ACCOUNTING

25. A company’s accounts payable was $600,000 at the beginning of the year and $632,000 at the end of the year. Cost of goods sold for the year was $637,000.  Inventory at the beginning of the year was $420,000 and at the end of the year $455,000.  How much cash did the company pay to its suppliers during the period?
A) $612,000
B) $640,000
C)  $662,000
D) None of the above

26. If a company’s selling price per unit increases, what is the impact on its contribution margin and breakeven point?
Contribution Margin Breakeven Point
A) Increase Increase
B) Decrease No effect
C) No effect Increase
D) Increase Decrease

27. The bookkeeper who records cash receipts also deposits daily cash receipts at the bank on his way home from work.  This is a violation of which of the following characteristics of good internal control:
A) requiring proper authorization
B) separating incompatible duties
C) physically controlling assets and documents
D) maintaining adequate documents and records

28. For 2008, Parker Inc. reported total liabilities of $720,000, current assets of $235,000, and total shareholders’ equity of $1,250,000.  What are Parker Inc.’s total assets?
A) $1,735,000
B) $1,820,000
C) $1,970,000
D) $2,205,000

29. The Torbel Company ordered $80,000 of inventory from Borton Industries and was given terms of 3/15 n/45.  Which of the following describes how soon the payment must be made in order to receive a discount and the amount of the discount available?

Payment Made Within Amount of Discount
A) Between 3 and 15Days $12,000
B) 45 Days $  9,600
C) Between 2 and 15 $  2,400
D) Within 15 Days $  2,400

30. The following journal entry affected the accounting equation by:
Cash    XXX
Capital Stock   XXX
A) increasing assets and increasing liabilities
B) decreasing assets and increasing owners equity
C) increasing liabilities and decreasing owners equity
D) increasing assets and increasing owners equity

31. Moreland Corp. purchased a building for $35 million that will house its new manufacturing plant.  This is part of Moreland’s
A) Operating activities
B) Financing activities
C) Investing activities
D) All of the above

Use the following to answer questions 32 and 33:
Carrington Company has a perpetual inventory system and uses the LIFO method of inventory costing.  Carrington reported the following events during the month of March:

Number of Units
Date Event  Bought Sold Unit Price
Mar. 1 Beginning Inv. 100  $10
3 Purchase   75        $11
5 Sale   50
10 Purchase 140         $12
16 Sale   110
21 Sale   70
25 Purchase 175        $14
30 Sale      120

32. The cost of goods sold for the March 21st sale is:
A) $700
B) $720
C) $785
D) $ 840

33. The ending inventory on March 31st is:
A) $1,440
B) $1,620
C) $1,640
D) $1,960

34. Triple Tee Company sells their only product for $22.00. Variable costs per unit are $14.80, while total fixed costs amount to $550,000.  The company wants to earn a before-tax profit of $400,000. The  total unit sales needed to achieve the desired before-tax profit is:
A)   64,190
B)   76,389
C) 131,945
D) 137,266

35. Distance Solutions’ president receives a bonus equal to 8% of income before tax and bonus.   If the tax rate is 30%, what is Distance Solutions’ net income for the year assuming income before tax and bonus was $1,300,000?
A) $104,000
B) $390,000
C) $806,000
D) $837,200

36. Pratt Company currently produces and sells 12,000 units of its product each month at a sales price of $15 each.  Another firm has offered to buy an additional 1,000 units at $10 per unit.  Pratt’s total cost per unit is as follows:

Fixed costs per unit are based on production of 12,000 units per month.  Pratt Company currently has the capacity to produce 15,000 units per month.  By how much would profit change if Pratt accepts this offer?
A) $7,000 increase
B) $5,500 increase
C) $1,700 increase
D) $300 decrease

37. If a product has a cost of $600 and a selling price of $1,800, what is the product’s markup percentage?
A) 33%
B) 67%
C) 150%
D) 200%

38. Grover Company’s economic order quantity is 2,800 units.  Demand for the year is 108,000 units.  There are three days between the time an order is placed and the day it is received.  Grover operates 360 days per year.  What is the daily demand?
A) 300
B) 900
C) 934
D) 2,700

39. WyKan Corporation sells three types of speaker systems, the Model A, the Model B and the Model C. The profit report for these speaker systems for the most recent period is shown below by product line.  The facility sustaining costs are fixed and allocated as shown below between each of the three product lines.
Model A_       Model B       Model C
Sales $200,000 $95,000  $155,000
Variable Costs   110,000   60,000    124,000
Contribution Margin   $90,000 $35,000    $31,000
Facility Sustaining Cost     50,000   30,000      40,000
Net Income (Loss)   $40,000 $5,000  $(9,000)

Wykan’s president insists on discontinuing Model C.  He obviously has not taken acct 2101!  What will be the company’s net income (loss) after eliminating Model C?
A) $45,000
B) $36,000
C) $(9,000)
D) $5,000

40. Palisades Corporation purchased equipment by signing a long-term note payable.  What was the effect of this transaction?
A) increased assets and increased liabilities
B) increased assets and increased owners equity
C) increased assets and decreased owners equity
D) increased owners equity and decreased liabilities

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