1. Selected financial information presented below was obtained from the financia
ID: 2477032 • Letter: 1
Question
1. Selected financial information presented below was obtained from the financial statements of the Napa Valley Brewery:
Current Assets $ 49,000
Property and Equipment, net 69,000
Current Liabilities 49,500
Noncurrent Liabilities 39,500
Stockholder’s Equity 21,000
Sales Revenue 60,000
Net Income 21,600
What was the net profit margin ratio?
A. 18.31%
B. 36.00%
C. 97.22%
D. 44.00%
2. Inventory levels increase by 10% at your company during the fourth quarter. Based on this increase, which of the following statements must be correct?
A. This must be good news because inventories are an asset to the company.
B. This could be good news if the company is ordering more goods because sales appear to be rising.
C. This must be bad news because higher inventories mean higher costs.
D. This could be bad news if the company is ordering more goods because unit costs are falling.
3. Consider the following information:
Sales Revenue $665,000
Ending inventory 73,000
Cost of Goods Sold 530,000
Beginning inventory 63,000
What is the number of days to sell? (Round intermediate calculations to 2 decimal places.)
A. 40.1 days
B. 46.9 days
C. 37.3 days
D. 50.3 days
4. Your company sells $58,000 of one-year, 10% bonds for an issue price of $48,000. The journal entry to record this transaction will include a credit to Bonds Payable in the amount of:
A. $53,800.
B. $48,000.
C. $63,800.
D. $58,000.
5. A truck costing $13,000, which has Accumulated Depreciation of $9,100, was sold for $2,100 cash. The entry to record this event would include a:
A. gain of $1,800.
B. credit to Accumulated Depreciation for $9,100.
C. credit to the Vehicles account for $3,900.
D. loss of $1,800.
Explanation / Answer
1. The correct answer is B. 36%
Net profit margin ratio = Net income / Sales revenue = $ 21,600 / $ 60,000 = 36%
2. Both B. and C are correct
3. The correct answer is B. 46.9 days
Number of days to sell = 365 / Inventory turnover = 365 / 530,000 x 68,000 = 46.83 days
4. The correct answer is D. $ 58,000
5. The correct answer is D. loss of $ 1,800
Book value of the asset = Cost - Accumulated depreciation = $ 13,000 - $ 9,100 = $ 3,900
Gain/ (loss) on sale = Sale proceeds - Book value = $ 2,100 - $ 3,900 = $ (1,800)
Account Titles Debit Credit $ $ Cash 48,000 Discount on bonds payable 10,000 Bonds payable 58,000Related Questions
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