151. Wheaton Company Wheaton Company owns an apartment building that originally cost $40 million and by the end of the current period has accumulated depreciation of $10 million, with net carrying value of $30 million. Wheaton Company had originally expected to collect rentals of $3.34 million each year for 30 years before selling the building for $16 million. Unanticipated placement of a new shopping […]

  Learning Objective 11-4   1) Which of the following is evidence of a company’s positive ethical climate? A) The company controller leaves work after lunch every Friday to play golf with his friends. B) The company president has a framed motto on his desk that says: “Winning isn’t the most important thing, it’s the only thing.” C) The company’s annual audit is performed by […]

  4) Which of the following elements are used in calculating revenue in a flexible budget? A) budgeted selling price and actual quantity of output B) actual selling price and budgeted quantity of output C) budgeted selling price and budgeted quantity of output D) actual selling price and actual quantity of output   5) An unfavorable flexible-budget variance for variable costs may be the result […]

    141. Statements that show the effects of proposed transactions as if the transactions had already occurred are called:  A. Pro forma statements B. Professional statements C. Simplified statements D. Temporary statements E. Interim statements       142. The following items appeared on a company’s December 31 work sheet for the current period. Based on the following information, what is net income for the current period?     Unadjusted   […]

  21) Forise Water Company drills small commercial water wells. The company is in the process of analyzing the purchase of a new drill. Information on the proposal is provided below. Initial investment: Asset$600,000 Working capital$ 128,000 Operations (per year for four years): Cash receipts$450,000 Cash expenditures$ 190,000 Disinvestment: Salvage value of drill (existing)$ 50,000 Discount rate18%   What is the net present value of […]

    86.A company’s net sales were $676,600, its cost of goods sold was $236,810 and its net income was $33,750. Its gross margin ratio equals:    A.5%.   B.9.6%.   C.35%.   D.65%.   E.285.7%. Gross Margin Ratio = (Net Sales – Cost of Goods Sold)/Net SalesGross Margin Ratio = ($676,600 – $236,810)/$676,600 = 65%       87.A company had net sales of $752,000 […]

    21) A vendor offers terms of 2/10, n/30. What is the ANNUAL interest rate the vendor is charging a buyer who does not pay within 10 days? (Assume there are 360 days in the year. A) 2% B) 36% C) 54% D) 72%   22) A vendor offers terms of 1/10, n/30. What is the ANNUAL interest rate the vendor is charging a […]

    101. The management of Zesty Corporation is considering the purchase of a new machine costing $400,000. The company’s desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this […]

  130. On December 31, a company needed to estimate its ending inventory to prepare its annual financial statements. The following information is currently available: Inventory as of January 1: $120,500 Net sales for the year: $400,000 Net purchases for the year: $270,500 This company typically achieves a gross profit ratio of 15%. Ending Inventory under the gross profit method would be:  A. $102,425. B. $ 10,425. C. $9,000. […]

  121. The following selected account balances appeared on the financial statements of the Franklin Company:  Accounts Receivable, Jan. 1 $13,000 Accounts Receivable, Dec. 31 9,000 Accounts Payable, Jan 1 4,000 Accounts payable Dec. 31 7,000 Merchandise Inventory, Jan 1 10,000 Merchandise Inventory, Dec 31 15,000 Sales 56,000 Cost of Merchandise Sold 31,000     The Franklin Company uses the direct method to calculate net cash […]