BUS 209 RETAKE EXAM 7-9 Name __________________________
Date is Imperative________________
Part I II III IV V VI Total
Points 10 10 30 15 12 23 100
Score
PART I — MULTIPLE CHOICE (10 points)
Instructions: Designate the best answer for each of the following questions.
____ 1. Seaside Market recorded the following events involving a recent purchase of merchandise:
Received goods for $50,000 terms 2/10, n/30
Returned $2,000 of the shipment for credit
Paid $250 freight on the shipment
Paid the invoice within the discount period.
As a result of these events, the company’s merchandise
a. increased by $48,000
b. increased by $47,290
c. increased by $48,270
d. increased by $47,250
____ 2. T. Powers Company's financial statements on December 31, 2010, showed the following:
What is the fixed asset turnover for 2010 (rounded to two decimal places)?
a. 3.93
b. 2.60
c. 4.10
d. 2.79
TEST 3 – Chapters 7-9
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BUS 209
____ 3. At the beginning of the year, Hillsboro Athletic had an inventory of $400,000. During the year, the
company purchased goods costing $1,600,000. If Hillsboro Athletic reported ending inventory of
$500,000 and sales of $2,000,000, the company’s cost of goods sold and gross profit rate must be:
a. $1,400,000 and 70%
b. $1,500,000 and 25%
c. $1,400,000 and 30%
d. $1,500,000 and 75%
____ 4. Which assets should be amortized using the straight-line method:
a. Plant assets
b. Intangible assets with limited lives.
c. Intangible assets with unlimited lives.
d. All of the above.
____ 5. On March 20, 2011, E Flynn Company acquired the following net assets from M. Curtiz Company
for $360,000. How much Goodwill should E. Flynn Company record for this acquisition?
a. $66,000
b. $63,000
c. $44,000
d. $ 0.00
Test 3 BUS 209
PART II: worth 10 points including double underlining the correct numbers. Put losses in parenthesis for full
points. See page following for additional questions. No partial Credit.
Instructions: Complete the Heading of the Income Statement
for "Quality Fashion Center" and the missing amounts
designated by letters A-H for the Month of December 2011.
A A
1 Sales revenues 1
2 Sales 855,200 2
3 Less: Sales returns and allowances (9,900) 3
4 Net Sales 845,300 4
B Cost of Goods Sold B
6 Gross profit 248,700 6
7 7
8 Operating Expenses 8
9 Selling expenses 9
10 Salaries expense 160,100 10
11 Advertising expense 24,400 11
16 Store supplies expense 3,700 16
C Total Selling Expense C
18 Administrative expense 18
19 Salaries expense 57,100 19
21 Rent expense 4,800 21
22 Utilities expense 2,800 22
D Total admin expenses D
E Total operating expense E
F Income (Loss) from operations F
26 Other expenes and losses 26
27 Interest expense 5,000 27
G Income (loss) before income taxes G
29 Income Tax Expense 0.00 29
H Net Income/ (Loss) H
31 31
Quality Fashion Center
Income Statement
What is the Format of the above Income Statement?____________________________________
Explain how different inventory methods would change this statement:
_______________________________________________________________________________________
TEST 3 – Chapters 7-9
Page | 4
BUS 209
PART III — BASIC INVENTORY COMPUTATIONS (30 points)
Pilgrim Company, which uses a periodic inventory system, had a beginning inventory on Nov 1, of 250 units of
Product A at a cost of $7.50 per unit. During November, the following purchases and sales were made.
Purchases Sales
Nov 6 225 units at $8.00 Nov 4 275 units
14 250 units at $9.00 8 425 units
21 350 units at $11.50 22 400 units
28 400 units at $12.00 24 225 units
1,225 1,325
Instructions: Compute the Nov 31 ending inventory and Nov’s cost of goods sold under (a) Average Cost, (b)
FIFO, and (c) LIFO. Provide appropriate supporting calculations.
(a) Average: Ending Inventory = $_________; Cost of Goods Sold = $_________.
(b) FIFO: Ending Inventory = $_________; Cost of Goods Sold = $_________.
(c) LIFO: Ending Inventory = $_________; Cost of Goods Sold = $_________.
Test 3 BUS 209
PART IV — Receivables, bad debt, ratios (15 points)
144. At the end of 2011, Geisel, Inc has a $1,000 debit balance in the Allowance for Doubtful Accounts, before
adjusting entries were prepared. Credit sales for 2011 totaled $510,000. Sales returns for 2011 were $10,000.
Credit Sales for 2010 were $610,000. Sales returns for 2010 were $10,000. The following aging analysis of
Accounts Receivable was prepared at 12/31/11:
A. Compute the allowance for uncollectible accounts, and show your work below.(2pts)
B. Prepare the 12/31/11 adjusting entry using the aging analysis approach to estimate bad debts.(5pts)
C. Calculate the accounts receivable turnover ratio and the days to collect for 2010 and 2011 (round each
calculation to one decimal place).The net receivables balance reported on the company's 12/31/09 financial
statements was $120,000. The net receivables balance reported on the 12/31/10 financial statements was
$130,000. (Show your work, make sure your work is correct – no partial points)(5 pts)
2010 AR Turnover ratio = 2010 Days to collect ratio =
2011 AR Turnover ratio = 2011 Days to collect ratio =
c. Discuss the implications of the receivables turnover ratio and days to collect as calculated in part b. Discuss
possible reasons for any changes in the calculations. (3 pts)
TEST 3 – Chapters 7-9
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BUS 209
PART V — Recording purchase of Capital Assets (12 points)
Instructions: Complete the Journal Entries for the following separate transactions:
A. A company purchases property that includes land, buildings and equipment for $5.5 million. The
company pays $180,000 in legal fees, $220,000 in commissions, and $100,000 in appraisal fees. The
land is estimated at 25%, the buildings are at 40%, and the equipment at 35% of the property value.
Prepare the journal entry that is required to record the purchase assuming that the company paid 50%
of the amounts using cash and signed a note for the remainder.
B. On April 1, 2010, a company discarded a computer that cost $15,000 and that had a useful life of 4
years and a salvage value of $1,000. Using straight-line depreciation, the accumulated depreciation as
of December 31, 2009 was $10,700.
a. Prepare the journal entry to record depreciation up to the date of disposal of the computer
b. Prepare the journal entry to record the disposal of the computer.
C. Heidel Co. paid $750,000 cash to buy the plant assets of Rogers Co. that went out of business. An
independent appraiser assigned the following values to the assets acquired:
Land $522,000
Building 243,000
Equipment 135,000
Total $900,000
Prepare Heidel's journal entry to record the acquisition of these assets.
Test 3 BUS 209
PART V — Computation of Depreciation (23 points)
On September 30, 2012 ( the current year), a company acquired and placed in service a machine at a cost of
$700,000. It has been estimated that the machine has a service life of five years or 330,000 units of output with
a salvage value of $40,000. Using the double-declining-balance method of depreciation, prepare a schedule
showing depreciation amounts for the current year and the next 4 years (round answers to the nearest dollar).
The company closes its books on December 31 of each year.
Instructions: Show all computations:
A. Prepare the Double-Declining Depreciation Schedule below: (18 pts)
B. What would have been the Depreciation expense been for 2012, had the Straight line method been
used? (2 pts)
C. What would have been the Depreciation expense in 2012 if the Units of Production method been used
and the machine was used 30,000 units? (3 pts)
TEST 3 – Chapters 7-9
Page | 8
BUS 209
Target Corp. (TGT)
Income Statement
View: Annual Data | Quarterly Data All numbers in thousands
Period Ending Jan 27, 2012 Jan 28, 2011 Jan 29, 2010
Total Revenue 69,865,000 67,390,000 65,357,000
Cost of Revenue 47,860,000 45,725,000 44,062,000
Gross Profit 22,005,000 21,665,000 21,295,000
Operating Expenses
Research Development - - -
Selling General and Administrative 14,552,000 14,329,000 14,599,000
Non Recurring - - -
Others 2,131,000 2,084,000 2,023,000
Total Operating Expenses - - -
Operating Income or Loss 5,322,000 5,252,000 4,673,000
Income from Continuing Operations
Total Other Income/Expenses Net 3,000 3,000 3,000
Earnings Before Interest And Taxes 5,325,000 5,255,000 4,676,000
Interest Expense 869,000 760,000 804,000
Income Before Tax 4,456,000 4,495,000 3,872,000
Income Tax Expense 1,527,000 1,575,000 1,384,000
Minority Interest - - -
Net Income From Continuing Ops 2,929,000 2,920,000 2,488,000
Non-recurring Events
Discontinued Operations - - -
Extraordinary Items - - -
Effect Of Accounting Changes - - -
Other Items - - -
Net Income 2,929,000 2,920,000 2,488,000
Preferred Stock And Other Adjustments - - -
Net Income Applicable To Common Shares 2,929,000 2,920,000 2,488,000
Test 3 BUS 209
Currency in USD.
Target Corp. (TGT)
All numbers in thousands
Period Ending Jan 27, 2012 Jan 28, 2011 Jan 29, 2010
Assets
Current Assets
Cash And Cash Equivalents 794,000 1,712,000 2,200,000
Short Term Investments - - -
Net Receivables 5,927,000 6,153,000 6,966,000
Inventory 7,918,000 7,596,000 7,179,000
Other Current Assets 1,810,000 1,752,000 2,079,000
Total Current Assets 16,449,000 17,213,000 18,424,000
Long Term Investments - - -
Property Plant and Equipment 29,149,000 25,493,000 25,280,000
Goodwill - - -
Intangible Assets - - -
Accumulated Amortization - - -
Other Assets 1,032,000 999,000 829,000
Deferred Long Term Asset Charges - - -
Total Assets 46,630,000 43,705,000 44,533,000
Liabilities
Current Liabilities
Accounts Payable 10,501,000 9,951,000 9,631,000
Short/Current Long Term Debt 3,786,000 119,000 1,696,000
Other Current Liabilities - - -
Total Current Liabilities 14,287,000 10,070,000 11,327,000
Long Term Debt 13,697,000 15,607,000 15,118,000
Other Liabilities 1,634,000 1,607,000 1,906,000
Deferred Long Term Liability Charges 1,191,000 934,000 835,000
Minority Interest - - -
Negative Goodwill - - -
Total Liabilities 30,809,000 28,218,000 29,186,000
TEST 3 – Chapters 7-9
Page | 10
BUS 209
Stockholders' Equity
Misc Stocks Options Warrants - - -
Redeemable Preferred Stock - - -
Preferred Stock - - -
Common Stock 56,000 59,000 62,000
Retained Earnings 12,959,000 12,698,000 12,947,000
Treasury Stock - - -
Capital Surplus 3,487,000 3,311,000 2,919,000
Other Stockholder Equity (681,000) (581,000) (581,000)
Total Stockholder Equity 15,821,000 15,487,000 15,347,000
Net Tangible Assets 15,821,000 15,487,000 15,347,000
Currency in USD.
BONUS QUESTIONS: 6 Points
1. Prepare the Receivable Turnover Ratio for the January 27th 2012 Fiscal Year end for Target
Corporation. (Show your work)
2. Prepare the Days to Collect for the January 27th 2012 Fiscal Year for Target Corporation. (Show your
work)
3. Prepare the Fixed Asset Turnover Ratio for the January 27th 2012 Fiscal Year End for Target
Corporation ( Show your work)
CLICK HERE TO GET THE ANSWER !!!!
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