“ACCOUNTING INFORMATION SYSTEMS 1

1. Cal Farms reported supplies expense of $2,000,000 this year. The supplies.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account decreased by
$200,000 during the year to an ending balance of $400,000. What was the cost
of supplies the Cal Farms purchased during the year?

A.$1,600,000

B.$2,200,000

C.$1,800,000

D.$2,400,000

2. Listed below are.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account balances (in
$millions) taken from the records of Symphony Stores. All of these are
permanent accounts, except the last two that have yet to be closed. The
installment receivables are current. Symphony uses a perpetual inventory
system.
.0/msohtmlclip1/01/clip_image001.gif”” alt=””https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif””>
What
is the amount of working capital for Symphony?

A.$98

B.$113

C.$143

D.$128

3. On December 31, 2011,
the end of Larry’s Used.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>Cars first year of
operations, the accounts receivable was $53,600. The company estimates that
$1,200 of the year-end receivables will not be collected. Accounts receivable
in the 2011 balance sheet will be valued at

A.$53,600.

B.$54,800.

C.$52,400.

D.$1,200.

4. In its first year of
operations, Best Corp. had income before.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>tax of $500,000.
Best made income tax payments totaling $210,000 during the year and has an
income tax rate of 40%. What was Best’s net income for the year?

A.$294,000

B.$290,000

C.$300,000

D.$306,000

5. Yummy Foods purchased
a two-year fire and extended coverage.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>insurance
policy on
August 1, 2011, and charged the $4,200 premium to Insurance expense. At its
December 31, 2011, year-end, Yummy Foods would record which of the following
adjusting entries?

a.

Insurance
expense

875

Prepaid
insurance

875

b.

Prepaid
insurance

875

Insurance
expense

875

c.

Insurance
expense

875

Prepaid
insurance

3,325

Insurance
payable

4,200

d.

Prepaid
insurance

3,325

Insurance
expense

3,325

A.Option b

B.Option d

C.Option c

D.Option a

6. Janson Corporation
Co.’s trial balance included the following.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account balances at
December 31, 2011:

Accounts
payable

$25,000

Bond
payable, due 2020

22,000

Salaries
payable

16,000

Note
payable, due 2012

20,000

Note
payable, due 2016

40,000

What
amount should be included in the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>current liability
section of Janson’s December 31, 2011, balance sheet?

A.$41,000

B.$101,000

C.$61,000

D.$63,000

7. On June 1, Royal Corp. began
operating a service company with an initial cash investment by shareholders of
$2,000,000. The company provided $6,400,000 of services in June and received
full payment in July. Royal also incurred expenses of $3,000,000 in June that
were paid in August. During June, Royal paid its shareholders cash dividends of
$1,000,000. What was the company’s income before income taxes for the two
months ended July 31 under the following methods of.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>accounting?

Cash
Basis

Accrual
Basis

a.

$3,400,000

$3,400,000

b.

$5,400,000

$2,400,000

c.

$6,400,000

$3,400,000

d.

$6,400,000

$2,400,000

A.Option c

B.Option b

C.Option a

D.Option d

8. Temporary accounts
would not include

A.cost of goods sold.

B.depreciation expense.

C.salaries payable.

D.supplies expense.

9. On November 1, 2011,
Tim’s Toys borrows $30,000,000 at 9% to finance the holiday sales season. The
note is for a six-month term and both principal and interest are payable at
maturity. What should be the balance of interest payable for the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>loan as of December
31, 2011?

A.$1,350,000.

B.$112,500.

C.$450,000.

D.$225,000.

10. A cause-and-effect
relationship is implicit in the

A.historical cost principle.

B.going concern assumption.

C.matching principle.

D.realization principle.

11. The mostlikely
important flaw leading to the demise of the APB was the perceived lack of

A.importance.

B.competence.

C.independence.

D.confidence.

12. An example of a
contra.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account is

A.sales revenue.

B.accounts receivable.

C.depreciation expense.

D.accumulated depreciation.

13. Janson Corporation
Co.’s trial balance included the following.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account balances at
December 31, 2011:

Accounts
receivable

$12,000

Inventories

40,000

Patent

12,000

Investments

30,000

Prepaid.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>insurance

6,000

Note
receivable, due 2014

50,000

Investments
consist of treasury bills that were purchased in November and mature in
January. Prepaid insurance is for the next two years. What amount should be
included in the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>current asset section of
Janson’s December 31, 2011, balance sheet?

A.$135,000

B.$55,000

C.$88.000

D.$85,000

14. In its first year of
operations Best Corp. had income before.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>tax of $500,000.
Best made income tax payments totaling $210,000 during the year and has an
income tax rate of 40%. What was Best’s net income for the year?

A.$290,000

B.$306,000

C.$294,000

D.$300,000

15. Based on recent
financial statement data for Harmony Health Foods, Inc. (HHF), shown below,
HHF’s debt-to-equity ratio is (rounded)
.0/msohtmlclip1/01/clip_image002.gif”” alt=””https://my.pennfoster.com/exams/images/061500NR_Q36-38.gif””>

A.0.53.

B.0.75.

C.1.13.

16. Pat’s Custom.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>Tuxedo
Shop maintains
its records on the cash basis. During this past year Pat’s collected $42,000
in tailoring fees, and paid $14,000 in expenses. Depreciation expense totaled
$2,000. Accounts receivable increased $1,500, supplies increased $4,000, and
accrued liabilities increased $2,500. Pat’s accrual basis net income would be

A.$29,000.

B.$23,000.

C.$18,000.

D.$34,000.

17. SFAC No.5 focuses on

A.objectives of financial
reporting.

B.qualitative characteristics of
accounting information.

C.elements of financial
statements.

D.recognition and measurement
concepts in accounting.

18. Which of the following
was the first private sector entity that set.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>accounting standards in the
United States?

A.AICPA

B.Committee on Accounting
Procedure

C.Accounting Principles Board

D.Financial Accounting Standards
Board

19. Dave’s Duds reported
cost of goods sold of $2,000,000 this year. The inventory.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account increased by
$200,000 during the year to an ending balance of $400,000. What was the cost
of merchandise that Dave purchased during the year?

A.$1,800,000

B.$1,600,000

C.$2,400,000

D.$2,200,000

20. Ace Bonding Company
purchased merchandise inventory on.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account. The inventory costs
$2,000 and is expected to sell for $3,000. Indicate how Ace should record the
purchase by selecting one of the options listed below.

a.

Inventory

2,000

Accounts
payable

2,000

b.

Cost
of goods sold

2,000

Deferred
revenue

1,000

Sales
in advance

3,000

c.

Cost
of goods sold

2,000

Inventory
payable

2,000

d.

Cost
of goods sold

2,000

Profit

1,000

Sales
payable

3,000

A.Option b

B.Option a

C.Option d

D.Option c

21. Listed below are.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account balances (in
$millions) taken from the records of Symphony Stores. All of these are
permanent accounts, except the last two that have yet to be closed. The
installment receivables are current. Symphony uses a perpetual inventory
system.
.0/msohtmlclip1/01/clip_image001.gif”” alt=””https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif””>
What
would Symphony report as total assets?

A.$2,338

B.$2,318

C.$2,303

D.$2,323

22. The full disclosure
principle requires a balance between

A.relevance and cost
effectiveness.

B.timeliness and predictive value.

C.comparability and consistency.

D.reliability and neutrality.

23. Based on recent
financial statement data for Harmony Health Foods, Inc. (HHF), shown below,
HHF’s times interest earned ratio is (rounded):
.0/msohtmlclip1/01/clip_image002.gif”” alt=””https://my.pennfoster.com/exams/images/061500NR_Q36-38.gif””>

A.3.47

B.2.47.

C.1.73.

24. Listed below are.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account balances (in
$millions) taken from the records of Symphony Stores. All of these are
permanent accounts, except the last two that have yet to be closed. The
installment receivables are current. Symphony uses a perpetual inventory
system.
.0/msohtmlclip1/01/clip_image001.gif”” alt=””https://my.pennfoster.com/exams/images/061500NR_Q16-19.gif””>

What would Symphony report as total.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>current assets?

A.$843

B.$838

C.$1,696

D.$823

25. In its first year of
operations Acme Corp. had income before.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>tax of $400,000.
Acme made income tax payments totaling $150,000 during the year and has an
income tax rate of 40%. What would be the balance in income tax payable at
the end of the year?

A.$10,000 debit.

B.$150,000 credit.

C.$160,000 credit.

D.$10,000 credit

ACCOUNTING
INFORMATION SYSTEMS 2

1. Cendant Corporation’s
results for the year ended December 31, 2011, include the following material
items:

Sales
revenue

$6,200,000

Cost
of goods sold

3,800,000

Selling
and administrative expenses

1,300,000

Loss
on sale of investments

200,000

Loss
on discontinued operations

500,000

Loss
on expropriation (unusual and infrequent event)

800,000

Restructuring
costs

80,000

Overstatement
of amortization expense in 2010
caused by mathematical error

60,000

Cendant
Corporation’s income from continuing operations before income.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>taxes for 2011
is

A.$900,000.

B.$880,000.

C.$820,000.

D.$320,000.

2. Reliable Enterprises
sells distressed merchandise on extended.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>credit terms.
Collections on these sales aren’t reasonably assured and bad debt losses
can’t be reasonably predicted. It’s unlikely that repossessed merchandise
will be in salable condition. Therefore, Reliable uses the cost recovery
method. Merchandise costing $30,000 was sold for $55,000 in 2010. Collections
on this sale were $20,000 in 2010, $15,000 in 2011, and $20,000 in 2012.
In
its 2010 year-end balance sheet, Reliable would report installment
receivables (net) of

A.$20,000.

B.25,909.

C.$35,000.

D.$10,000.

3. On October 28, 2011,
Mercedes Company committed to a plan to sell a division that qualified as a component
of the entity according to GAAP regarding discontinued operations and was
properly classified as held for sale on December 31, 2011, the end of the
company’s fiscal year. The division’s loss from operations for 2011 was
$2,000,000.
The division’s book value and fair value less cost to sell on December 31
were $3,000,000 and $3,500,000, respectively. What before-tax amount(s)
should Mercedes report as loss on discontinued operations in its 2011.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>income statement?

A.$500,000 gain included in
continuing operations and a $2,000,000 loss from discontinued operations

B.$2,000,000 loss

C.None

D.$2,500,000 loss

4. Lake Power.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>Sports sells jet skis
and other powered recreational equipment. Customers pay 1/3 of the sales
price of a jet ski when they initially purchase the ski, and then pay another
1/3 each year for the next two years. Because Lake has little information
about collectibility of these receivables, they use the installment
methodfor revenue recognition. In 2010 Lake began operations and
sold jet skis with a total price of $900,000 that cost Lake $450,000. Lake
collected $300,000 in 2010, $300,000 in 2011, and $300,000 in 2012 associated
with those sales. In 2011 Lake sold jet skis with a total price of $1,500,000
that cost Lake $900,000. Lake collected $500,000 in 2011, $400,000 in 2012,
and $400,000 in 2013 associated with those sales. In 2013 Lake also
repossessed $200,000 of jet skis that were sold in 2011. Those jet skis had a
fair value of $75,000 at the time they were repossessed.
In 2013, Lake would record a loss on repossession of

A.$120,000.

B.$80,000.

C.$200,000.

D.$45,000.

5. Chancellor Ltd. sells
an asset with a $1 million fair value to Sophie Inc. Sophie agrees to make 6
equal payments, one year apart, commencing on the date of sale. The payments
include principal and 6% annual interest. Compute the annual payments.

A.$191,852

B.$166,651

C.$203,351

D.$135,252

6. Elmore Co. purchased
an offset press on January 1, 2008, at a cost of $120,000. The press had an
estimated eight-year life with no residual value. Elmore uses straight-line
depreciation. At January 1, 2011, Elmore estimated that the press would have
only three more years of remaining life with no residual value. For 2011,
Elmore would report depreciation of

A.$25,000.

B.$20,000.

C.$30,000.

D.$15,000.

7. First Financial
Auto.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>Loan Department
wishes to know the payment required at the first of each month on a $10,500,
48-month, 11% auto loan. To determine this amount, First Financial would

A.Multiply $10,500 by the present
value of an ordinary annuity of 1.

B.Divide $10,500 by the present
value of an annuity due of 1.

C.Multiply $10,500 by the present
value of 1.

D.Divide $10,500 by the future
value of an ordinary annuity of 1.

8. Present and future
value tables of $1 at 3% are presented below:
.0/msohtmlclip1/01/clip_image004.jpg”” alt=””https://my.pennfoster.com/exams/images/061501NR_Q23.gif””>
Shane
wants to invest money in a 6% CD.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account that compounds
semiannually. Shane would like the account to have a balance of $100,000 four
years from now. How much must Shane deposit to accomplish his goal?

A.$22,510

B.$25,336

C.$88,849

D.$78,941

9. Lake Power.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>Sports sells jet skis
and other powered recreational equipment. Customers pay 1/3 of the sales
price of a jet ski when they initially purchase the ski, and then pay another
1/3 each year for the next two years. Because Lake has little information
about collectibility of these receivables, they use the installment
methodfor revenue recognition. In 2010 Lake began operations and
sold jet skis with a total price of $900,000 that cost Lake $450,000. Lake
collected $300,000 in 2010, $300,000 in 2011, and $300,000 in 2012 associated
with those sales. In 2011 Lake sold jet skis with a total price of $1,500,000
that cost Lake $900,000. Lake collected $500,000 in 2011, $400,000 in 2012,
and $400,000 in 2013 associated with those sales. In 2013 Lake also
repossessed $200,000 of jet skis that were sold in 2011. Those jet skis had a
fair value of $75,000 at the time they were repossessed.
In 2010, Lake would recognize realized gross profit of

A.$0.

B.$150,000.

C.$300,000.

D.$450,000.

10. Freda’s Florist
reported the following before-.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>tax income statement
items for the year ended December 31, 2011:

Operating
income

$250,000

Extraordinary
gain

$70,000

All
income statement items are subject to a 40% income tax rate. In its 2011
income statement, Freda’s separately stated income tax expense and total
income tax expense would be

A.$100,000 and $128,000,
respectively.

B.$128,000 and $100,000,
respectively.

C.$128,000 and $128,000,
respectively.

D.$100,000 and $100,000,
respectively.

11. Lake Power Sports
sells jet skis and other powered recreational equipment. Customers pay 1/3 of
the sales price of a jet ski when they initially purchase the ski, and then
pay another 1/3 each year for the next two years. Because Lake has little
information about collectibility of these receivables, they use the installment
methodfor revenue recognition. In 2010 Lake began operations and
sold jet skis with a total price of $900,000 that cost Lake $450,000. Lake
collected $300,000 in 2010, $300,000 in 2011, and $300,000 in 2012 associated
with those sales. In 2011 Lake sold jet skis with a total price of $1,500,000
that cost Lake $900,000. Lake collected $500,000 in 2011, $400,000 in 2012,
and $400,000 in 2013 associated with those sales. In 2013 Lake also repossessed
$200,000 of jet skis that were sold in 2011. Those jet skis had a fair value
of $75,000 at the time they were repossessed.
In its December 31, 2011,.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>balance
sheet,
Lake would report

A.installment receivables (net) of
$900,000.

B.deferred gross profit of
$700,000.

C.deferred gross profit of
$1,050,000.

D.installment receivables (net) of
$750,000.

12. Quaker State Inc. offers
a new employee a lump sum signing bonus at the date of.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>employment. Alternatively, the
employee can take $8,000 at the date of employment plus $20,000 at the end of
each of his first three years of service. Assuming the employee’s time value
of money is 10% annually, what lump sum at employment date would make him
indifferent between the two options?

A.$57,737

B.$23,026

C.$8,000

D.$62,711

13. On May 1, Foxtrot Co.
agreed to sell the assets of its Footwear Division to Albanese Inc. for $80
million. The sale was.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>completed on December 31,
2011.
The following additional facts pertain to the transaction:
* The Footwear Division qualifies as a component of the entity according to
GAAP regarding discontinued operations.
* The book value of Footwear’s assets totaled $48 million on the date of the
sale.
* Footwear’s operating income was a pretax loss of $10 million in 2011.
* Foxtrot’s income tax rate is 40%.
Suppose that the Footwear Division’s assets had not been sold by December 31,
2011, but were considered held for sale. Assume that the fair value of these
assets at December 31 was $80 million. In the 2011 income statement for
Foxtrot Co., under discontinued operations it would report a

A.16% gain.

B.$6 million loss

C.$10 million loss

D.$13.2 million income

14. Indiana Co. began a
construction project in 2011 that will provide it $150 million when it
is.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>completed in 2013. During
2011, Indiana incurred $36 million of costs and estimates an additional $84
million of costs to complete the project.
Using the percentage-of-completion method, Indiana recognized _______ on the
project in 2011.

A.$36 million loss

B.$6 million loss

C.$9 gross profit

D.no gross profit or loss

15. Lucia Ltd. reported
net.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>income of $135,000 for
the year ended December 31, 2011. January 1 balances in accounts receivable
and accounts payable were $29,000 and $26,000 respectively. Year-end balances
in these accounts were $30,000 and $24,000, respectively. Assuming that all
relevant information has been presented, Lucia’s cash flows from operating
activities would be

A.$136,000.

B.$134,000.

C.$132,000.

D.$138,000

16. Fenland Co. plans to
retire $100 million in bonds in five years, so it wishes to create a fund by
making equal investments at the beginning of each year during that period in
an.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account it expects to
earn 8% annually. What amount does Fenland need to invest each year?

A.$17,045,650

B.15,783,077

C.$23,190,400

D.The amount can’t be determined
from the given information.

17. Shady Lane’s income
tax payable.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account decreased from
$14 million to $12 million during 2011. If its income tax expense was $80
million, what would be shown as an operating cash flow under the direct
method?

A.A cash outflow of $80 million

B.A cash outflow of $82 million

C.A cash outflow of $12 million

D.A cash outflow of $78 million

18. Misty Company reported
the following before-tax items during the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>current year:

Sales

$600

Operating
expenses

250

Restructuring
charges

20

Extraordinary
loss

50

Misty’s
effective tax rate is 40%.
What would be Misty’s net income for the current year?

A.$112

B.$148

C.$168

D.$198

19. Reliable Enterprises
sells distressed merchandise on extended.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>credit terms.
Collections on these sales aren’t reasonably assured and bad debt losses
can’t be reasonably predicted. It’s unlikely that repossessed merchandise
will be in salable condition. Therefore, Reliable uses the cost recovery
method. Merchandise costing $30,000 was sold for $55,000 in 2010. Collections
on this sale were $20,000 in 2010, $15,000 in 2011, and $20,000 in 2012.
In
2010, Reliable would recognize gross profit of

A.$8,090.

B.$25,000.

C.$0.

D.$8,333.

20. On October 28,
2011,.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>Mercedes Company
committed to a plan to sell a division that qualified as a component of the
entity according to GAAP regarding discontinued operations and was properly
classified as held for sale on December 31, 2011, the end of the company’s
fiscal year. The division’s loss from operations for 2011 was $2,000,000.
The division’s book value and fair value less cost to sell on December 31
were $3,000,000 and $2,500,000, respectively. What before-tax amount(s)
should Mercedes report as loss on discontinued operations in its 2011 income
statement?

A.None

B.$2,500,000 loss

C.$500,000 impairment loss
included in continuing operations and a $2,000,000 loss from discontinued
operations

D.$2,000,000 loss

21. Indiana Co. began a
construction project in 2011 that will provide it $150 million when it
is.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>completed in 2013. During
2011, Indiana incurred $36 million of costs and estimates an additional $84
million of costs to complete the project.
In 2012, Indiana incurred costs of $58.5 million and estimated an additional
$40.5 million in costs to complete the project. Using the
percentage-of-completion method, Indiana recognized _______ on the project in
2012.

A.$1.5 million gross profit

B.$6 million gross profit

C.$15 million gross profit

D.$13.5 million gross profit

22. On May 1, Foxtrot Co.
agreed to sell the assets of its Footwear Division to Albanese Inc. for $80
million. The sale was.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>completed on December 31,
2011.
The following additional facts pertain to the transaction:
* The Footwear Division qualifies as a component of the entity according to
GAAP regarding discontinued operations.
* The book value of Footwear’s assets totaled $48 million on the date of the
sale.
* Footwear’s operating income was a pretax loss of $10 million in 2011.
* Foxtrot’s income tax rate is 40%.
Suppose that the Footwear Division’s assets had not been sold by December 31,
2011, but were considered held for sale. Assume that the fair value of these
assets at December 31 was $40 million. In the 2011 income statement for
Foxtrot Co., it would report a loss from discontinued operations of

A.$3 million loss

B.$18 million loss

C.$10.8 million loss

D.$10 million loss

23. Misty Company reported
the following before-tax items during the.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>current year:

Sales

$600

Operating
expenses

250

Restructuring
charges

20

Extraordinary
loss

50

Misty’s
effective tax rate is 40%.
What
would be Misty’s income before extraordinary item(s)?

A.$198

B.$210

C.$360

D.$330

24. Kunkle Company wishes
to earn 20% annually on its investments. If it makes an investment that
equals or exceeds that rate, it considers it a success. Assume that it
invests $2 million and gets $500,000 in return at the end of each year
for xyears. What is the minimum value of xfor
which it will consider the investment a success? Assume that it can’t invest
for fractional parts of a year.

A.7 years

B.6 years

C.9 years

D.4 years

25. Hong Kong Clothiers
reported revenue of $5,000,000 for its year ended December 31, 2011. Accounts
receivable at December 31, 2010 and 2011, were $320,000 and $355,000,
respectively. Using the direct method for reporting.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>cash flows from
operating activities, Hong Kong Clothiers would report cash collected from
customers of

A.$4,965,000.

B.$5,035,000.

C.$5,045,000.

D.$5,000,000.

ECONOMIC RESOURCES 1

1. Alliance Software
began 2011 with accounts receivable of $115,000. All sales are made on.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>credit. Sales and cash
collections from customers for the year were $780,000 and $700,000,
respectively. Cost of goods sold for the year was $450,000. What was
Alliance’s receivables turnover ratio (rounded) for 2011?

A.6.78

B.2.90

C.5.03

D.4.00

2. Chez Fred Bakery
estimates the allowance for uncollectible accounts at 3% of the ending
balance of accounts receivable. During 2011, Chez Fred’s credit sales and
collections were $125,000 and $131,000, respectively. What was the balance of
accounts receivable on January 1, 2011, if $180 in accounts receivable were
written off during 2011 and if the allowance.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>account had a balance of
$750 on 12/31/11?

A.$31,000

B.$5,820

C.$31,180

D.138,000

3. Data below for the
year ended December 31, 2011, relates to Houdini Inc. Houdini started
business January 1, 2011, and uses the LIFO retail method to estimate ending
inventory.

Cost

Retail

Beginning
inventory

$66,000

$104,000

Net
purchases

280,000

420,000

Net
markups

20,000

Net
markdowns

40,000

Net
sales

375,000

.pennfoster.com/StudentLMS/Student/Exams/Random.aspx”” title=””Powered by Text-Enhance””>Current period
cost-to-retail percentage is

A.63.6%.

B.63.5%.

C.68.7%.

“