase of company’s common stock shares?
Net income increases by $7,300.
Stockholders' equity increases $12,500.
Stockholders' equity decreases $19,200. d
Net income decreases by $7,300.
22. The following information is provided for Bold Company for the year 2017:
Assuming the preferred stock is cumulative, what amount of the 2017 dividend declaration for
dividends in arrears was recorded with a debit to the Dividends payable account on the date of
declaration?
$32,200.
$63,000.
$8,050.
$30,800. AAAAA
23.
On October 1, 2015, Adoll Company acquired 1,700 shares of its $1 par value stock for $51 per
share and held these shares in treasury. On March 1, 2017, Adoll resold all the treasury shares for
$47 per share. Which of the following entries would be recorded when Adoll Company resells the
shares of treasury stock?
rev: 10_04_2016_QC_CS-64483
Cash 79,900
Additional paid-in capital 6,800 a
Treasury Stock 86,700
Cash 79,900
Common Stock 1,700
Additional paid-in
78,200
capital
Cash 79,900
Additional paid-in capital 6,800
Common Stock 86,700

Cash 79,900
Loss on sale of treasury

6,800
stock
24. Flow Company has provided the following information for the year ended December 31, 2016:
Cash paid for interest, $22,500

Cash paid for dividends, $6,500
Cash dividends received, $4,500
Cash proceeds from bank loan, $34,000
Cash purchase of treasury stock, $13,500
Cash paid for equipment purchase, $29,500
Cash received from issuance of common stock, $39,500
Cash received from sale of land with a $34,500 book value, $27,000
Acquisition of land costing $53,500 in exchange for preferred stock issuance.
Payment of $125,000 note payable by exchanging used machinery with a $79,500 book value and
$125,000 fair value
How much was Flow's net cash flow from investing activities?
A net inflow of $2,500.

A net outflow of $56,000
A net inflow of $53,500
D A net outflow of $2,500
25. Milliken Company paid $2.60 million to purchase stock in another company, $1.20 million to
repurchase treasury shares, $1.00 million to buy short-term investments, sold used equipment for
$0.82 million when its book value was $0.90 million, and purchased new equipment for $3.6 million.
What was the net cash flow from investing activities?
$5.32 million net cash outflow.
$6.38 million net cash outflow. ANS
26. Trenton Company has provided the following information:

● Net income, $310,000;
● Preferred shares issued, 6,700;
● Weighted average number of shares of common stock issued, 24,700;
● Cash dividends declared and paid on common stock, $37,000;
● Market price per share, $43;
● Weighted average number of treasury shares of common stock, 4,700.
What is Trenton's earnings per share?
$10.54.
$12.55.
$8.38.
D $15.50. ANS
28.
Rice Company, a retailer, has provided the following information pertaining to its recent year of
operation:

● Prepaid insurance decreased $3,600
● Gain on sale of land, $2,600
● Wages payable decreased $7,600
● Unearned revenue increased $14,000
Using the indirect method, how much was Rice's net cash provided by operating activities?
$137,000
$127,000
C $121,800
$90,200.
29. Lee Company has provided the following information:

What was Lee's cash coverage ratio?
rev: 12_03_2018_QC_CS-150160
20.43
B 11.95
9.00
10.21
30. Most companies use the direct method for disclosing their cash flows from operating
activities rather than the indirect method.
True
False
31 GJ Company, a manufacturer, has provided the following information pertaining to its recent year
of operation:
● Net income, $450,000 +

● Accounts payable decreased $37,000 -
● Prepaid assets increased $26,000
● Accounts receivable decreased $36,000
● Loss on sale of a depreciable asset was $26,000
● Unearned revenue decreased $26,000-
● Patent amortization expense was $12,500
Using the indirect method, how much was GJ's net cash provided by operating activities?
$390,000
$510,000
$484,000 CCC
$562,000
answer:$510,000
32. Roberts Company sold equipment for $340,000, purchased a building for $6,950,000, sold
short-term investments for $370,000, repaid principal on a note payable for $2,750,000 plus
$320,000 of interest, and paid cash dividends of $29,000.
$6,240,000 outflow.
$6,610,000 outflow.
$9,040,000 outflow.
$8,990,000 outflow.
Answer $6,240,000 outflow.
33.
Canadian Beer reported equipment sold for $228 million cash and new equipment purchased
$1,518 million cash. The equipment sold had a net book value of $156 million. Cash flow from
investing activities would show:
An inflow of $228 million and outflow of $156 million.
Cash paid for equipment of $1,290 million.
An inflow of $228 million and outflow of $1,518 million. CCCC investing activities
A net outflow of $1,362 million.
34. A company purchased 2,200 shares of treasury stock for $39,200 cash. The shares were
initially issued for $25,200 and had a $10,200 par value. Which of the following statements
incorrectly describes the effect of the treasury stock purchase?
Earnings per share increases.
B Total assets remain the same.
Net income is unchanged.
Stockholders' equity decreases.
35. During 2016, Eva's Enterprises cash paid for property, plant and equipment was $635
million and cash flow from operating activities was $6,088 million. The average property, plant,
and equipment from the comparative balance sheets were $5,734 million. Eva's capital
acquisitions ratio for 2016 is closest to:
9.03.
9.31.
1.06.
D 9.59.
36.
KAJ Incorporated purchased a machine costing $258,000 by paying $41,400 and signing a
$216,600 note payable.
How would this transaction be reported within the cash flow from investing activities section of the
cash flow statement?
An outflow of $258,000.
An outflow of $41,400. CCCC
It would not be reported in the investing activities section of the cash flow statement.
37. Agnes Company reported the following data:
$53,0
Quick assets
00
148,0
Current assets
00
298,0
Total liabilities
00
13,80
Average net receivables
0
36,00
Beginning inventory
0
198,0
Long-term liabilities
00
124,0
Net credit sales
00
82,00
Cost of goods sold
0
44,00
Ending inventory
0
What was the current ratio?
0.50
1.48
0.68
0.75
Answer:1.48
38. RKJ Company has provided the following information:
• 100,000 shares of $5 par value common stock are authorized

• 70,000 shares have been issued
• 65,000 shares are outstanding
Which of the following statements is correct?
RKJ has 30,000 shares of treasury stock.
B RKJ can issue an additional 30,000 shares of common stock.
RKJ can issue an additional 35,000 shares of common stock.
39. The statement of cash flows explains how the cash balance changed during a particular
period of time.
True
False
40. Irish Corporation issued (sold) 23,000 shares of common stock for $57 per share. The bylaws
established a stated value of $5 per share. What is the amount of increase in the common stock
account as a result of this transaction?
$1,196,000.
$115,000. BBB
$0.
$1,311,000.
41. Collection of principal on a note receivable is a cash flow from financing activities.
True
B False
42.
Trenton Company has provided the following information:
● Net income, $330,000;

What is Trenton's price/earnings ratio?
3.40
4.06
5.32
D 2.73
43. CBA Company reported total stockholders' equity of $85,000 on its balance sheet dated
December 31, 2016. During the year ended December 31, 2017, CBA reported net income of
$10,000, declared and paid a cash dividend of $2,000, and issued additional common stock for
$20,000. What is total stockholders' equity as of December 31, 2017?
$115,000.
$113,000.
$117,000.
$109,000.
44. Lee Company has provided the following information:

What was Lee's times interest earned ratio?
A 17.05
36.15
32.93
16.81
45. The following information is provided for Bold Company for the year 2017:
How much of the 2017 dividend payment was paid to the preferred stockholders assuming the
preferred stock is cumulative?
$47,150.
$15,400.
$3,850.
$35,600.
answer:$35,600.
46.
During 2016, Boogle reported net income of $801 million and net cash inflow from operating
activities of $1,260 million. During 2015, Boogle's net income was $595 million and net cash inflow
from operations was $1,317 million. Which of the following is incorrect about the quality of income
ratios?
In 2015 the ratio was 2.2 and in 2016 it was 1.6
B Boogle's quality of income ratios indicate poor performance because net income is less
than cash flow.
The ratio in both years shows the company's ability to generate positive cash flow from its
operating activities.
The ratio in 2015 was better than the ratio in 2016.

47. Bailey Corporation reported the following information for 2016:
Net income $30,000
Total assets 14,000
Total stockholders' equity 6,000
What is Bailey's debt-to-equity ratio?
1.33
3.75
2.33
2.50
Answer :1.33
48. Flow Company has provided the following information for the year ended December 31, 2016:
● Cash paid for interest, $24,500

● Cash paid for dividends, $6,900
● Cash dividends received, $4,900
● Cash proceeds from bank loan, $38,000
● Cash purchase of treasury stock, $15,500
● Cash paid for equipment purchase, $31,500
● Cash received from issuance of common stock, $41,500
● Cash received from sale of land with a $36,500 book value, $28,600
● Acquisition of land costing $55,500 in exchange for preferred stock issuance.
● Payment of a $145,000 note payable by exchanging used machinery with a $81,500 book
value and $145,000 fair value.
How much was Flow's net cash flow from financing activities?
A net outflow of $58,400.
Answer:A net inflow of $57,100.
49. Agnes Company reported the following data:.
Quick assets $64,000
Current assets 159,000
Total liabilities 309,000
Average net receivables 13,500
Beginning inventory 47,000
Long-term liabilities 209,000

Net credit sales 135,000
Cost of goods sold 93,000
Ending inventory 55,000
Average inventory (47k-55k)/2 = 51k
Inventory Turn over 93K/51K = 1.82
Days sale in inventory 365/1.82 = 200.55
What was the average number of days to sell inventory? (Round intermediate computations
to two decimal places. Assume 365 days in a year.)
200.55AA
137.89
215.86
184.46
50. What is the correct entry for the sale of 1,200 shares of $20 par value preferred stock for
$72,000 cash?
Cash 72,000
Gain on sale of preferred stock 48,000
Preferred stock 24,000
Cash 24,000
Cash 72,000
Cash 72,000
Additional paid-in capital, preferred

48,000
stock
DDD
Angels final
The records of Everyday Electronics Corporation for a particular period include the following:
8.53%.
13.86%.
5.28%.
22.18%.
2.
Which of the following statements about earnings per share (EPS) is correct?

D. EPS is calculated using the number of common shares of stock outstanding.
3 Agnes Company reported the following data:.
What was the average number of days to sell inventory?

214.24
136.19
182.50
198.37
4 CBA Company reported total stockholders' equity of $85,000 on its balance sheet dated December
31, 2016. During the year ended December 31, 2017, CBA reported net income of $10,000,
declared and paid a cash dividend of $2,000, and issued additional common stock for $20,000. What
is total stockholders' equity as of December 31, 2017?
$117,000.
$109,000.
C. $113,000.
$115,000.
5A company reported net income of $202,100 during 2016. The company reported depreciation
expense of $45,500, patent amortization of $15,250 and a $7,100 loss on the sale of equipment.
Using the indirect method, how much is the company's net cash flow from operating activities?
$262,850.
$255,750.
$247,600.
D $269,950.
6 A company's assets and stockholders' equity both decrease when a cash dividend is declared by
True
False
7

● Net income, $206,200 +
● Interest expense, $21,650 +
● Income tax expense, $137,100 +
ADD UP + AND / INT EXP = 16.86
35.58
16.86
32.44
16.63
8
A company acquired some land (independently appraised at $14,500) and paid for it by issuing
1,250 shares of its common stock (par $10 per share; no market price was quoted).

Teague Company's working capital was $80,000 and total current liabilities were one-fourth of that
5
4
3
1
10

rev: 12_03_2018_QC_CS-150160
27.40
13.00
13.70
16.33
11 The following information is provided for Bold Company for the year 2017:
$28,800.
$47,700.
$25,200.
$6,300.
12.
Which of the following statements correctly describes a treasury stock transaction?
13 Canadian Beer reported equipment sold for $268 million cash and new equipment purchased
An inflow of $268 million and outflow of $1,538 million.

14.
During 2016, Eva's Enterprises cash paid for property, plant and equipment was $585 million and
cash flow from operating activities was $6,138 million. The average property, plant, and equipment
from the comparative balance sheets were $5,584 million. Eva's capital acquisitions ratio for 2016
is closest to:
10.02.
10.49.
1.10.
9.55.
15.
operation:

$137,000
$121,800
$90,200.
$127,000
16.
A primary objective of financial statements is to provide information to current and potential

investors and creditors.
True
False
17.
Roberts Company sold equipment for $170,000, purchased a building for $6,100,000, sold
$5,930,000 outflow.
$7,680,000 outflow.
$7,630,000 outflow.
$5,730,000 outflow.
18.
Bailey Corporation reported the following information for 2016:
Net income $17,000
Total assets 23,000

1.93
3.15
1.08
2.15
19.
Flow Company has provided the following information for the year ended December 31, 2016:


20.
0.22
6.73
4.46
6.32
21.
On October 1, 2015, Adoll Company acquired 1,900 shares of its $1 par value stock for $53
per share and held these shares in treasury. On March 1, 2017, Adoll resold all the treasury
shares for $49 per share. Which of the following entries would be recorded when Adoll
Company resells the shares of treasury stock?
rev: 10_04_2016_QC_CS-64483
Cash 93,100

7,600
stock
Cash 93,100
Cash 93,100
Common Stock 100,700
Cash 93,100
Common Stock 1,900
Additional paid-in
91,200
capital
©2019 McGraw-Hill Education. All rights reserved.
22.

● Payment of $105,000 note payable by exchanging used machinery with a $77,500 book
value and $105,000 fair value

23.
$10,500.
$19,000.
$50,500.
$42,000.
24.
Time remaining: 1:41:51
25.
Irish Corporation issued (sold) 14,000 shares of common stock for $66 per share. The bylaws
established a stated value of $10 per share. What is the amount of increase in the common
stock account as a result of this transaction?
$924,000.
$784,000.
$0.
$140,000.
$8,640,000 outflow.
$8,590,000 outflow.
$6,410,000 outflow.
$6,090,000 outflow.
26.

11.53.
34.68.
15.37.
19.21.
ROBBINS TEST

rev: 12_03_2018_QC_CS-150160
6.24
8.93
15.62
7.81
28.
● Net income, $160,000;

$8.00.
$6.90.
$7.27.
$6.06.
30
GJ Company, a manufacturer, has provided the following information pertaining to its recent year of
operation:

● Accounts payable decreased $44,000
$534,000
$473,000
$567,000
$633,000
Cash
Flow
From
Operating
Activity
$
Net Income
520,000
$
Add Depreciation Exp
55,000
$
Add Patent Amortization Exp
6,000
Add Increase in Current Liability and decrease in current asset
$
Accounts receivable decreased
43,000
$
Wages Payable Increased
20,000
$
Unearned Revenue decreased
33,000
Less decrease in Current Liability and Increase in current asset
$
Prepaid asset increased
(33,000)
$
Accounts Payable Decreased
(44,000)
$
Add Loss on sale of asset
33,000
$
Cash Flow From Operating Activity
633,000
31.
RKJ Company has provided the following information:


32.
The payment of interest on a note payable is a cash flow from a financing activity.
True
False
33 A company reported the following asset and liability balances at the end of 2015 and 2016:
2015 2016
$ 7,600,0 $ 8,400,0
Total Assets
00 00
3,760,0 4,240,0
Total Liabilities
00 00
During 2016, cash dividends of $66,000 were declared and paid, and common stock was issued for
$108,000. What was the amount of net income for 2016?
$320,000.
$278,000.
$386,000.
$212,000.
34 Agnes Company reported the following data:
0.76
0.51
0.64
1.57 DD
● Current Ratio = Current Assets / Current Liabilities

● Current Liabilities = Total Liabilities – Long Term Liabilities = 290000 – 190000 =
$ 100,000
● Current Ratio = $ 140,000 / $ 100,000
= 1.40
35.
Milliken Company paid $5.80 million to purchase stock in another company, $2.80 million to
repurchase treasury shares, $5.00 million to buy short-term investments, sold used equipment
for $0.98 million when its book value was $3.30 million, and purchased new equipment for
$5.2 million. What was the net cash flow from investing activities?
36.

Income tax rate 35%
calculating ROA.)
rev: 12_07_2018_QC_CS-150761
28.63%.
27.00%.
50.22%.
62.79%.
Explanation: Total Revenue-Total expenses+Interest Expense(1-tax rate) / average total assets
(5080000-4000000+100000*0.65)/4000000
= 1145000/4000000
= 28.625% or 28.63%
37.
A company repurchased shares of its common stock for $19,300. The stock was initially issued for
$12,750 and had a $5,300 par value. Which of the following statements correctly describes the

Stockholders' equity decreases $19,300.
. Stockholders' equity decreases $19,300
Stockholders' equity is reduced by the $19,300. It is reported on the balance sheet as a

contra-equity account.
34.

The average number of days to collect receivables during 2016 is closest to: (Do not round
your intermediate calculations. Use 365 days a year.)
12.66.
10.01.
40.52.
18.08.
38.
What is the correct entry for the sale of 2,700 shares of $5 par value preferred stock for $121,500
cash?
Cash 121,500
Cash 121,500
Additional paid-in capital, preferred stock 108,000
Cash 121,500
Cash 13,500
39.
Burich Co. reported short-term borrowings of $3.70 million, long-term borrowings of $6.92 million,

$720,000 net cash inflow.
$-2,980,000 net cash inflow.
$4.82 net cash inflow.
Cash flow from financing activities Amount ($)
Short term borrowings 4,000,000
Long term borrowings 6,950,000
Repayment of long term borrowings (4,250,000)
Purchase of common stock for treasury (2,000,000)
Total cash flow 4,700,000
40.
Most companies use the direct method for disclosing their cash flows from operating activities
rather than the indirect method.
True
False
41 Main Street Company paid out $2.40 in dividends per share of common stock and had earnings
per share of $5.10 during 2014. The market price of the stock on December 31, 2014 was $21.10
per share. There were 15,100 shares of stock outstanding for the entire year. The dividend yield as
of December 31, 2014 is closest to:
24.17%
8.79%
47.06%
11.37%
Dividend yield=annual dividend/current stock price
=(3.3/22)
=0.15
=15%
42.
● Net income, $250,000;


3.57
4.59
2.96
4.17
40.
Darwin Company, a manufacturer, has provided the following information pertaining to its recent
year of operation:

$181,000.
$211,000.
$168,000.
$219,000.
● Net income, $250,000;

3.57
4.59
2.96
4.17
43.
On December 15, 2016, the board of directors of Cross Corporation declared a cash dividend,
payable on January 8, 2017, of $0.97 per share on the 2,000,000 common shares outstanding.
On December 15, 2016, Cross Corporation should
not prepare a journal entry because the event had no effect on the corporation's financial
position until 2017.
44.
The statement of cash flows explains how the cash balance changed during a particular period of
time.
True
False
45.
declaration?
$28,400.
$69,000.
$40,600.
$10,150.
46.
Collection of principal on a note receivable is a cash flow from financing activities.
True
False
47.
year of operation:

$175,000.
$220,000.
$190,000.
$237,000.
48.
ratios?
Boogle's quality of income ratios indicate poor performance because net income is less than
cash flow.
49.
Shares of stock held as treasury stock do not have voting rights or the right to receive dividends.
True
False
50.
A company purchased 2,200 shares of treasury stock for $39,200 cash. The shares were
initially issued for $25,200 and had a $10,200 par value. Which of the following statements
incorrectly describes the effect of the treasury stock purchase?
Total assets remain the same.
©2019 McGraw-Hill Education. All rights reserved.
27Lee Company has provided the following information:

1.67
1.40
1.02
0.71
Earnings quality ratio =Net cash from operating activities / Net incomeLee's earnings quality ratio =
240000/204000= 1.18 or 1.2
28 Trenton Company has provided the following information:
● Net income, $160,000;

$8.00.
$6.90.
$7.27.
$6.06.
38 What is the correct entry for the sale of 2,700 shares of $5 par value preferred stock for
$121,500 cash?
Cash 121,500
Cash 121,500
Additional paid-in capital, preferred stock 108,000
Cash 121,500
Cash 13,500
13,500
Preferred stock
MAURICIO FINAL
1.
Which of the following statements correctly describes a treasury stock transaction?
A treasury stock purchase for less than the amount of the stock's original issue cost results
in a decrease in total stockholders' equity.
2.
$40,000.
$55,000.
$25,000.
$10,000.
3.
A primary objective of financial statements is to provide information to current and potential

investors and creditors.
True
False
4.
The statement of cash flows explains how the cash balance changed during a particular period of
time.
True
False
5.
Most companies use the direct method for disclosing their cash flows from operating activities
rather than the indirect method.
True
False
6.
The payment of interest on a note payable is a cash flow from a financing activity.
True
False
7.
A company reported net income of $202,000 during 2016. The company reported depreciation
expense of $45,000, patent amortization of $15,000 and a $7,000 loss on the sale of equipment.
Using the indirect method, how much is the company's net cash flow from operating activities?
$269,000.
$247,000.
$262,000.
$255,000.
8.
● Net income, $150,000;

$7.14.
$5.73.
$6.49.
$7.50.
9.
A company purchased 1,700 shares of treasury stock for $38,700 cash. The shares were initially
issued for $24,700 and had a $9,700 par value. Which of the following statements incorrectly
describes the effect of the treasury stock purchase?

Total assets remain the same.
10.

● Payment of $125,000 note payable by exchanging used machinery with a $79,500 book
value and $125,000 fair value

11.
A company reported the following asset and liability balances at the end of 2015 and 2016:
2015 2016
$ 7,600,0 $ 8,400,0
Total Assets
00 00
3,760,0 4,240,0
Total Liabilities
00 00
During 2016, cash dividends of $66,000 were declared and paid, and common stock was issued
for $108,000. What was the amount of net income for 2016?
$278,000.
$320,000.
$386,000.
$212,000.
12.
Agnes Company reported the following data:.

What was the average number of days to sell inventory? (Round intermediate computations to
two decimal places. Assume 365 days in a year.)
191.63
172.99 k
113.69
155.13
Time remaining: 1:48:26
13.
Shares of stock held as treasury stock do not have voting rights or the right to receive
dividends.
True
False
14.
Burich Co. reported short-term borrowings of $4.60 million, long-term borrowings of $7.01 million,

$-140,000 net cash inflow.
15.
RKJ Company has provided the following information:

16.
year of operation:

$216,000.
$171,800.
$186,000.
$229,000.
17.
Cash flows associated with property, plant, and equipment acquisition and disposition are reported
as cash flows from investing activities.
True
False
18.
Collection of principal on a note receivable is a cash flow from financing activities.
True
False
19.
Which of the following statements about earnings per share (EPS) is correct?
EPS is calculated using the number of common shares of stock outstanding.
20.
21.


22.81.
30.07.
18.25.
13.14.
22.
Irish Corporation issued (sold) 11,000 shares of common stock for $69 per share. The bylaws
established a stated value of $5 per share. What is the amount of increase in the common stock
account as a result of this transaction?
$759,000.
$55,000.
$704,000.
$0.
23.
GJ Company, a manufacturer, has provided the following information pertaining to its recent year
of operation:

● Accounts payable decreased $42,000
$607,000
$455,000
$545,000
$514,000
24.
Canadian Beer reported equipment sold for $260 million cash and new equipment purchased
An inflow of $260 million and outflow of $1,534 million.

25.
On October 1, 2015, Adoll Company acquired 3,000 shares of its $1 par value stock for $34 per
share and held these shares in treasury. On March 1, 2017, Adoll resold all the treasury shares for
$30 per share. Which of the following entries would be recorded when Adoll Company resells the
shares of treasury stock?
rev: 10_04_2016_QC_CS-64483
Cash 90,000

12,000
stock
Cash 90,000
Common Stock 3,000
Additional paid-in
87,000
capital
Cash 90,000
Additional paid-in
12,000
capital
Common Stock 102,000
Cash 90,000
Additional paid-in
12,000
capital
26.
Income tax rate 40%
calculating ROA.)
rev: 12_07_2018_QC_CS-150761
25.82%.
47.34%.
61.08%.
27.33%.
27.
Main Street Company paid out $3.60 in dividends per share of common stock and had earnings
per share of $6.30 during 2014. The market price of the stock on December 31, 2014 was $22.30
per share. There were 16,300 shares of stock outstanding for the entire year. The dividend yield
as of December 31, 2014 is closest to:
A 16.14%
57.14%
28.25%
6.19%
29.
A company repurchased shares of its common stock for $21,300. The stock was initially issued for
$17,750 and had a $7,300 par value. Which of the following statements correctly describes the
Stockholders' equity decreases $21,300.

30.
0.23
6.59
6.07
D 4.32
31.
During 2016, Eva's Enterprises cash paid for property, plant and equipment was $575 million and
cash flow from operating activities was $6,148 million. The average property, plant, and equipment
from the comparative balance sheets were $5,554 million. Eva's capital acquisitions ratio for 2016
is closest to:
9.66.
1.11.
10.18.
10.69.
32.
CBA Company reported total stockholders' equity of $85,000 on its balance sheet dated
December 31, 2016. During the year ended December 31, 2017, CBA reported net income of
$10,000, declared and paid a cash dividend of $2,000, and issued additional common stock for
$20,000. What is total stockholders' equity as of December 31, 2017?
A $113,000.
$117,000.
$109,000.
$115,000.
33.
Teague Company's working capital was $40,000 and total current liabilities were one-fourth of that
A5
3
1
4
34.

rev: 12_03_2018_QC_CS-150160
A 13.78
11.67
10.67
23.33
35.
declaration?
$35,600.
$6,600.
C $62,000.
$26,400.
36.
$8,480,000 outflow.
$8,430,000 outflow.
$6,030,000 outflow.
$6,330,000 outflow.
37.
$20,800.
$5,200.
C $47,800.
$32,200.
38.


39.
The records of Everyday Electronics Corporation for a particular period include the following:
5.25%.
13.40%.
24.36%.
8.65%.
40.
● Net income, $170,000;

3.92
4.54
3.97
3.41
41.
ratios?

C Boogle's quality of income ratios indicate poor performance because net income is less
than cash flow.
42.
operation:

$89,200.
$117,000
$112,800
$127,000
43.
Bailey Corporation reported the following information for 2016:
Net income $23,000
Total assets 18,000
2.69
2.04
2.19
1.69
44.
On December 15, 2016, the board of directors of Cross Corporation declared a cash dividend,
payable on January 8, 2017, of $0.81 per share on the 2,000,000 common shares outstanding.
On December 15, 2016, Cross Corporation should
not prepare a journal entry because the event had no effect on the corporation's financial position
until 2017.
45.

34.81
17.49
17.78
38.32
46.
Agnes Company reported the following data:
0.75
0.50
0.65
1.53
47.
A company acquired some land (independently appraised at $13,500) and paid for it by issuing
1,150 shares of its common stock (par $10 per share; no market price was quoted).

48.

0.82
1.73
0.80
D 1.24
49.
A company's assets and stockholders' equity both decrease when a cash dividend is declared by
A True
False
50.
Milliken Company paid $3.60 million to purchase stock in another company, $1.70 million to
repurchase treasury shares, $2.25 million to buy short-term investments, sold used equipment for
$0.87 million when its book value was $1.65 million, and purchased new equipment for $4.1
million. What was the net cash flow from investing activities?
A $9.08 million net cash outflow.


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2 Which of the following statements correctly describes a treasury stock transaction?

Average total assets $3,550,000

Average total liabilities 1,270,000

Total revenue 4,630,000

Total expense (including income tax) 4,090,000

Interest expense (included in total expenses) 91,000

Income tax rate 35%

● Net income, $196,000

Average total assets $790,000

Average total liabilities 515,000

Total revenue 206,500

Total expenses (including income tax) 138,000

The return on equity ratio is closest to:

Working notes for the above answer is as under

EPS is calculated using the number of common shares of stock outstanding.

Purchasing treasury shares would cause earnings per share to decrease.

Increased net income would cause earnings per share to decrease.

What is the cash flow from financing activities?

$2,750,000 net cash inflow.

Report $12,200 as an inflow of cash.

Report $12,200 as inflow and outflow of cash.

The transaction should not be reported on the statement of cash flows.

Report in a schedule of significant noncash investing and financing activities.

Lee’s earnings quality ratio is closest to:

Expenses (27% on credit) 76,000

Accounts receivable, net at December 31, 2016 (a

Total assets 360,000

Stockholders' equity 160,000

Additional paid-in capital 6,800 a

Treasury Stock 86,700

Common Stock 1,700

Additional paid-in capital 6,800

Common Stock 86,700

Loss on sale of treasury

Treasury Stock 86,700

Cash paid for interest, $22,500

A net inflow of $2,500.

26. Trenton Company has provided the following information:

What is Trenton's earnings per share?

● Net income, $106,000

29. Lee Company has provided the following information:

● Cash flow from operating activities, $251,000

What was Lee's cash coverage ratio?

● Net income, $450,000 +

What was the net cash flow from investing activities?

Answer $6,240,000 outflow.

An inflow of $228 million and outflow of $156 million.

Cash paid for equipment of $1,290 million.

Earnings per share increases.

B Total assets remain the same.

Net income is unchanged.

Stockholders' equity decreases.

37. Agnes Company reported the following data:

What was the current ratio?

38. RKJ Company has provided the following information:

• 100,000 shares of $5 par value common stock are authorized

• 65,000 shares are outstanding