ACCT 101 Exam 2 Review
Problem 1: The following balances are from Halloween Town, Inc.
Cash
Accounts Receivable
ADA
Prepaid Rent
Prepaid Insurance
Equipment
Accumulated Depreciation
Patent
Accounts Payable
Wages Payable
Interest Payable
Taxes Payable
Note Payable
Common Stock
Retained Earnings
Sales
COGS
Wage Expense
Rent Expense
Interest Expense
Insurance Expense
Depreciation Expense
Income Tax Expense
20x11
46,400
50,000
10,000
6,000
2,400
210,000
70,000
6,000
40,000
10,000
0
3,000
50,000
80,000
47,800
100,000
30,000
10,000
24,000
4,000
2,000
10,000
6,000
20x10
30,000
65,000
5,000
3,000
3,600
190,000
60,000
0
50,000
0
5,000
4,000
70,000
50,000
37,600
During the year, Halloween Town exchanged 100 shares of Common stock worth $10,000 for a new
piece of equipment worth that amount. The Note requires annual principal payments of $20,000.
During 20x11, the company paid a dividend of __3,800______. No equipment was sold during the
year. The tax rate is 30% and the 20x10 tax payable and ½ of 20x11 taxes were paid in 20x11.
PREPARE A CASH FLOW STATEMENT AND ANSWER THE FOLLOWING QUESTIONS.
ACCT 101 Exam 2 Review
1. The Total Assets at December 31, 2011 was:
a. $200,800
b. $240,800
c. $240,000
d. $280,800
2. The Total Current Liabilities at December 31, 2011 was (be careful!)
a. $53,000
b. $50,000
c. $73,000
d. $70,000
3. The Operating Income was
a. $24,000
b. $25,500
c. $20,000
d. $22,000
4. The cash paid for wages in 2011 was:
a. $10,000
b. $0
c. $11,000
d. $5,000
5. Cash flow from Operations was:
a. $36,000
b. $35,200
c. $36,200
d. $26,200
6. Cash Flow from (Used by) Investing Activities was:
a. ($16,000)
b. ($10,000)
c. ($20,000)
d. $16,000
7. Cash Flow from (Used by) Financing Activities was:
a. ($43,800)
b. ($40,300)
c. ($3,000)
d. ($3,800)
ACCT 101 Exam 2 Review
8. In the “Supplemental Cash Flow Information” section, the Cash Paid for Interest was:
a. $9,000
b. $4,000
c. $13,000
d. $10,000
9. In the “Supplemental Cash Flow Information” section, the Cash Paid for Taxes was:
a. $10,000
b. $7,000
c. $13,000
d. 0
10. Taxable Income for 2011 was:
a. $14,000
b. $28,000
c. $20,000
d. $22,000
11. Net Fixed Assets at December 31, 2011 was:
a. $210,000
b. $70,000
c. $280,000
d. $140,000
12. Financing Activities include:
a. Issuance of Common Stock $30,000
b. Issuance of Common Stock ($20,000)
c. New Borrowings ($20,000)
d. Issuance of Common Stock $20,000
13. Investing activities include:
a. Purchased Land ($100,000)
b. Purchased Equipment ($20,000)
c. Purchased Equipment ($10,000)
d. Payment on Note ($20,000)
14. On November 19, Lauren’s Company made a $8,000 credit sale under the terms 2/10, n/30.
If Lauren receives full payment of the account on November 26, the amount of cash
received is:
a. $ 8,160
b. $ 8,000
c. $ 7,840
d. $ 7,800
ACCT 101 Exam 2 Review
15. The accounts receivable turn measures:
a. The ability of a company to turn sales into cash
b. The ability of a company to pay its bills for the coming year
c. How well a company uses its assets to create profits
d. The amount of debt a company is carrying as a percentage of total assets
16. Which of the following would NEVER be an adjustment in arriving at net cash flow from
operations on any Statement of Cash Flows?
a. Add: Accumulated Depreciation
b. Decrease in Net A/R
c. Increase in Prepaids
d. Increase Taxes Payable
17. Lucky Company had a beginning balance (12/31/2010) in Accounts Receivable of $300,000
and a beginning credit balance in ADA of $10,000. During 20x11, Lucky Co. sold $100,000 of
goods on credit and collected $75,000. If Lucky Co. estimates that 4% of their ending
accounts receivable will eventually not be collected, their adjusting journal entry for the bad
debt expense will include a credit to ADA for:
a. $13,000
b. $3,000
c. $10,000
d. $23,000
18. Still on Lucky Co. – if they had written off $6,000 of accounts receivable during 20x11, the
debit to bad debt expense would have been:
a. $8,760
b. $12,760
c. $6,000
d. $8,800
19. Lauren’s Lollipop Factory had a fire! She knows that last year she ended with $650,000 in
inventory and after going through invoices she finds she had purchased $400,000 in
inventory prior to the fire. Her average markup rate is 120% of the cost of the item. Her
sales to date of the fire were $1,000,000. How much inventory did she lose in the fire?
a. $595,454
b. $600,000
c. $365,000
d. $599,000
e. None of the above
20. You are buying a new Hummer. The cost is $70,000 with 10% down and the rest in 60 month
payments which include interest at an annual rate of 6%. What are the monthly payments?
a. $3,898.17
b. $1,159.97
c. $1,353.30
d. $1,217.97
e. None of the above
REMEMBER TO STUDY YOUR RATIOS (A/R TURN, INVENTORY TURN, AVG COLLECTION PERIODS, AVG
DAYS SALES IN INVENTORY, EPS