1. A company had net income of $48,000, netsales of $380,000, and average total assets of $280,000. Its profitmargin and total asset turnover were respectively: Multiple Choice1.36%; 0.17. 1.97%; 1.36. 12.63%; 1.36. 1.36%; 12.63. 12.63%;0.17.

2. Six months ago, a company purchased aninvestment in stock for $69,000. The investment is classified asavailable-for-sale securities. This is the company’s first and onlyinvestment in available-for-sale securities. The current fair valueof the stock is $72,600. The company should record a:

Multiple Choice

Debit to Unrealized Loss-Equity for $3,600.

Debit to Investment Revenue for $3,600.

Credit to Unrealized Gain-Equity for $3,600.

Credit to Investment Revenue for $3,600.

No entry is required.

3. Carpark Services began operations in 20X1and maintains long-term investments in available-for-salesecurities. The year-end cost and fair values for its portfolio ofthese investments follow. The year-end adjusting entry to recordthe unrealized gain/loss at December 31, 20X1 is:

Available-for-SaleSecurities	Cost			Fair Value
December 31,20X1	$	255,000		$	245,000
December 31, 20X2	$	344,000		$	355,500
December 31, 20X3	$	414,000		$	455,000

Multiple Choice

Debit Unrealized Gain– Equity $10,000; Credit Fair ValueAdjustment – Available-for-Sale (LT) $10,000.

Debit Unrealized Loss – Equity $10,000; Credit Fair ValueAdjustment – Available-for-Sale (LT) $10,000.

Debit Unrealized Loss – Income $10,000; Credit Fair ValueAdjustment – Available-for-Sale (ST) $10,000.

Debit Fair Value Adjustment – Available-for-Sale (LT) $10,000;Credit Unrealized Loss – Equity $10,000.

Debit Fair Value Adjustment – Available-for-Sale (LT) $10,000;Credit Unrealized Gain – Equity $10,000.

4. On June 18, Wyman Company (a U.S. Company)sold merchandise to the Nielsen Company of Denmark for €77,000(Euros), with a payment due in 60 days. If the exchange rate was$1.52 per euro on the date of sale and $1.31 per euro on the dateof payment, Wyman Company should recognize a foreign exchange gainor loss in the amount of:

Multiple Choice

$77,000 gain.

$77,000 loss.

$100,870 loss.

$16,170 gain.

$16,170 loss.

5. Landmark Corp. buys $490,000 of SchroeterCompany's 8%, 5-year bonds payable at par value on September 1.Interest payments are made semiannually. Landmark plans to hold thebonds for the 5-year life. The journal entry to record the purchaseshould include:

Multiple Choice

A debit to Long-Term Investments-AFS $490,000.

A debit to Short-Term Investments-Trading $490,000.

A debit to Long-Term Investments-HTM $490,000.

A debit to Short-Term Investments-AFS $490,000.

A debit to Cash $490,000.

6. Canberry Corporation had net income of$92,000, beginning total assets of $712,000 and ending total assetsof $640,000. Its return on total assets is:

Multiple Choice

13.6%

12.9%

14.4%

774%

696%

7. On January 4, Year 1, Barber Companypurchased 5,500 shares of Convell Company for $66,000 plus abroker's fee of $1,200. Convell Company has a total of 27,500shares of common stock outstanding and it is presumed the BarberCompany will have a significant influence over Convell. During eachof the next two years, Convell declared and paid cash dividends of$0.75 per share, and its net income was $75,000 and $70,000 forYear 1 and Year 2, respectively. The January 12, Year 3, entry torecord Barber's sale of 3,300 shares of Convell Company stock,which represents 60% of Barber's total investment, for $44,550 cashshould be:

Multiple Choice

Debit Cash $44,550; credit Gain on Sale of Investment $4,230;credit Long-Term Investments $40,320.

Debit Cash $44,550; debit Loss on Sale of Investment $8,220;credit Long-Term Investments $52,770.

Debit Cash $44,550; credit Gain on Sale of Investment $8,250;credit Long-Term Investments $36,300.

Debit Cash $44,550; debit Loss on Sale of Investment $8,250;credit Long-Term Investments $52,800.

Debit Cash $44,550; debit Loss on Sale of Investment $22,650;credit Long-Term Investments $67,200.

8. On November 12, Higgins, Inc., a U.S.Company, sold merchandise on credit to Kagome of Japan at a priceof 3,400,000 yen. The exchange rate was $0.00856 on the date ofsale. On December 31, when Higgins prepared its financialstatements, the exchange rate was $0.00862. Kagome paid in full onJanuary 12, when the exchange rate was $0.00880. On January 12,Higgins should prepare the following journal entry:

Multiple Choice

Debit Cash $29,920; credit Accounts Receivable-Kagome $29,104;credit Foreign Exchange Gain $816.

Debit Cash $29,104; debit Foreign Exchange Loss $816; creditAccounts Receivable-Kagome $29,920.

Debit Cash $29,308; credit Accounts Receivable-Kagome $29,104;credit Foreign Exchange Gain $204.

Debit Cash $29,104; debit Foreign Exchange Loss $204; creditAccounts Receivable-Kagome $29,308.

Debit Cash $29,920; credit Accounts Receivable-Kagome $29,308;credit Foreign Exchange Gain $612.

9. On February 15, Jewel Company buys 9,200shares of Marcelo Corp. common stock at $29.63 per share plus abrokerage fee of $510. The stock is classified asavailable-for-sale securities. This is the company’s first and onlyinvestment in available-for-sale securities. On March 15, MarceloCorp. declares a dividend of $1.70 per share payable tostockholders of record on April 15. Jewel Company received thedividend on April 15 and ultimately sells half of the Marcelo Corp.stock on November 17 of the current year for $30.40 per share lessa brokerage fee of $360. The journal entry to record the sale ofthe 4,600 shares of stock on November 17 is:

Multiple Choice

Debit Cash $139,480; credit Long-Term Investments-AFS $136,298;credit Gain on Sale of Long-Term Investments $3,182.

Debit Cash $139,840; credit Long-Term Investments-Trading$136,298; debit Gain on Sale of Long-Term Investments $3,542.

Debit Cash $139,840; credit Long-Term Investments-AFS $136,553;credit Gain on Sale of Long-Term Investments $3,287.

Debit Cash $139,480; credit Long-Term Investments-AFS $136,553;credit Gain on Sale of Long-Term Investments $2,927.

Debit Cash $139,840; credit Long-Term Investments-Trading$136,298; credit Gain on Sale of Long-Term Investments $3,542.

10. Landmark buys $370,000 of SchroeterCompany's 6%, 5-year bonds payable at par value on September 1.Interest payments are made semiannually on March 1 and September 1.The journal entry Landmark should record to accrue interest earnedat year-end December 31 is (Do not round your intermediatecalculations):

Multiple Choice

Debit Interest Receivable $11,100, credit Interest Revenue$11,100.

Debit Cash $7,400, credit Interest Revenue $7,400.

Debit Interest Receivable $7,400, credit Interest Revenue$7,400.

Debit Interest Revenue $7,400, credit Interest Receivable$7,400.

Debit Cash $11,100, credit Interest Revenue $11,100.