Financial Accounting Practice Test -

1. Using the information below prepare a classified balance sheet, income statement, and statement of retained earnings for Alpha Company as of December 31, 2013:

Cash $30,000 debit

Accounts Receivable $12,000 debit

Accounts Payable $16,000 credit

Common Stock $2par, 8,000 shares issued $16,000 credit

Additional Paid in Capital $ 8,000 credit

Equipment $24,000 debit

Accumulated Depreciation $12,000 credit

Retained Earnings $ 9,400 credit*

Sales $28,000 credit

Supplies Expense $ 2,200 debit

Rent Expense $14,800 debit

Dividends $ 4,000 debit

Depreciation Expense $ 2,400 debit

*Hint = Beginning balance

2. Based on the financial statements you prepared compute (show computations):

1. Current ratio

2. Earnings per share

3. Price earnings ratio

4. Return on equity

5. Net income ratio