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Date Posted: 21:53:58 06/19/07 Tue
Author: Zee (solutions)
Subject: Re: Sample Quiz 1 questions
In reply to: Charles Hodges 's message, "Sample Quiz 1 questions" on 11:24:35 08/23/00 Wed

>Here are some sample questions from past quizzes.
>Also, I will be making questions in the style of the
>IRC case.
>
>
>1. Identify the following as a Current Asset (CA), a
>Long Term Asset (LTA), a Current Liability (CL), a
>Long Term Liability (LTL), or Equity (E):
>
>a. Net Accounts Receivable e. Notes Payable
>b. Retained Earnings f. Inventories
>c. Accounts Payable g. Accrued Expenses
>d. Net Fixed Assets h. Additional paid in capital
>
>2. At the end of 1995 Pern Inc. reported retained
>earnings of $64,200. At the end of 1996, the retained
>earnings were $78,600. If Pern Inc. had net income of
>$25,400 in 1996, what was the amount of dividends paid
>by Pern in 1996?
>
>3. The following are two lines from the Income
>Statement of Darkover Inc.
>
> 1995 1996
>Gross Profit $100,000 $100,000
>Net Income $ 25,000 $ 50,000
>
>List two things that could explain why gross profit
>did not change, but net income increased.
>
>
>
>
>Gemini Beverage has the following historical balance
>sheet:
>
>Cash $ 20 Accounts payable
> $ 200
>Accounts receivable 240 Notes payable
> 130
>Inventory 320 Accruals
> 30
>Total current assets $ 580 Current liabilities
> $ 360
>
>Net plant & equipment $ 420 Long-term bonds
> $260
> Common stock
> 270
> Retained earnings
> 110
>Total assets $1,000 Total liab. &
>equity $1,000
>
>a. (1.5 points) What is the firm's current debt ratio?
>
>
>
>b. (1.5 points) What is the firm's current quick ratio?
>
>
>
>Over the next year Gemini's current assets, accounts
>payable, and accruals will grow in proportion to sales
>(i.e. are spontaneous). Last year's sales were $800
>and this year's sales are expected to increase by 40
>percent. The firm will retain $58 in earnings to fund
>current asset growth, and the rest of the increase
>will be funded entirely with notes payable. The net
>plant and equipment account will increase to $500 and
>will be funded directly by a new equity issue.
>
>c. (4 points) What will Gemini's new current ratio be
>after the changes in the firm's financial picture are
>complete?
>
>
>d. (2 points) What will be the firm's new inventory
>turnover ratio?
> 24. Fill in the missing numbers for the Aboutt, Inc.
>1997 annual financial statements. Assume all balance
>sheet accounts are 1997 ending balances unless other
>wise noted. Missing numbers are worth 1 point unless
>otherwise noted.
>
>Profit before taxes $ 162 Accrued Wages $________
>Depreciation $90 Income tax $ ________
>Net income $ ________(3 points) Total current
>liabilities$ __________
>Long term debt $ 205 Net sales $ 907
>Total liabilities and owner's equity $_____ Beginning
>Retained Earnings $132
>Additional Paid-in Capital $100 Common stock ($.03
>par) $ 30
>Ending retained earnings $ 131 Cost of goods sold
>________
>Beginning Net Fixed Assets $351 Cash $
>____________
>Accounts payable $ 193 Accounts receivable $230
>Inventories $ 95
>Gross profit $ 467 Rent $70
>Total Assets $ ___________ Research and Development
>Expense $7
>Advertising $110 Operating Profit $
>_________
>Interest expense $8 Total Current assets $ 421
>Ending Net fixed assets $ 397 Dividends $74
>Dividends per Share ________(3 points) Net Profit
>Margin on Sales _____________
>Fixed Asset Turnover Ratio ___________ Return on
>Assets Ratio ________________

any solutions

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