31. Based on the above data, what is the amount of quick assets? a. $195,000 b.

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31. Based on the above data, what is the amount of quick assets? a. $195,000 b. $163,000 c. $56,000 d. $121,000 32. A corporation has 50,000 shares of $25 par value stock outstanding that has a current market value of $120. If the corporation issues a 5-for-1 stock split, the par value of the stock after the split will be: a. $5 b. $25 c. $60 d. $24 33. If total assets decreased by $88,000 during a period of time and stockholders' equity increased by $65,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is a. $153,000 increase b. $153,000 decrease c. $23,000 increase d. $88,000 decrease 34. An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts tot $4,000. If Allowance for Doubtful Accounts has a $1.200 debit balance, the adjustment to record the l debt expense for the period will require a debit to Bad Debt expense for $2,800 a. b. credit to Allowance for Doubtful Accounts for $5,000. debit to Bad Debt Expense for $4,000. c. d. debit to Bad Debt Expense for $5,200. 5. Using this data, answer the following questions; Sales, $905,000; cost of merchandise sold, $540,000; administrative expenses, $10,000, interest expense $20,000; rent revenue, $25,000; selling expenses, $90,000. How much is operating income? a. 270,000 b. 365,000 c. 235,000 d. 265,000 36. Which of the following groups of accounts have a normal debit balance? a. revenues, liabilities b. assets, liabilities c. liabilities, expenses d assets, expenses

Explanation / Answer

Hence option b) is correct

Solutions Q.No 31 Data not available for the computing Quick Assets. Q.No 32

1. PAR Value means nominal Value or face value . In the give n problem before splitup the par value is $25 per share. Total face Value of company is $25*50000 shares = $ 1250000.
2. The number of shares afetr split up are = 5 * 50000 shares = 250000 shares
3. The PAR value of the stock after splitup is $1250000/250000 = $5 per share . Answer : a)

Q.No 33 Particulars Increase/(Decrease) Remarks Total Assets Decreased by $88000 -88000 Assume it,there is a decrease in the Cash and consequently decrease in liabilities Increase in equity -65000 Shareholders’ equity is equal to the company's total assets minus its total liabilities , increase in euity leads to decrease in liabilities -153000

Hence option b) is correct

Q.No 34

1. The Allowance for Doubtfull Accounts shall be always credit balance. While Adjusting through Allowance for Doubtfull Account , such account shall be credited and respective Debit shall be given to Bad Debt Expenses.
2. In the given problem, there is a pending debit balance of $1200 in Allowance for Doubtfull Account and furthere estimation is $4000.Total $5200/- shall bedebited to Bad Debts Expence.
3. Hence the answer is d) is correct

Q.No 35

1. Earnings before interest and tax, also know as operating income (EBIT). Here it is assuming that Rental Income is other than operating Income and not included.
2. As per the following workings answer d) is correct.

Particulars Amount$ Sales * 905000 Less : Cost of Merchandise Sold -540000 Administrative Expenses -10000 Selling Expenses -90000 Operating Income 265000 Q.No 36

1. Answer is d) Assets and Expenses
2. As revenues and laibilities shall be credit balance,Hence option a,b,c are wrong

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