Bando Company has a $300,000 balance in Accounts Receivable and a $4,000 debit balance in Allowance for Doubtful Accounts. Credit sales for the period totaled $1,800,000. What is the amount of the bad debt adjusting entry if Bando uses a percentage of credit sales basis (at 2%) or a percentage of receivables basis (at 10%)?
% Credit Sales % Receivables
a. $36,000 $30,000
b. $40,000 $26,000
c. $36,000 $34,000
d. $32,000 $26,000

Mitchell Company bought furniture on account. Their accountant debited Furniture and credited Accounts Receivable. An appropriate correcting entry is
a. debit Furniture and credit Accounts Payable.
b. debit Accounts Receivable and credit Accounts Payable.
c. debit Miscellaneous Expense and credit Accounts Payable.
d. no correcting entry is needed.

Which of the following would not be included in the operating activities section of a statement of cash flows?
a. Cash inflows from returns on loans (i.e., interest)
b. Cash inflows from returns on equity securities (i.e., dividends)
c. Cash outflows to governments for taxes
d. Cash outflows to reacquire treasury stock

Which of the following combinations presents correct examples of liquidity, profitability, and solvency ratios, respectively?
Liquidity Profitability Solvency
a. Inventory turnover Inventory turnover Times interest earned
b. Current ratio Inventory turnover Debt to total assets
c. Receivable turnover Return on assets Times interest earned
d. Quick ratio Payout ratio Return on assets

Which of the following pairs of terms in the area of financial statement analysis are synonymous?
a. Ratio ? Trend
b. Horizontal ? Trend
c. Vertical ? Ratio
d. Horizontal ? Ratio

The directors of Caldwell Corp. are trying to decide whether they should issue par or no par stock. They are considering three alternatives for their new stock, which they are assuming will be issued at $8 per share. The alternatives are: (A) $5 par value, (B) no par with a $1 stated value, and (C) no par, no stated value. If 60,000 shares are issued, what amount will be credited to the common stock account in each of these cases?
(A) (B) (C)
a. $60,000 $300,000 $480,000
b. $60,000 $480,000 $480,000
c. $480,000 $480,000 $480,000
d. $300,000 $60,000 $480,000

Rifkin Corp. reacquired 30,000 shares of its $2 par common stock at a cost of $13 per share on April 30, 2000. The stock was originally issued at $11 per share. On January 10, 2000, the 30,000 shares were sold at $16 per share. The sales entry should include a credit to Paid-in Capital from Treasury Stock for
a. $0.
b. $60,000.
c. $90,000.
d. $420,000.

What is the effect on total paid-in capital of a stock dividend and a stock split, respectively?
Stock Dividend Stock Split
a. Increase No effect
b. No effect No effect
c. Decrease No effect
d. Decrease Decrease

RATIO ANALYSIS
The condensed financial statements of Gregg Corporation for 2006 are presented below.
Gregg Corporation Gregg Corporation
Balance Sheet Income Statement
December 31, 2006 For the Year Ended December 31, 2006

Assets Revenues $2,000,000
Current assets Expenses
Cash and temporary Cost of goods sold 960,000
investments $ 30,000 Selling and administrative
Accounts receivable 70,000 expenses 690,000
Inventories 140,000 Interest expense 50,000
Total current assets 240,000 Total expenses 1,700,000
Property, plant, and Income before income taxes 300,000
equipment (net) 760,000 Income tax expense 120,000
Total assets $1,000,000 Net income $ 180,000

Liabilities and Stockholders' Equity
Current liabilities $ 100,000
Long-term liabilities 350,000
Stockholders' equity 550,000
Total liabilities and
stockholders' equity $1,000,000

Additional data as of December 31, 2005: Inventory = $100,000; Total assets = $800,000; Stockholders' equity = $450,000.

Instructions: Compute the following listed ratios for 2006 showing supporting calculations.

RATIO ANALYSIS

Current ratio = .

Debt to total assets = .

Times interest earned = .

Inventory turnover = .

Profit margin ratio = .

Return on stockholders' equity = .

Return on assets = .

Statement of Cash Flows
Condensed financial data for Yates Corporation are given below.

YATES CORPORATION
Comparative Balance Sheet
December 31

Assets
20X2 20X1
Cash $ 68,000 $ 20,000
Accounts receivable 34,000 27,000
Inventory 105,000 115,000
Land 720,000 650,000
Equipment 498,000 458,000
Accumulated depreciation (45,000) (20,000)
Total assets $1,380,000 $1,250,000

Liabilities and Stockholders' Equity
Accounts payable $ 55,000 $ 12,000
Accrued expenses payable 18,000 24,000
Bonds payable 575,000 575,000
Common stock 674,000 604,000
Retained earnings 58,000 35,000
Total liabilities and stockholders' equity $1,380,000 $1,250,000

Additional information for 20X2:
1. A cash dividend of $12,000 was declared and paid during the year.
2. Additional equipment was purchased for cash.
3. Land was acquired by issuing common stock.

Instructions: Prepare a statement of cash flows for 20X2 using the indirect method.