Accounting 284 Final ExamA

Fall 2012

STATEMENTOFACADEMICHONESTY

Sinceethicalbehaviorisvitaltoallprofessionals,pleasereadandassenttotheacademichonestystatementbelowasindicatedbyyoursignature.Ihaveneitherprovidedassistancetonorreceivedassistancefromanyoneinregardstotheadministrationofthisexamination.Allworkshownismyown;allanswersgivenaretheproductofmyindependentjudgment.Name(print)_______________________________________________

Signature: ________________________ Section: (circle one) Clem TR 9:30 – 10:50 Clem TR 11:00 – 12:20 Watanabe TR 12:40 – 2:00 Whittle TR 2:10 – 3:30 1. Use a number 2 pencil to complete the answer sheet. You may use a calculator. NO communication devices are permitted (cell phones, computers, tablets, etc.) 2. Be sure that the pre-printed number on your answer sheet matches the pre-printed number on your exam. BE SURE YOUR NAME AND UNIVERSITY ID NUMBER (full 9 digits) are on the answer sheet. Only put your name on the exam. 3. You will have two hours to complete the exam. 4. There are 50 questions on the exam. Make sure you have 50 questions and that you answer them all. 5. Select the best answer to each question and mark it on your answer sheet. Also circle the answer on your exam booklet. 6. When you finish the exam, bring it along with the attachment packet to the front of the room with your answer sheet and your photo ID, along with the rest of your personal belongings. Plan to leave the room without returning to your seat.

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1. A company issued 100,000 shares of $0.25 par value common stock for $36.00 per share. How did this transaction affect the accounting equation?

A. Cash + $3,600,000 Common Stock + $25,000 Additional Paid-in Capital + $3,575,000. B. Cash + $3,600,000 Common Stock Revenue + $3,600,000. C. Cash + $3,600,000 Retained Earnings + $3,600,000. D. Cash + $3,600,000 Common Stock + $25,000 Gain on Sale of Common Stock + $3,575,000. 2. Which one of the following items should NOT appear in the financing section of the statement of cash

flows? A. Cash dividends paid B. Interest expense C. Proceeds from issuing common stock D. Cash used to pay off notes payable 3. On Jan. 1, 2012, a catering business purchased a delivery van for $36,000. The van has an estimated

useful life of three years, or 100,000 miles, and a $5,000 residual value. The van was driven 30,000 miles in 2012. How much is depreciation expense for 2012 using the straight line method and the units of production method?

Straight Line Units of Production A. $12,000 $ 10,800 B. $12,000 $ 9,300 C. $10,333 $ 10,800 D. $10,333 $ 9,300 4. On Dec. 1, 2012, a company issued $5,000,000 of 4%, 10-year bonds. The market interest rate on Dec. 1

was 4.25%. How much cash will the company receive from the bond issue? A. $5,000,000 B. More than $5,000,000 C. Less than $5,000,000 D. Cannot be determined from the information given. 5. Which of the following represents the cost principle? A. The long life of the company is divided into shorter periods B. Revenues are recorded when earned C. Expenses are recorded in the same period as revenues D. Assets and liabilities are recorded at their original cost to the company

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6. Jane Smith is preparing a bank reconciliation for Robinson Company for the month of January. Jane Smith has the following information gathered:

Balance per bank statement: $11,215 Balance per company records: $11,617.50 Bank Service Charge: $25 Deposits in Transit: $1,097 Interest earned on checking account $19.50 NSF Check from customer Matt Crook: $125 Outstanding checks: $825 What is the reconciled cash balance? A. $11,487 B. $11,215 C. $11,617.50 D. $12,312 7. On July 1st, 2012 a company paid $12,000 for a three-year property insurance policy. Coverage begins on

the day of purchase. What is the adjusting entry on December 31, 2012? A. Insurance Expense + $2,000 Cash - $2,000 B. Prepaid Insurance + $4,000 Insurance Expense - $4,000 C. Insurance Expense + $2,000 Prepaid Insurance - $2,000 D. Insurance Expense + $4,000 Prepaid Insurance - $4,000 8. A company purchased 2,000 shares of its $.02 par value common stock for $42 per share on Dec. 1, 2012.

On Mar. 31, 2013, the company sold 500 of the shares for $43 per share. How did the Mar. 31, 2013 sale affect the company’s financial statements?

A. Cash + $21,500 Treasury Stock - $21,500. B. Cash + $21,500 Treasury Stock - $21,000 Gain on Sale of Treasury Stock + $500. C. Cash + $21,500 Common Stock + $10 Additional Paid-in Capital + $21,490. D. Cash + $21,500 Treasury Stock - $21,000 Additional Paid-in Capital + $500. 9. Where is unearned revenue reported on the financial statements? A. Revenues, net B. Gross Profit C. Current Liabilities D. Non-Current Assets

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10. A company has 50,000 shares of 5%, $100 par, cumulative preferred stock and 4,000,000 shares of $.10 par value common stock outstanding. On Dec. 1, 2012, the Board of Directors declares a total cash dividend of $1,200,000 to be paid that month. How much will the common shareholders receive if no preferred dividends were paid in 2011?

A. $0 B. $700,000 C. $950,000 D. $1,080,000 11. Which of the following represents Gross Profit? A. Gross sales less sales returns, discounts and allowances B. Net sales less cost of goods sold C. Net sales less operating expenses D. Gross accounts receivable less allowance for doubtful accounts 12. A company had 25 million common shares authorized, 18 million shares issued, and 4 million shares of

treasury stock. How many common shares were outstanding? A. 7 million B. 18 million C. 14 million D. 21 million 13. Watanabe Inc. reported the following regarding its inventory in the month of December: Beginning balance 1,500 units @ $8.00 December 10th purchase 2,000 units @ $8.50 December 15th purchase 1,200 units @ $9.50 December 20th purchase 3,000 units @ $10.00 During December 5,525 units were sold. If the company uses FIFO, what was the cost of goods sold for

December? A. $52,662.50 B. $21,750 C. $48,650 D. $55,023.50 14. Dark, Inc. accepted a $100,000 promissory note, with a 6% annual rate, from a long-term customer on

March 31, 2011. The note pays interest annually and matures on April 1, 2016. What amount of interest revenue should be recorded on December 31, 2011?

A. $6,000 B. $0 C. $4,500 D. $60,000

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15. On Jan. 1, 2012, an Ames company purchased new manufacturing equipment for $250,000 and paid $15,000 in sales tax. Freight charges to ship the equipment from Chicago to Ames were $3,500 and were also paid by the company. Installation costs were $4,500. The company purchased a 1-year insurance policy on the equipment for $1,200 and after operating the equipment for three months performed routine maintenance at a cost of $800. Electrical costs to operate the equipment were $1,500 for the first year. At what amount should the equipment be shown on the company’s balance sheet?

A. $276,500 B. $273,000 C. $270,500 D. $268,500 16. XYZ Corp reports total revenue of $1,000,000 and total expenses of $550,000 for 2011. Retained

earnings at the beginning of 2011 was $300,000. At the fiscal year end the company reported total contributed capital of $900,000, and total liabilities of $2,500,000. In 2011, XYZ Corp paid $125,000 in dividends. What are XYZ Corp’s total assets at the end of 2011?

A. $4,025,000 B. $3,725,000 C. $3,850,000 D. $4,150,000 17. On Sept. 1, 2012, a company borrowed $400,000 from the bank by signing a 6-month note, with an

annual interest rate of 5%. The principal amount and interest are to be paid on the maturity date. How much interest expense should the company report for its fiscal year ending on Dec. 31, 2012?

A. $0 B. $6.667 C. $13,333 D. $20,000 18. Assume that Kawabata Corp. has in its warehouse on December 31, 2012 1,000 units of inventory costing

$10 each. The market value per unit of inventory is $ 9.50 on December 31st. What should be the write down to inventory, if any on December 31, 2012?

A. $0 B. $500 C. $9,500 D. $950 19. Smith and Sons reported $2,000,000 of credit sales in 2012. Accounts receivable at the end of 2012 is

$1,500,000. The balance in the allowance for doubtful accounts was $100,000 at the beginning of 2012. Smith and Sons estimates uncollectible accounts receivable to amount to 6% of credit sales. Assuming write-offs of $30,000, what is the balance in the allowance for doubtful accounts at the end of 2012?

A. $190,000 B. $90,000 C. $120,000 D. $220,000

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20. A company sold used machinery for $45,000 on Dec. 1, 2012. The machinery originally cost $200,000 and had $160,000 of accumulated depreciation on the sale date. As a result of the sale the company should record:

A. a $5,000 gain B. a $5,000 loss C. a $115,000 loss D. no gain or loss 21. Which of the financial statements reflects the financial position of a company on a given date? A. Income Statement B. Balance Sheet C. Cash Flows Statement D. Statement of Retained Earnings 22. A company issued $10,000,000 of 6%, 10-year bonds for $10,772,020, which resulted from a market rate

of 5%. Interest is paid to the bondholders annually. How much is interest expense for the first year using the effective interest method?

A. $600,000 B. $500,000 C. $646,321 D. $538,601 23. A company had 1,500,000 shares of its $.20 par value common stock issued and outstanding when the

Board of Directors declared a 40% stock dividend. The market price of the stock on the declaration date was $45 per share. How did the stock dividend affect stockholders’ equity?

A. Common Stock increased $120,000. B. Retained Earnings decreased $27,000,000. C. Additional Paid-in Capital increased 26,880,000. D. Total stockholders’ equity increased $5,400,000. 24. Which one of the following statements regarding bonds payable is true? A. When bonds are issued at a discount, the carrying value of the bonds will increase each year until

maturity. B. When bonds are issued at a premium, the amount of total interest expense will be greater than the total

amount of cash interest paid to the bondholders. C. A premium on bonds payable is shown as a current asset on the balance sheet. D. Bonds selling at 102 are selling at a discount. 25. When a company prepares the operating section of its statement of cash flows using the indirect method,

which one of the following should be subtracted from net income? A. Depreciation expense B. An increase in Wages Payable C. An increase in Accounts Receivable D. A loss on the sale of used equipment

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Use the 2012 financial statements of National Beverage Corporation to answer the following 25 questions. Note fiscal year 2012 is the most recent year presented and ends on April 28, 2012.

26. What is the effective tax rate for 2012?

A. 32.7% B. 33.6%

C. 34.2% D. 38.5%

27. Assuming a market price of $17, what is the price-earnings ratio? (Hint: use basic EPS) A. 17.9

B. 16.2 C. 15.8 D. 14.6

28. What is the gross value of trade receivables at the end of the fiscal year 2012? A. $60,662 thousand

B. $61,192 thousand C. $61,591 thousand D. $61,990 thousand

29. What did National Beverage spend purchasing property, plant and equipment during 2012?

A. $ 1,392 thousand B. $ 9,905 thousand

C. $10,651 thousand D. $56,729 thousand

30. What is the profit margin for 2012?

A. 3.1% B. 4.2%

C. 5.9% D. 7.0%

31. What amount of depreciation and amortization expense was reported for the fiscal year 2012?

A. $10,651 thousand B. $22,903 thousand C. $113,560 thousand D. $146,149 thousand

32. How much selling, general, and administrative expense was recognized by National Beverage during fiscal year 2012? A. $145,159 thousand

B. $146,169 thousand C. $145,159 thousand D. $213,257 thousand

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33. What was the change in the balance of cash and cash equivalents during 2012? A. $28,254 thousand increase

B. $28,254 thousand decrease C. $35,626 thousand increase D. $35,626 thousand decrease

34. What were the reported cash flows from investing activities during 2012? A. $ 410 thousand

B. $ 9,852 thousand C. $ 9,905 thousand D. $37,696 thousand

35. What is the par value of the common stock of National Beverage Imports?

A. $0.01 B. $0.10

C. $1.00 D. $5.00

36. What was the largest inflow of cash from financing activities during 2012? A. Common stock cash dividends

B. Proceeds from stock options exercised C. Stock-based tax benefits. D. Proceeds from sale of property, plant and equipment

37. What was the number of shares of common stock outstanding at the end of 2012? A. 4,032,784

B. 50,262,139 C. 50,321,559 D. 46,288,775

38. How did the change in accounts payable affect the statement of cash flows? A. account balance decreased during the year and was therefore deducted from net income in

determining cash flows from operating activities B. account balance decreased during the year and was therefore added to net income in determining cash

flows from operating activities C. account balance increased during the year and was therefore deducted from net income in determining

cash flows from operating activities D. account balance increased during the year and was therefore added to net income in determining cash

flows from operating activities

39. What was the balance of retained earnings at the end of fiscal year 2012?

A. $ 43,993 thousand B. $ 65,207 thousand

C. $106,314 thousand D. $109,200 thousand

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40. What was the net value of property, plant and equipment reported by National Beverage at the end of fiscal year 2012? A. $ 9,905 thousand

B. $37,696 thousand C. $55,337 thousand D. $56,729 thousand

41. The inventory turnover ratio for 2012 is _______ indicating that ____________. (Assuming a 360 day

year). A. 11.2; the company converts its inventory into sales every 32.6 days

B. 11.2; the company converts its inventory into sales every 11.2 days C. 32.6; the company pays for its inventory 32.6 times per year D. 32.6; the company pays for its inventory every 1.4 months

42. Compute and interpret the current ratio at the end of 2012.

A. The company has $1.92 of current assets for every $1 of current liabilities. B. The company has $1 of current assets for every $1.27 of current liabilities.

C. 1.92% of the company’s total assets will be converted to cash within a year. D. The company pays off its current liabilities 1.27 times per year.

43. What is the times interest earned ratio for fiscal year 2012?

A. 62.6 times per year B. 412.6 times per year

C. 626.2 times per year D. 704.8 times per year

44. What is the return on equity for fiscal year 2012?

A. 17.4% B. 29.0%

C. 31.4% D. 43.6%

45. What are the total dividends paid by National Beverage during fiscal year 2012? A. $0

B. $95 thousand C. $46,448 thousand D. $62,295 thousand

46. What is the quick ratio for fiscal year 2012? (Hint: Quick assets include cash, accounts receivable, and

marketable securities) A. 4.2

B. 3.4 C. 1.3 D. 0.7

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47. Assuming all sales are on credit, what is the receivables turnover ratio for fiscal year 2012? A. 10.2

B. 10.7 C. 10.9 D. 11.2

48. What is the debt-to-equity ratio at the end of 2012?

A. 0.63 B. 0.73

C. 0.83 D. 0.93

49. What is the gross profit percentage reported by National Beverage for 2012?

A. 31.1% B. 33.9%

C. 36.4% D. 39.5%

50. What is the asset turnover ratio for fiscal year 2012?

A. 1.6 times per year B. 3.1 times per year

C. 5.2 times per year D. 6.9 times per year