Ratios
Pasadena Company's 2023 sales revenue was $600,000 and 2022 sales revenue was $540,000. Pasadena's total assets as of December 31, 2023 were $450,000 and total assets as of January 1, 2023 were $390,000. What is Pasadena’s total asset turnover ratio?
A) 1.48
B) 1.43
C) 1.33
D) 1.36
B) 1.43
Henderson Company's 2022 income statement reported total revenues, $850,000 and total expenses (including $40,000 depreciation) of $720,000. The company’s accounting records showed the following: accounts receivable—beginning balance, $40,000 and ending balance, $50,000; accounts payable—beginning balance, $28,000 and ending balance, $22,000. Based only on this information, how much was the 2022 net cash provided by operating activities?
A) $174,000.
B) $154,000.
C) $166,000.
D) $186,000.
B) $154,000.
Assume Idaho Company recorded the following adjusting journal entry at year-end:
Account Title Debit Credit
Insurance expense $2,000
Prepaid insurance $2,000
If the beginning balance in prepaid insurance was $500, and $2,500 was paid for an insurance premium during the year, what is the ending balance in the prepaid insurance account after the above adjusting entry?
A) $1,200
B) $700
C) $2,200
D) $1,000
D) $1,000
Benwick Industries purchased a computer system on January 1, 2022, at a cash cost of $50,000. The estimated useful life is 10 years, and the estimated residual value is $6,000. The company will use the double declining-balance depreciation method.
What is the accumulated depreciation balance as of December 31, 2023?
A) $8,000.
B) $15,840.
C) $18,000.
D) $17,040.
C) $18,000.
Upon completing an aging analysis of accounts receivable, the accountant for Cedar Creek prepared an aging of accounts receivable and estimated that $15,000 of the $294,000 accounts receivable balance would be uncollectible. The allowance for doubtful accounts had a $1,200 credit balance at year-end prior to adjustment. What is the amount of bad debt expense?
A) $16,200.
B) $13,800.
C) $15,000.
D) $1,200
B) $13,800.
Stone Glen Incorporated had 14,000 shares of common stock outstanding at December 31, 2022, and 26,000 shares of common stock outstanding at December 31, 2023. For the year ended December 31, 2023, Stone Glen had net income of $160,000 and sales of $960,000. What amount will Stone Glen report for earnings per share for 2023?
A) $4.00
B) $40.00
C) $24.00
D) $8.00
D) $8.00
Peakview Company reported net income of $160,000 during 2022. The company reported depreciation expense of $28,000, patent amortization of $8,000 and a $4,000 loss on the sale of equipment. Using the indirect method, how much is the company's net cash flow from operating activities?
A) $200,000.
B) $196,000.
C) $192,000.
D) $188,000.
A) $200,000.
On January 1, 2023, Ryan Company paid the premium on a three-year insurance policy in the amount of $6,000. At that time, the full amount paid was recorded as prepaid insurance. After recording the adjusting entry for the insurance policy on December 31, 2023, what would be the balance in Ryan Company's prepaid insurance account?
A) $6,000
B) $2,000
C) $3,000
D) $4,000
D) $4,000
Benwick Industries purchased a computer system on January 1, 2022, at a cash cost of $50,000. The estimated useful life is 10 years, and the estimated residual value is $6,000. The company will use the double declining-balance depreciation method.
How much is the 2023 depreciation expense?
A) $8,240.
B) $10,000.
C) $8,000.
D) $7,040.
C) $8,000.
For the current year, Victoria Company had $2,000 of sales returns and allowances, $4,200 of sales discounts and $190,000 of sales revenue. Additionally, the company’s allowance for doubtful accounts was $2,400 and its ending accounts receivable balance was $76,000. How much was Victoria’s net sales revenue for the year?
A) $183,800.
B) $181,400.
C) $179,800.
D) $177,200.
A) $183,800.
Parsley Industries has provided the following information:
Operating expenses $462,000
Net sales $1,8800,000
Interest expense $64,000
Gain on sale of investments $152,000
Income tax expense. $302,000
Income from operations (operating income) $666,000
What was Parsley’s gross profit?
A) $1,280,000
B) $1,128,000
C) $1,064,000
D) $1,216,000
B) $1,128,000
Kirby Company has provided the following information pertaining to its recent year of operation:
Using the indirect method, how much was Kirby's net cash provided by operating activities?
A) $279,000.
B) $215,000.
C) $227,000.
D) $257,000.
A) $279,000.
On July 1, 2023, Goode Company borrowed $100,000. The company signed a note payable with interest at 6 percent per year. The note and interest are due on December 31, 2023. On December 31, 2023, Goode paid $103,000 to settle the debt in full. Assuming no accruals for interest have been made during the year, transaction analysis of the $103,000 cash payment on December 31, 2023 should reflect which of the following?
A) A decrease in assets of $103,000 and a decrease in liabilities of $103,000.
B) A decrease in assets of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in liabilities of $103,000.
C) A decrease in stockholders' equity of $100,000, a decrease in liabilities of $3,000, and a decrease in assets of $103,000.
D) A decrease in liabilities of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in assets of $103,000.
D) A decrease in liabilities of $100,000, a decrease in stockholders' equity of $3,000, and a decrease in assets of $103,000.
On January 1, 2022, Nervin Company purchased an asset that cost $100,000 and had no estimated residual value. The estimated useful life of the asset is 8 years and straight-line depreciation is used. An error was made in 2022 because the total amount of the asset's cost was debited to an expense account for 2022 and no depreciation was recorded. Pretax income for 2022 was $84,000. How much is the correct 2022 pretax income?
A) $171,500.
B) $96,500.
C) $71,500.
D) $184,000.
A) $171,500.
Vincent Industries had credit sales totaling $1,800,000 for the year. During the same time period, the company wrote off $23,000 of accounts receivable. The beginning balance of accounts receivable was $300,000 and the ending balance was $420,000. The allowance for doubtful accounts was $28,000 at the beginning of the year and $25,800 at the end of the year. What was the amount of bad debt expense recorded by Vincent for the year?
A) $23,000.
B) $25,800.
C) $20,800.
D) $28,000.
C) $20,800.
Oxford has the following information available:
Year 2022 2021
Cost of goods sold. $1,125,000 $1,155,000
Inventory $282,000. $312,000
A) 3.99
B) 3.79
C) 3.84
D) 3.89
B) 3.79
Coachman Company uses the indirect method for preparing its statement of cash flows. The company has provided the following information pertaining to its recent year of operation:
How much was Coachman's net income?
A) $95,000.
B) $135,000.
C) $131,000.
D) $147,000.
A) $95,000.
Devonshire Company borrowed $250,000 cash on April 1, 2022, and signed a one-year, 12% interest-bearing note payable. The interest and principal are both due on March 31, 2023. What is the amount to be paid to the bank on March 31, 2023 for interest and principal?
A) $250,000.
B) $257,500.
C) $270,000.
D) $280,000.
D) $280,000.
Soledad Company purchased a truck at a cost of $120,000. It has an estimated useful life of five years and estimated residual value of $10,000. At the beginning of year three, Soledad's managers concluded that the total useful life would be four years, rather than five years. There was nochange in the estimated residual value. What is the amount of depreciation that Soledad should record for Year 3 under the straight-line depreciation method?
A) $16,500.
B) $33,000.
C) $22,000.
D) $31,000.
B) $33,000.
A company reported total stockholders' equity of $540,000 on its balance sheet dated December 31, 2021. During the year ended December 31, 2022, the company reported net income of $60,000, declared and paid a cash dividend of $18,000, declared and distributed a 10% stock dividend with a $15,000 total market value, issued additional common stock for $70,000, and resold treasury stock for $15,000 that it had purchased in 2021 for $12,000. What is total stockholders' equity as of December 31, 2022?
A) $670,000.
B) $655,000.
C) $667,000.
D) $640,000.
C) $667,000.
Oxford has the following information available:
Year 2022 2021
Cost of goods sold. $1,125,000 $1,155,000
Inventory $282,000. $312,000
Oxford's average number of days to sell its inventory during 2022 is closest to:
Note: Use 365 days a year. Round your intermediate calculations to 2 decimal places.
A) 96
B) 92
C) 95
D) 94
A) 96
The following information has been provided to you by RKJ Company:
Net income $300,000
Decrease in accounts payable $114,000
Increase in inventory $22,000
Increase in accounts receivable $24,000
Decrease in bonds payable $25,000
Loss on sale of a depreciable asset $19,000
Depreciation expense $40,000
Decrease in income taxes payable$ $12,000
Using the indirect method, what is the net cash provided by operating activities?
A) $187,000.
B) $231,000.
C) $168,000.
D) $206,000.
A) $187,000.
Valley Ranch Incorporated borrowed $250,000 cash on October 1, 2022, and signed a nine-month, 8% interest-bearing note payable with interest payable at maturity. Assuming that adjusting entries have not been made during the year, the amount of accrued interest payable to be reported on the December 31, 2022 balance sheet is which of the following?
A) $2,500.
B) $3,000.
C) $5,000.
D) $7,500.
C) $5,000.
Which of the following statements is incorrect?
A) A trademark is recorded on the balance sheet at an amount equal to the related research and development costs incurred.
B) A copyright has a legal life not exceeding 70 years after the author's death.
C) A franchise's amortization period is determined by the franchise agreement.
D) A patent's legal life is 20 years.
A) A trademark is recorded on the balance sheet at an amount equal to the related research and development costs incurred.
Benwick Industries purchased a computer system on January 1, 2022, at a cash cost of $50,000. The estimated useful life is 10 years, and the estimated residual value is $6,000. The company will use the double declining-balance depreciation method.
What is the accumulated depreciation balance as of December 31, 2023?
A) $17,040.
B) $15,840.
C) $8,000.
D) $18,000.
D) $18,000.