SOLVED

21) A caterer has 20% cash sales. Half of the credit sales are paid by customers with credit cards and is reimbursed by the financial institutions in the month following the sale after first deducting a fee of 2 percent of gross credit card sales. The rest is invoiced with an equal amount collected in each of three months starting the month after the sales, net of 1.5% loss due to bad debts. If the caterer has sales of $48,000 in May, her first month of business, and $53,000 in June, how much cash will she receive in June? A) $35,720 B) $49,790 C) $37,790 D) $34,720 E) $45,320 22) In September, Sales Revenue for a company totaled $660,000 of which 40% was collected. The Company issued 50,000 preferred shares at $45 each. A down payment of $1,125,000 was proposed on the purchase of a building and electronic equipment to be operational by year-end. Salary expense in September, totaled $250,000 of which 10% were accrued. Three months of rent were prepaid for a total of $156,000. August’s expenses were paid. $150,000 of corporate taxes was deferred to the next quarter. Accounts Receivable was reduced by $360,000. The credit line of $120,000 was paid off at the beginning of the month, saving $986 of interest for the period. Amortization expense totaled $40,000. In September A) Operating activities produced a net cash inflow of $363,000 B) Investment activities produced a net cash outflow of $1,125,000 C) Financing activities produced a net cash inflow of $2,130,000 D) Financing activities produced a net cash inflow of $2,130,986 E) Operating activities produced a net cash outflow of $3,000 23) Sales for RAJ Inc. from March to June were $190,000, $200,000, $323,000 and $340,000, respectively. 10% are cash sales and 80% of the invoices are paid the next month, and the rest the month after that. RAJ Inc.’s operating expenses for March through June are $165,000, $185,000, $270,000 and $285,000, respectively, of which salaries and rent, comprising $100,000 are paid immediately, and the rest are paid in the next month. If RAJ had a cash shortfall of $50,000 at the end of April, what is RAJ Inc.’s net cash balance at the end of June? A) [$23,700] B) [$20,300] C) [$300] D) $18,700 E) $68,700 24) Athabasca Inc. has a closing inventory of $1,501,610. The company’s sales revenue is $5,460,400. It purchased $1,200,000 worth of goods. Starting inventory is $3,578,234. The amount of goods available for sale was A) $4,778,234 B) $1,501,610 C) $1,200,000 D) $3,276,624 E) $3,958,790 25) Dressler Antiques Ltd. reported retained earnings of ($125,000) on the balance sheet for the year just ended. The company is projecting a net income after tax of $1,620,000 for the coming year. Dressler has 500,000 preferred shares outstanding and 3 million common shares outstanding Both pay a dividend of $.35 per share. What is the projected balance of the Company’s retained earnings at the end of the coming year? A) $270,000 B) $345,000 C) $395,000 D) $1,320,000 E) $1,495,000 26) Timmy’s Toys expects to make purchases of $181,775. It anticipates an opening inventory of $65,225 and closing inventory of $19,000. If its Sales Revenue is $365,030, what will the Company’s cost of goods sold be? A) $247,000 B) $346,030 C) $266,000 D) $228,000 E) $183,255 27) Bennoit Legal Services Ltd. is expecting to accrue salaries of $37,725. Accumulated Depreciation for all capital assets will be $45,000. Bennoit will end the next year with a bank overdraft of a $26,365. Inventory is estimated at $19,000. The original cost for the building is $150,000 and for the furniture is $60,000. Accounts Payable is projected to be $21,350. Common shares are valued at $75,000. In reviewing the pro forma balance sheet, it can be concluded that the company is A) In a stable financial position B) Is depending heavily on long-term debt to grow C) Experiencing a liquidity problem D) Overinvested in current assets E) Experiencing a high level of growth 28) When Jacob Jawad had completed Spiro Tech’s pro forma cash flow, he noticed a cash deficit for three months of the year, which, he perceived, was due to poor inventory planning. He adjusted the date of selected purchase orders on his electronic spreadsheet until he was satisfied that the deficits were eliminated or minimized in the target months. And Jawad was performing A) Scenario Analysis B) Sensitivity Analysis C) Fraudulent Accounting D) Drilling Down E) Account Profiling 29) The disadvantage associated with simulations, is that A) The ease of generating different pro forma statements can preclude a critical look at underlying assumptions B) A single assumption often drives in the range of results produced for all the variables C) Because of data reduction, an insufficient range of alternatives is produced D) Information overload occurs as too many meaningless alternatives are generated for each set of inputs E) The analysis cannot handle the variety of imports from different stakeholders 30) A financing gap refers to A) The undisclosed project for which a portion of retained earnings is reserved B) Estimates included in pro forma statements which have no basis in hard data C) Financing requirements not identified in the pro forma statements D) A value added to liabilities to balance the pro forma balance sheet E) A reserve for bad debt