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ACCT 504 Final Exam (Keller)




Question;1.;(TCO A) Which one of the following is an advantage of;corporations relative to partnerships and sole proprietorships? (Points: 5);Reduced legal liability for investors;Harder to transfer ownership;Lower taxes;Most common form of organization;2. (TCO A) The Dividends account _____. (Points;5);is increased with a debit;is decreased with a credit;is not an expense account;All of the above;3. (TCOs A, B) Below is a partial list of account;balances for Kerner Company;Cash $10,000;Prepaid insurance 1,000;Accounts receivable 5,000;Accounts payable 4,000;Notes payable 6,000;Common stock 2,000;Dividends 1,000;Revenues 30,000;Expenses 25,000;What did Kerner Company show as total credits?;(Points: 5);$43,000;$41,000;$42,000;$44,000;4. (TCOs B, E) A small and private company may be;able to justify using a cash basis of accounting if it has _____. (Points: 5);sales under $1,000,000;no accountants on staff;insignificant receivables and payables;all sales and purchases on account;5. (TCO D) Two companies report the same cost of;goods available for sale, but each employs a different inventory costing;method. If the price of goods has increased during the period, then the company;using _____. (Points: 5);LIFO will have the highest ending inventory;FIFO will have the highest cost of goods sold;FIFO will have the highest ending inventory;LIFO will have the lowest cost of goods sold;6. (TCOs A, E) Equipment with a cost of $192,000;has an estimated salvage value of $18,000 and an estimated life of 4 years or;12,000 hours. It is to be depreciated by the straight-line method. What is the;amount of depreciation for the first full year, during which the equipment was;used 3,300 hours? (Points: 5);$48,000;$52,500;$49,500;$43,500;7. (TCOs D, G) Joyce Corporation issues 1,000;ten-year, 8%, $1,000 bonds dated January 1, 2007, at 102. The journal entry to;record the issuance will show a _____. (Points: 5);debit to Cash of $1,020,000;debit to Discount on Bonds Payable for $20,000;credit to Bonds Payable for $1,020,000;credit to Cash for $1,000,000;8. (TCO C) Accounts receivable arising from sales;to customers amounted to $80,000 and $70,000 at the beginning and end of the;year, respectively. Income reported on the income statement for the year was;$240,000. Exclusive of the effect of other adjustments, the cash flows from;operating activities to be reported on the statement of cash flows is _____.;(Points: 5);$240,000;$250,000;$310,000;$230,000;9. (TCO F) Which one of the following is not a;tool in financial statement analysis? (Points: 5);Horizontal analysis;Circular analysis;Vertical analysis;Ratio analysis;10. (TCO F) Comparisons of data within a company;are an example of the following comparative basis. (Points: 5);Industry averages;Intercompany;Intracompany;Interregional;11. (TCO F) Which one of the following is not a;characteristic generally evaluated in ratio analysis? (Points: 5);Liquidity;Profitability;Marketability of the product;Solvency;12. (TCO F) Short-term creditors are usually most;interested in assessing _____. (Points: 5);solvency;liquidity;marketability;profitability;13. (TCO F) Return on common stockholder's equity;ratio is affected by _____. (Points: 5);net income;dividend paid to preferred stock, if any;leverage (debt-to-assets ratio);All of the above;14. (TCO G) The present value of a bond is a;function of which factors below? (Points: 5);The market interest rate;The length of time until the amounts are received;The dollar amounts to be received;All of the above;(TCO A) Below you will find selected information (in millions) from;Coca-Cola Co.?s 2012 Annual Report;Income;Taxes Payable;$471;Short-term;Investments and Marketable Securities;8,109;Cash;8,442;Other;non-current Liabilities;10,449;Common;Stock;1,760;Receivables;4,812;Other;Current Assets;2,973;Long-term;Investments;10,448;Other;Non-current Assets;3,585;Property;Plant and Equipment;23,486;Trademarks;6,527;Other;Intangible Assets;20,810;Allowance;for Doubtful Accounts;53;Accumulated;Depreciation;9,010;Accounts;Payable;8,680;Short;Term Notes Payable;17,874;Prepaid;Expenses;2,781;Other;Current Liabilities;796;Long-Term;Liabilities;14,736;Paid-in-Capital;in Excess of Par Value;11,379;Retained;Earnings;55,038;Inventories;3,264;Treasury;Stock;35,009;Other information taken from the Annual Report;Sales;Revenue for 2012;$48,017;Cost;of Goods Sold for 2012;19,053;Net;Income for 2012;9,019;Inventory;Balance on 12/31/11;3,092;Net;Accounts Receivable Balance on 12/31/11;4,920;Total;Assets on 12/31/11;79,974;Equity;Balance on 12/31/11;31,921;Required;1. Using the information provided prepare a Balance Sheet. Separate the;current assets from non-current assets and provide a total for each. Also;separate the current liabilities from the non-current liabilities and provide;a total for each.;2. Using the Balance Sheet from your answer above;calculate the Current Ratio and Return on common stockholders?;equity ratio. (Make sure to show all your work).;(Points: 36);(Points: 36);Question 2.2.;(TCO B) The following selected data was retrieved from the Walmart;Inc. financial statements for the year ending January 31, 2013;Accounts;Payable;$38,080;Accounts;Receivable;6,768;Cash;7,781;Common;Stock;3,952;Cost;of Goods Sold;352,488;Income;Tax Expense;7,981;Interest;Expenses;2,064;Membership;Revenues;3,048;Net;Sales;466,114;Operating;Selling and Administrative Expenses;88,873;Retained;Earnings;72,978;Required;Using the information provided above;1. Prepare a multiple-step income statement;2. Calculate the Profit Margin, and Gross profit rate for the company.;Be sure to provide the formula you are using, show your calculations, and;discuss your findings/results.;(Points: 36);2.;Question 3.3.(TCO C) Please review the following;real-world Hewlett Packard Statement of Cash flows and address the two;questions below;Cash flow from operating activities;In millions;In millions;For the year ended 2012;For the year ended 2011;Net (loss) earnings;$(12,650);$7,074;Depreciation and amortization;5,095;4,984;Impairment of goodwill and purchased intangible assets;18,035;885;Stock-based compensation expense;635;685;Provision for doubtful accounts;142;81;Provision for inventory;277;217;Restructuring charges;2,266;645;Deferred taxes on earnings;(711);166;Excess tax benefit from stock-based competition;(12);(163);Other, net;265;(46);Accounts and financing receivables;1,269;(227);Inventory;890;(1,252);Accounts payable;(1,414);275;Taxes on earnings;(320);610;Restructuring;(840);(1,002);Other assets and liabilities;(2,356);(293);Net cash provided;by;operating activities;10,571;12,639;Cash flows from investing activities;Investment in property, plant, and equipment;(3,706);(4,539);Proceeds from sale of property, plant, and equipment;617;999;Purchases of available-for-sale securities and other investments;(972);(96);Maturities and sales of available-for-sale securities and other;investment;662;68;Payments in connection with business acquisitions, net of cash;acquired;(141);(10,480);Proceeds from business divestiture, net;87;89;Net cash used in;investing activities;(3,453);(13,959);Cash flow from financing activities;(Payments) issuance of commercial paper and notes payable, net;(2,775);(1,270);Issuance of debt;5,154;11,942;Payment of debt;(4,333);(2,336);Issuance of common stock under employee stock plans;716;896;Repurchase of common stock;(1,619);(10,117);Excess tax benefit from stock-based compensation;12;163;Cash dividends paid;(1,015);(844);Net cash used in financing activities;(3,860);(1,566);Increase (decrease) in cash and cash equivalents;3,258;(2,886);Cash and cash equivalents at beginning of period;8,043;10,929;Cash and cash equivalents at end of period;$11,301;$8,043;Required;1) Please calculate the;percentage increase or decrease in cash for the total line of the operating;investing, and financing sections bolded above and explain the major;reasons for the increase or decrease for each of these sections.;2) Please;calculate the free cash flow for 2012 and explain the meaning of this ratio.;(Points: 36);4. (TCO D) You are CFO of Goforit, Inc., a;wholesale distribution company specializing in emerging technologies. Your CEO;is a brilliant marketer, but relies on you to explain issues and choices in;accounting and finance. She has heard from other members of a CEO organization;to which she belongs that a company?s net income can vary widely depending on;which accounting choices are made from the ?GAAP menu.?;Assuming the goal is to maximize net income;choose an accounting treatment from each of the following scenarios, and;explain to your CEO why the choice will produce the desired effect on reported;Net Income for the current year. Include in your answer the effect of the;choice on both the income statement and balance sheet.;Required;a. Goforit carries significant electronics;inventory in a competitive environment where prices are actually falling. Which;inventory valuation method would you choose?LIFO, FIFO, or average cost? Assume;that unit purchases exceed unit sales.;b. Goforit has a large investment in warehouse;equipment including conveyor belts, forklifts, and automated packaging systems.;Which depreciation method would you choose: Straight line (SL) or double;declining balance (DDB)?;(Points: 36);Question 5.5.(TCO F) Please review the following;real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012;and address the 2 questions below.;Ratio Name;Johnson & Johnson;Pfizer;Profit margin;16.1%;24.7%;Inventory turnover ratio;3.1;1.7;Average collection period;59.4 days;69.1 days;Cash debt coverage ratio;.27;.16;Debt to Total assets;46.6%;127.5%;Required;1) Please explain the;meaning of each of the Pfizer ratios above.;2) Please state which;company performed better for each ratio.;(Points: 36)


Paper#48974 | Written in 18-Jul-2015

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