The following information is given for a restaurant -
Purchases of food $55,000
Food Inventory Beg. Balance 10,000
Food Inventory Ending Balance 1,500
Purchase of glassware and silverware 250
Transfer from the bar to kitchen 300
Promotional meals 200
1. Compute the cost of goods sold for food.
a. $61,200
b. $63,600
c. $63,500
d. $55,250
2. Compute the gross profit or gross margin if the Revenues is $212,000
a. $235,650
b. $113,800
c. $148,400
d. $235,650
3. Compute the Net Income after tax if Operating Expenses are $31,500 and Income Tax is 6%
a. $87,591
b. $109,886
c. $115,829
d. $82,850
Compute the Net Working Capital and the Current Ratio given the following information
Current Assets Current Liabilities
Marketable Securities $2,000,000
Long Term Debt $4,500,000
Inventory $1,000,000
Accounts Payable $1,000,000
Current portion of Long-Term Debt $1,600,000
Prepaid expense $500,000
Cash $1,000,000
Building $2,500,000
Retained Earnings $2,000,000
Total CA Total CL
4. Compute the current ratio:
a. 1.26
b. 2.05
c. .755
d. 1.73
5. Compute the Net Working Capital: _________________________
a. $1,900,000
b. $7,900,000
c. -$1,300,000
d. $2,300,000
The Letch Plaza uses the following selected accounts (See chart below).
|
Account
|
Category / Classification
|
Normal
Balance
|
|
Marketable Securities
|
Asset
|
#7
|
|
Retained Earnings
|
#6
|
Credit
|
|
Treasury Stock
|
Stockholder's Equity
|
#8
|
|
Wages Payable
|
#9
|
Credit
|
|
Cost of Goods Sold
|
Stockholder's Equity
|
#10
|
|
Common Stock
|
Stockholder's Equity
|
#12
|
|
Mortgage Payable
|
#11
|
Credit
|
|
Prepaid Insurance
|
#13
|
Debit
|
|
Equipment
|
Asset
|
#14
|
|
Accumulated Depreciation
|
#15
|
#16
|
|
Cash
|
Asset
|
#17
|
|
Allowance for Doubtful Accounts
|
#18
|
#19
|
|
Inventory
|
Asset
|
#20
|
6. Category Classification for Retained Earnings
a. Asset
b. Contra-Asset
c. Owner's Equity
7. Normal balance for Marketable Securities
a. Credit
b. Debit
8. Normal Balance for Treasury Stock
a. Credit
b. Debit
9. Category Classification for Wages Payable
a. Asset
b. Liability
c. Contra-Liability
10. Normal Balance for COGS
a. Credit
b. Debit
11. Category Classification for Mortgage Payable
a. Asset
b. Liability
c. Contra-Liability
12. Normal Balance for Common Stock
a. Credit
b. Debit
13. Category Classification for Prepaid Insurance
a. Asset
b. Liability
c. Owner's Equity
14. Normal Balance for Equipment
a. Credit
b. Debit
15. Category Classification for Accumulated Depreciation
a. Asset
b. Contra-Asset
c. Liability
16. Normal Balance for Accumulated Depreciation
a. Credit
b. Debit
17. Normal Balance for Cash
a. Credit
b. Debit
18. Category Classification for ADA
a. Asset
b. Contra-Asset
c. Contra-Equity
19. Normal Balance for ADA
a. Credit
b. Debit
20. Normal Balance for Inventory
a. Credit
b. Debit
21. A hotel company pays $40,000 for a two-year fire insurance coverage. If the journal entry is recorded as insurance expense $40,000. This violates the ___________ principal.
a. matching
b. cost
c. full disclosure
d. materiality
22. A hotel, in addition to reporting depreciation expense on its income statement, mentioned its method of depreciation and the estimated life of its assets in the footnotes. This is based on the ____________ principal.
a. business entity
b. consistency
c. cost
d. full disclosure
23. The F&B director purchases a case of excellent St.Emillion for $400. Because of the _________ principal the wine is recorded at the purchase price even though it could be resold for $500 immediately.
a. matching
b. cost
c. consistency
d. business entity
Rosalie opens a small cafe call Rosie's. The following are the transactions for the first week. Choose the correct journal entry.
24. Rosalie deposited $400,000 into Rosie's Cafe bank account
A.
|
Capital
|
400,000
|
|
|
Cash
|
|
400,000
|
B.
|
Cash
|
400,000
|
|
|
Capital
|
|
400,000
|
C.
|
Investment
|
400,000
|
|
|
Capital
|
|
400,000
|
25. Purchased an old warehouse for $75,000 to convert into a restaurant.
A.
|
Capital
|
75,000
|
|
|
Cash
|
|
75,000
|
B.
|
Investment
|
75,000
|
|
|
Capital
|
|
75,000
|
C.
|
Building
|
75,000
|
|
|
Cash
|
|
75,000
|
26. Purchased equipment on account for $120,000.
A.
|
Equipment
|
120,000
|
|
|
Accounts Payable
|
|
120,000
|
B.
|
Equipment
|
120,000
|
|
|
Cash
|
|
120,000
|
C.
|
Investment
|
120,000
|
|
|
Capital
|
|
120,000
|
27. Rosalie catered a party for $2,000. She received $250 and the balance is on account.
A.
|
Revenue
|
2,250
|
|
|
Cash
|
|
2,000
|
|
Accounts Receivable
|
|
250
|
B.
|
Cash
|
250
|
|
|
Accounts Receivable
|
1,750
|
|
|
Revenue
|
|
2,000
|
C.
28. Rosalie paid employee wages of $200.
A.
|
Wages Payable
|
200
|
|
|
Cash
|
|
200
|
B.
|
Cash
|
200
|
|
|
Accounts Receivable
|
200
|
|
|
Wages Payable
|
|
400
|
C.
|
Wage Expense
|
200
|
|
|
Cash
|
|
200
|
The following are transactions affecting a business. Compute the Cash Account balance.
Beginning cash $10,000
1. Bought a computer on account for $3,000
2. Sold rooms for $5,000 and collected cash
3. Paid for the computer in transaction #2
4. Sold a block of room on account for $10,000
5. Paid for advertising $500
6. Collected $8,000 in cash from a customer to pay account balance
7. Purchased Equipment $6,000 on Account
|
Cash Account
|
|
Transactions
|
Debit
|
Credit
|
Balance
|
|
Beg Cash
|
|
|
|
|
1.Computer
|
|
|
|
|
2. Rooms sold
|
|
|
|
|
3. Paid for computer
|
|
|
|
|
4. Sold rooms
|
|
|
|
|
5. Paid for advertising
|
|
|
|
|
6. Collected from customer
|
|
|
|
|
7. Purchased Equipment
|
|
|
|
29. Which transactions do not affect the cash account balance?
a. #2, 3 & 5
b. #3, 5 & 7
c. #1, 4 & 7
d. none of the above they all affect the cash account
30. What is the ending balance after all 8 transactions?
a. $7,300
b. $20,500
c. $19,500
d. $10,300
The following is information for Bella Dora Hotel for the year 2011.
During the year a net income of $100,000 was earned. The balance in the retained earning account at the beginning of the year was $700,000. The dividends declared were $30,000. Expenses in 2010 were understated by $3,000.
|
Retained Earnings 2011
|
|
Beginning Balance
|
$
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
31. Compute the ending balance for retained earnings.
a. $767,000
b. $770,000
c. $1,000,000
d. $800,000
From the following facts complete depreciationfor the straight-line method
Cost of equipment $40,000
Salvage Value 3,000
Service life 5 years
|
Year
|
Cost of Equipment
|
Yearly Depreciation Expense
|
Accumulated Depreciation
|
Book Value
|
|
1
|
|
|
|
|
|
2
|
|
|
|
|
|
3
|
|
|
|
|
|
4
|
|
|
|
|
|
5
|
|
|
|
|
32. What is the Depreciation Expense for year 2?
a. $3,000
b. $8,000
c. $8,600
d. $7,400
33. What is the Accumulated Depreciation at the end of year 4?
a. $10,400
b. $29,600
c. $32,000
d. $40,000
34. What is the Book Value at the end of year 5?
a. $3,000
b. $40,000
c. $0
d. $37,000
From the following facts complete depreciation for the double declining method
Cost of equipment $30,000
Salvage Value 2,000
Service life 5 years Rate 40%
|
Year
|
Cost of Equipment
|
Book Value Beg-Year
|
Depreciation Expense
|
Accumulated Depreciation Year-end
|
Book Value Year-end
|
|
1
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
5
|
|
|
|
|
|
35. What is the cost of the equipment in year 2?
a. $25,600
b. $30,000
c. $28,000
d. $16,000
36. What is the Book Value Beginning year 3?
a. $40,000
b. $24,000
c. $10,800
d. $8,640
37. What is the Depreciation Expense for year 3?
a. $4,320
b. $3,456
c. $7,000
d. $16,000
A hotel property was purchased for $20,000,000. The cost included the building, the land and the furniture and equipment. After individual appraisals are done, the value of the land is estimated to be $8,000,000, the building at $12,000,000 and the furniture and equipment at $4,000,000. Apportion the lump cost to the land, building and furniture and equipment.
|
Asset
|
Appraised Value
|
% of Total
|
Apportionment of Cost
|
|
Land
|
8,000,000
|
|
|
|
Building
|
12,000,000
|
|
|
|
Furniture & Equipment
|
4,000,000
|
|
|
|
Total
|
24,000,000
|
100.00%
|
$20,000,000
|
38. What is the Apportionment of Cost for the Furniture and Equipment?
a. $3,333,333
b. $4,000,000
c. $7,777,777
d. $12,000,000
39. One of the limitations of the balance sheet is that it relies in part on estimates such as allowance for bad debt to accounts receivables.
a. True
b. False
40. If the cost of the oven was $10,000 and the accumulated depreciation at the end of its life with $8,000. Upon disposing of the asset it was sold for $3000, would this be a gain or loss
a. Gain of $3,000
b. Gain of $1,000
c. Loss of $2,000
d. Loss of $1,000
41. Accrual accounting recognizes revenues when they are collected and expenses when they are paid.
a. True
b. False
42. In selling assets, a loss results if cash received is less than the book value of the asset sold.
a. True
b. False
43. The Net Loss of an Income Statement is ________ to the Statement of Retained Earnings.
a. Subtracted
b. Added
44. The ability to convert current assets into cash for the purpose of paying short term liabilities is known as:
a. Liquidity
b. Solvency
45. Profits returned to the stockholders are known as __________.
a. Shares
b. Dividends
46. Debit is on the left and credit is on the right of the T account
a. True
b. False
47. A journal entry can affect only one account.
a. True
b. False
The ledger of Hammond Company, on March 31, 2016 includes these selected accounts before adjusting entries are prepared.
Debit Credit
Prepaid Insurance $ 3,600
Supplies 2,800
Equipment 25,000
Accumulated Depreciation-Equipment $5,000
Unearned Services Revenue 9,200
Prepare the adjusting entries for the month of March
48. Insurance expires at the rate of $100 per month
A.
|
Prepaid Insurance
|
100
|
|
|
Cash
|
|
100
|
B.
|
Insurance Expense
|
100
|
|
|
Cash
|
|
100
|
C.
|
Insurance Expense
|
100
|
|
|
Prepaid Insurance
|
|
100
|
49. Supplies on hand total $800 at end of month (ending inventory)
A.
|
Supplies Expense
|
2,000
|
|
|
Supplies
|
|
2,000
|
B.
|
Supplies Expense
|
800
|
|
|
Supplies
|
|
800
|
C.
|
Prepaid Supplies
|
800
|
|
|
Supplies
|
|
800
|
50. The equipment depreciates $200 a month
A.
|
Depreciation Expense
|
200
|
|
|
Cash
|
|
200
|
B.
|
Depreciation Expense
|
200
|
|
|
Equipment
|
|
200
|
C.
|
Depreciation Expense
|
200
|
|
|
Accumulated Depreciation
|
|
200
|
Looking forward to the team de-briefing on March 21.