16.During 2005, Patnode announced and paid dividends of $1,000, the only dividend-related activity during the year. What was its 2005 net income?
Cannot be estimated
17.During 2005, Patnode had a cash outflow of $15,000 for investing activities and a cash inflow of $7,000 from financing activities. Its 2005 cash flow from operations was:
Outflow of $15,000
Inflow of $15,000
Outflow of $8,000
Inflow of $8,000
18.Patnode’s 2005 statement of cash flows contains four items in the financing section. Three of them are: Short-term debt issued, $15,000; Short-term debt paid, ($10,000) and Dividends paid, ($1,000). What is the fourth item in the financing section?
Retained earnings, $4,600
Common stock issued, $3,000
Long-term debt paid, ($3,000)
Cash from financing, $3,000
19.How much total depreciation and amortization expense did Patnode record during 2005?
20.During 2005, Patnode recorded sales of $17,000. How much cash did it collect from its customers?
Cannot be estimated
21.Which one of the following items will not appear in the operating section of Patnode’s 2005 indirect method cash flow statement?
Deduct: increase in accounts receivable $3,000
Add: decrease in accounts payable $1,000
Add: increase in taxes payable $2,400
Add: decrease inventories $6,000
22.What is Patnode’s current ratio at the end of 2004?
23.What is Patnode’s total debt to equity ratio at the end of 2004 (rounded to two decimal places)?
24.Patnode recorded a 2005 tax expense of $3,000. What amount did it pay to the tax authorities during 2005?
25.Kirby, Inc. records a sale with a gross margin of $1,400. Which one of the following statements correctly describes the effect of such a sale on its balance sheet?
Common stock increases by $1,400
The sales revenue account increases by $1,400
The gross margin account increases by $1,400
The retained earnings account increases by $1,400
26.Sandy Robbins is the sole owner of a hair salon. He often takes small amounts of “lunch money” from the cash register, figuring that “it is my business anyway.” His accountant, however, insists that Sandy make a note of the cash he takes, and at the end of the each accounting period, she debits owners’ equity and credits the cash account for the total amount that Sandy has taken during the period.
In recording the cash withdrawals even though Sandy is sole proprietor, the accountant is correctly applying the:
27.Anderson Electronics’ 2005 return on sales percentage is 20%. Its 2005 net income is $40,000. What is its 2005 sales?
28.During 2005, Sunrise Foods, Inc. records an interest expense of $5,000, and pays $2,000 of it in cash. How should this accounting transaction be recorded?
Debit interest expense $5,000; credit cash $2,000; credit taxes payable $3,000
Debit interest expense $5,000; credit cash $2,000; credit interest payable $3,000
Debit various debt accounts $5,000; credit cash $2,000; credit interest payable $3,000
Debit interest expense $5,000; credit cash $2,000; credit various debt accounts $3,000
29.During June 2005, Bextra Inc. recorded sales of $55,000 but only $20,000 was collected in cash from customers. Cost of goods sold of $38,000. What was the effect of these sales on Bextra’s current ratio?
Current ratio increases
Current ratio decreases
Current ratio remains unchanged
Insufficient information provided to judge effect on current ratio
30.Which one of the following statements is not true about statements of cash flows prepared according to U.S. GAAP?
The operating section of the indirect method starts with the net income of the period
In the indirect method statement, the period’s depreciation is added to net income because it is a source of cash
Interest payments are included in the operating section of the direct method statement
The investing section of the direct method statement for a period is identical to the investing section of the indirect method statement for the same period