1. Your company is getting ready to lease some equipment. The attorney’s sign off on the lease contracts and you send it to you; the company’s CFO and you review the lease so you can decide what kind of lease it is. It has numerous provisions and you find that the lease transfers ownership of the property from the lessor to the lessee by the end of the lease term; the lease contains an option permitting the lessee to purchase the property at a bargain price; the lease term is equal to or greater than 75 percent of the estimated economic life of the leased property; and the present value of rental and other minimum lease payment equals or exceeds 75 percent of the fair value of the leased property.
Based on the information provided above, would you classify this lease as an operating lease or a capital lease and why.
2. Please review the following accounts. Each account will fall into one of the following categories on the Balance Sheet. Match the general ledger account as to which category the account would be located in the Balance Sheet. For instance, Preferred Stock would be located in which category? Categories can be used more than once and put the appropriate letter next to the General Ledger Account.
CA Current Assets
PPE Property, Plant and Equipment
OA Other Assets
CL Current Liabilities
LL Long Term Liabilities
OL Other Liabilities
NB Not a Balance Sheet Account
General Ledger Accounts:
Preferred Stock ______
Accounts Receivables ______
Notes Payable ______
Depreciation Expense ______
Prepaid Expenses ______
Accrued Expenses ______
Treasury Stock ______
Debt Maturing within One Year ______
Cost of Goods Sold ______
3. Using the following information, calculate the ratios noted below. Show your calculations
Cash $ 500,000
Net Accounts Receivables $1,250,000
Other Assets $ 100,000
Current Liabilities $ 750,000
Gross Sales $2,500,000
Common Stock $1,100,000
Average Current Liabilities $ 800,000
Average Total Liabilities $1,250,000
Treasury Stock $ 500,000
Cost of Goods Sold $1,000,000
Current Assets $3,500,000
Average Inventory $ 650,000
Average Net Receivables $1,075,000
Net Credit Sales $2,225,000
Cash Provided by Operations $ 375,000
Accumulated Depreciation $ 922,000
a. Current Ratio
b. Receivables Turnover
c. Current Cash Debt Coverage Ratio
d. Inventory Turnover Ratio
e. Cash Debt Coverage Ratio
4. Company A has a $1 million loan due in 10 years. The first year they pay $15,000 on the principal, year two they pay $20,000 on the principal and in year three they pay $30,000 on the principal. How much of the loan is current maturity of long term debt and how much in long-term debt in year three?
5. What are the four advantages of leasing:
6. Describe two major obligations incurred by a company when bonds are issued.
7. If an 8%, 10-year, $900,000 bond is issued at face value and interest is paid annually, what is the amount of the interest payment at the end of the first year?
8. What are the three essential features of the allowance method of accounting for Bad Debts?
9. Which of the following are not considered as cash on a company's balance sheet?
a. Cash in bank – Savings Account
b. Cash on Hand
c. Petty Cash
d. Cash refund due from Vendor
e. Cash in checking Account
f. Postdated Receivables Checks
10. Indicate where each of these accounts should be classified in the stockholders’equity section of the balance sheet below.
a. Common Stock
b. Paid-in-Capital in Excess of Par Value
c. Retained Earnings
d. Treasury Stock
e. Preferred Stock
Total Stockholders’ Equity $XXX,XXX
11. What are the effects of stock splits and stock dividends?
Stock Dividend Stock Split
Total Paid-in Capital _____________ ____________
Total Retained Earnings _____________ ____________ Total par value (Common Stock) _____________ ____________
Par Value per share _____________ ____________
The choices are: Increase, Decrease or No Change and each can be used more
12. What are the Five Basic Principals of Cash Management
13. The purpose of vertical analysis, also known as common-size analysis, is to determine the increase or decrease that has taken place, expressed as either an amount or a percentage. True or False
14. What are the two characteristics of “Cash Equivalents?
15. What are the six principals of Internal Controls?
|Due By (Pacific Time)||09/02/2013 01:15 am|
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