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Question(s) / Instruction(s):

A company borrowed $50,000 cash from the bank and signed a 6-year note at 7%. The present value of an annuity for 6 years at 7% is 4.7665. The annual annuity payments equal:

  1. $10,489.88.
  2. $11,004.88.
  3. $50,000.00.
  4. $52,450.00.
  5. $238,325.00.

Question 2           

A company buys a machine for $60,000 that has an expected life of 9 years and no salvage value. The company anticipates a yearly net income of $2,850 after taxes of 30%, with the cash flows to be received evenly throughout each year. What is the accounting rate of return?

  1. 2.85%.
  2. 4.75%.
  3. 6.65%.
  4. 9.50%.
  5. 42.75%.

 

 

Question 3           

A company had a beginning balance in retained earnings of $43,000. It had net income of $6,000 and paid out cash dividends of $5,625 in the current period. The ending balance in retained earnings equals:

  1. $54,625.
  2. $42,625.
  3. $11,625.
  4. $43,375.
  5. $49,000.

Question 4

A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?

 

  1. $5,000.
  2. $16,000.
  3. $25,000.
  4. $125,000.
  5. $250,000.

Question 5           

A company has two departments, A and B that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. A had a direct expense of $1,000 for deliveries and Dept. B had no direct expense. The indirect expenses are $8,000. The analysis also indicates that 60% of regular delivery requests originate in Dept. A and 40% originate in Dept. B. Departmental delivery expenses for Dept. A and Dept. B, respectively, are:

  1. $4,500; $4,500.
  2. $5,800; $3,200.
  3. $5,500; $3,500.
  4. $5,500; $4,500.
  5. $5,400; $3,600.

Question 6           

A company's board of directors votes to declare a cash dividend of $.75 per share. The company has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The total amount of the cash dividend is:

  1. $10,250.
  2. $14,625.
  3. $7,125.
  4. $7,500.
  5. $11,250.

Question 7           

A company's history indicates that 20% of its sales are for cash and the rest are on credit. Collections on credit sales are 20% in the month of the sale, 50% in the next month, and 30% the following month. Projected sales for January, February, and March are $75,000, $92,000 and $60,000, respectively. The March expected cash receipts from all current and prior credit sales are $80,500.

 

a)      True

b)      False

Question 8           

A corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 300 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

  1. A debit to Organization Expenses for $3,000.
  2. A debit to Organization Expenses for $5,000.
  3. A credit to Common Stock for $5,000.
  4. A credit to Paid-in Capital in Excess of Par Value, Common Stock for $5,000.
  5. A debit to Paid-in Capital in Excess of Par Value, Common Stock for $2,000.

Question 9           

A firm expects to sell 25,000 units of its product at $11 per unit. Pretax income is predicted to be $60,000. If the variable costs per unit are $5, total fixed costs must be:

  1. $65,000.
  2. $90,000.
  3. $125,000.
  4. $215,000.
  5. $275,000.

 

Question 10         

A manufacturing company has a beginning finished goods inventory of $14,600, raw material purchases of $18,000, cost of goods manufactured of $32,500, and an ending finished goods inventory of $17,800. The cost of goods sold for this company is:

  1. $21,200.
  2. $29,300.
  3. $32,500.
  4. $47,100.
  5. $27,600.

 

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