Question

1. Mansfield Office Furniture Store reported the following selected items at December 31, 2019 (previous year - 2018 - amounts are also given as needed):

Cash	$ 50,000
Accounts Receivable, net:     Dec. 31, 2019     Dec. 31, 2018	75,000 63,000
Accounts Payable	55,000
Cost of Goods Sold	375,000
Merchandise Inventory    Dec. 31, 2019    Dec. 31, 2018	240,000 220,000
Net Credit Sales Revenue	820,000
Long-Term Assets	320,000
Long-Term Liabilities	240,000
Other Current Assets	135,000
Other Current Liabilities	125,000
Short-term Investments	80,000

Compute Mansfield's

acid-test ratio; (b) accounts receivable turnover ratio (round to 2 decimal places); and (c) days' sales in receivables for 2019 (round to the nearest day). Show your computations

Chapter 4:

2. The following is the adjusted trial balance for Baker Services.

Accounts	Debit	Credit
Cash	$31,100
Accounts Receivable	30,000
Prepaid Insurance	3,500
Office Supplies	3,200
Land	49,000
Building	150,000
Accumulated Depreciation—Building		$14,500
Equipment	77,000
Accumulated Depreciation—Equipment		7,000
Accounts Payable		25,000
Salaries Payable		2,000
Unearned Revenue		26,000
Mortgage Payable		106,000
Baker, Capital		24,500
Baker, Withdrawals	23,000
Service Revenue		275,000
Salaries Expense	64,000
Depreciation Expense—Building and Equipment	5,600
Supplies Expense	11,000
Insurance Expense	14,600
Utilities Expense	18,000
Total	$480,000	$480,000

There were no new capital contributions during the year. After the closing entries are posted, what is the balance in Baker, Capital? Please show your calculations:

April, Inc. issued 4000 shares of preferred stock for $240,000. The stock has a par value of $60 per share. The journal entry to record this transaction would ________.

A) credit Cash $240,000, debit Preferred Stock—$60 Par Value $4000, and debit Paid-In Capital in Excess of Par—Preferred $236,000

B) debit Cash $240,000, credit Preferred Stock—$60 Par Value $4000, and credit Paid-In Capital in Excess of Par—Preferred $236,000

C) credit Cash $240,000 and debit Preferred Stock—$60 Par Value $240,000

D) debit Cash $240,000 and credit Preferred Stock—$60 Par Value $240,000

4. Which of the following occurs when a corporation's board of directors declares a 10% stock dividend?

A) Stock Dividends will be credited for the new shares times the current market value of the stock.

B) Stock Dividends will be debited for the new shares times the current market value of the stock.

C) Stock Dividends will be debited for the new shares times the par value of the stock.

D) Stock Dividends will be credited for the new shares times the par value of the stock.

5. On December 31, 2018, Globe Company borrowed $500,000 by signing a five-year, 8% note payable. The note is payable in five yearly installments of $100,000 plus interest, due at the end of every year beginning on December 31, 2019. Which portion is classified as the long-term portion of Notes Payable at December 31, 2018?

Answer 1

Ans:

1.

Acid-test ratio= (cash +account receivable+ short-term investment)/current liabilities

                              = ( $50000+$75000+$80000)/($55000+$125000)   

                              = $205000/$180000

                              = 1.13:1

Accounts receivable turnover ratio= Net credit sales/average accounts receivable

                                                                       = $820000/(75000+63000)/2

                                                                       = 11.88 times

Days’ sales in receivable for 2019= Number of days in a year/account receivable turnover ratio

                                                         =365/11.88=31 days