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MBA560 Financial and Managerial Accounting: Modules 1-8 Tests




Question;Saint Leo University (Graduate;Business Studies);MBA560 Financial and Managerial;Accounting;Module 1 Test;Problem 1.;At the beginning of 2010, Gonzales Company's accounting records had the;general ledger accounts and balances shown in the table below. During 2010, the;following transactions occurred;1. Received $80,000 cash for providing services to customers;2. Paid rent expense, $10,000;3. Purchased land for $9,000 cash;4. Paid $5,000 on note payable;5. Paid operating expenses, $52,000;6. Paid cash dividend, $6,000;Required;1) Record the transactions in the appropriate general ledger accounts.;Record the amounts of revenue, expense, and dividends in the Retained Earnings;column, providing appropriate titles for these accounts in the last column of;the table.;2) What is the amount of total assets as of December 31, 2010?;3) What is the amount of total stockholders' equity as of December 31;2010?;Problem 2.;Given are the amounts of assets, liabilities, owner?s equity, revenues;and expenses of AQUA Inc. at 12/31/10. The beginning amount of Retained;Earnings at 1/1/10 was $20,000, and during the year Dividends of $60,000 were;taken out by the owners of Aqua Inc.;Accounts Payable 59,000 Land 78,000;Accounts Receivable 15,000 Unearned Revenue 45,000;Advertising Expense 13,000 Utilities Expense 5,000;Building 160,000 Rent Expense 13,000;Cash 140,000 Operating Expenses 23,000;Supplies 10,000 Common Stock 240,000;Salary payable 2,000 Accumulated Depreciation 10,000;Prepaid Insurance Expense 20,000 Service Revenue 170,000;Interest Expense 9,000 Retained Earnings?;Prepare the year-end Balance Sheet and Income Statement for AQUA LLP at;the end of the year. (Include Correct Headings);Module 2 Test;Problem 1.;The May 31, 2012, balance per bank statement for Upton Company was;$7,200. The cash balance per books was $9,500. Outstanding checks amounted to;$800, and deposits in transit were $2,400. The bank statement contained an NSF;check for $500, a service charge for $25, and a debit memo for direct payment of;the telephone bill of $175.;Required;1) Prepare a bank reconciliation to determine the true cash balance at;May 31, 2012.;Problem 2.;Scott Company is a merchandising business that was started in 2012.;Scott uses the perpetual inventory system. It experienced the following events;during 2012.;1. Acquired $25,000 cash by issuing common stock;2. Purchased inventory on account that cost $14,000, terms 2/10, n/30;3. Sold inventory that had cost $8,400 for $15,000 cash;4. Paid for the merchandise referred to in event 2, within the discount;period;Required;1) Record the events in the financial statements model below, include;column totals.;2) Prepare an income statement for 2012.;3) What is the amount of total assets at the end of 2012?;Module 3 Test;Problem 1.;Maple Company started the year with no inventory. During the year, it;purchased two identical inventory items at different times. The first unit cost;$800 and the second, $700. One of the items was sold during the year.;Required;Based on this information, how much product cost would be allocated to;cost of goods sold and ending inventory, assuming use of;a. LIFO;b. FIFO;c. Weighted average;Problem 2.;Teague Company purchased a new machine on January 1, 2012, at a cost of;$150,000. The machine is expected to have an eight-year life and a $15,000;salvage value. The machine is expected to produce 675,000 finished products;during its eight-year life. Smith produced 70,000 units in 2012 and 110,000;units during 2013.;Required;1) Determine the amount of depreciation expense to be recorded on the;machine for the years 2012 and 2013 under each of the following methods;a) Straight-line method;b) Units of production method;c) Double-declining balance method;Module 4 Test;Problem 1.;Villarente Company issued 5-year $200,000 face value bonds at 95 on;January 1, 2012. The stated interest rate on these bonds is 9%, and the;effective interest rate is 10.33%.;Use the effective interest rate method to complete the amortization;schedule below.;Problem 2.;Allen Corporation was organized on July 15, 2012. It was authorized to;issue 150,000 shares of $25 par value common stock and 50,000 shares of 6%;cumulative preferred stock. The preferred stock had a stated value of $50 per;share. The following stock transactions relate to Allen Corporation.;? Issued 55,000 shares of common stock for $33 per share.;? Issued 2,750 shares of the class A preferred stock for $62 per share.;? Issued 27,500 shares of common stock for $35 per share.;Required;1) Indicate the effect of each of these transactions on Allen's;financial statements. Include dollar amounts in the model, below. After;recording the three transactions, calculate column totals.;2) After these transactions have been recorded, what is the total;amount of stockholders' equity?;3) After these transactions have been recorded, how many shares of;common stock are outstanding?;Module 5 Test;Problem 1.;The following information applies to Barnhart Company;Assets;Cash 5,000;Accounts Receivable 12,000;Inventory 15,000;Plant and equipment, net of depreciation 20,000;Land 18,000;Total Assets 70,000;Liabilities & Stockholders' Equity;Accounts payable 4,000;Salaries payable 9,000;Bonds payable (due 2020) 11,000;Capital stock, 20 no par 22,000;Retained earnings 24,000;Total Liabilities & Stockholders' Equity 70,000;Additional information;Net Credit Sales = $220,000;Beginning Accounts Receivable = $10,000;Required;1) Compute Barnhart's;a) Quick ratio;b) Current ratio;c) Working capital;d) Accounts receivable turnover;e) Average days to collect receivables;Problem 2.;The Jiffy Manufacturing Company started operations in 2012 when it;acquired $100,000 from its owners. During the year, the company incurred the;following costs;Raw materials used 40,000;Labor 50,000;Overhead 20,000;Selling & Administrative costs;30,000;The company placed 12,000 units into production, completed 10,000;units, and sold 8,000 units. The average selling price was $17 per unit.;Required;1) Prepare a schedule of cost of goods manufactured and sold for the;year ended December 31, 2012.;2) Prepare an income statement for the year ended December 31, 2012.;Module 6 Test;Problem 1.;The following information is for a product manufactured and sold by;Rivera Corporation;Sales price per unit 30;Variable cost per unit 20;Total fixed costs;200,000;Last year, Rivera earned a profit of $60,000;Required;1) How many units did Rivera sell last year?;2) Rivera's managers are considering decreasing the sales price to $28;in an effort to increase market share. Also, the company wants a profit of;$80,000. How many units would it have to sell at the lower selling price to;achieve this target?;Problem 2.;The management accountant at Melrose, Inc. provided the following;estimated costs for producing 5,000 units of a specialty product manufactured;by the firm;Direct Materials;10,000;Direct Labor (1 hour per unit);50,000;Unit level support costs;10,000;Batch level support costs;5,000;Product level support costs;3,000;Facility level support costs;7,000;The company believes that direct labor hours are the most appropriate;cost driver for assigning overhead costs to its product.;Required;1) Compute the predetermined overhead rate for this company.;2) Compute the specialty product's total estimated cost per unit.;3) Why do firms assign overhead costs using a predetermined overhead;rate instead of assigning actual costs?;Module 7 Test;Problem 1.;Ortiz Manufacturing is considering developing and marketing one of two;new products, A and B. It has accumulated the following information about the;two products;Product A Product B;Research and development costs incurred to date $800,000 $350,000;Additional development costs to bring product to market $120,000 $45,000;Expected annual sales 100,000;units, $900,000 50,000 units, $270,000;Expected annual unit-level costs;$4 per unit, $400,000 total $2 per unit, $100,000 total;Expected annual batch-level costs;$130,000 $60,000;Allocated facility-level costs;$210,000 $63,000;Expected product life cycle;15 years 8 years;Required;1);Which of these items are relevant to Ortiz's;decision about which of these products it will launch?;Problem 2.;Mae Lee owns a small retail store in Cairo, Georgia. The following;summary information regarding expectations for the month of January is;provided: As of December 31 there is $500 in the bank and the balance in;accounts receivable is $2,500. Budgeted cash and credit sales for January are;$3,000 and $2,000, respectively. Ninety percent of credit sales are collected;in the month of sale and the remainder is collected in the following month.;Mae's suppliers do not extend credit. Cash payments for January are expected to;be $12,000. Mae has a line of credit that enables the store to borrow funds on;demand. However, funds must be borrowed on the first day of the month and;interest paid in cash on the last day of the month. Mae desires to maintain a;$500 cash balance before consideration is given to the payment of interest.;Mae's bank charges annual interest of 12% per year.;Required;1) Compute the amount of funds that needs to be borrowed.;2) Compute the amount of interest expense that will appear on the;January 31 pro forma income statement.;Module 8 Test;Problem 1.;Creighton Company's balance sheet and income statement are provided;below;Creighton Company;Balance Sheet;December 31, 2012;Cash 21,000;Accounts receivable 24,000;Inventory 15,000;Plant and equipment, net of depreciation 144,000;Land held for future plant expansion;36,000;Total Assets 240,000;Liabilities and Stockholders' Equity;Accounts payable;18,000;Notes payable 30,000;Capital stock, no par;120,000;Retained earnings;72,000;Total Liabilities and stockholders' equity 240,000;Creighton Company;Balance Sheet;December 31, 2012;Sales 159,000;Less: variable costs;Manufacturing 31,000;Selling and administrative 25,000;Contribution margin 103,000;Less: Fixed costs;Manufacturing 31,000;Selling and administrative 22,500;Operating income;49,500;Required;1) Compute the margin, turnover, and return on investment for Creighton;Company;2) What is the advantage of expanding the ROI formula to measure margin;and turnover separately?;Problem 2.;Delta Company is evaluating two different capital investments, Project;X and Y. Either X or Y would cost $100,000, and the company cannot afford to do;both.;The company expects that Project X would provide net cash inflows of;$30,000 per year for 5 years.;For Project Y, the net cash inflows are expected to be as follows;Year Cash inflows;Year 1 22,000;Year 2 24,000;Year 3 30,000;Year 4 38,000;Year 5 40,000;Delta's cost of capital is 12%.;Required;1) Calculate the present value index for Project X and for Project Y.;2) Indicate whether each of the projects is an acceptable investment.;3) Which of the two projects;should Delta implement?


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