1. Company A has assets of $1,000,000, liabilities = 400,000 and equity = $600,000. What is the debt to asset ratio for Company A?

1. Company A has assets of $1,000,000, liabilities = 400,000 and equity = $600,000.

What is the debt to asset ratio for Company A?

40%

60%

100%

20%

1. Based on the following income statement what is the Net Profit Margin Ratio?

Cinnamon and Spice., Inc.

Income Statement

12/31/2008

Revenue:

Sales$200,000

Expenses:

Selling expense112,000

Operating expense28,000

Interest expense25,000

Other expense15,000

Total expense180,000

Net Income$20,000

10%

20%

180%

80%

1. Sales with terms 2/ 10, n/ 30 means:

The buyer gets a 10 percent discount for payment within 30 days.

The buyer gets 2 percent discount for payment within 10 days.

The buyer gets a 10 percent discount for payment within 10 days.

The buyer gets a 2 percent discount for payment within 30 days.

1. A $ 1,000 sale is made on May 1 with terms 2/ 10, n/ 30. What amount, if received on May 9, will be considered payment in full?

$ 1,000

$ 900

$ 800

$ 980

1. A company has net sales of $500,000 and cost of goods sold of $400,000. The company’s gross profit percentage is:

80%

20%

50%

10%

1. Company Alpha has Sales of $800,000, Sales Discounts of $40,000 and Sales Returns of $50,000. How will this be shown on the Income Statement?

With net sales of $710,000

With net sales of $890,000

With net sales of $790,000

With net sales of $810,000

1. Instructions

MATRIX INC. BANK RECONCILIATION

Cash balance per bank$9,610

Cash balance per books (general ledger)$7,430

Outstanding checks$2,417

Check mailed to the bank for deposit had

not reached the bank by the statement

date.$500

NSF check returned by the bank for

accounts receivable$225

July interest earned on the bank statement$30

Check no. 781 for supply expense cleared

the bank for $268; erroneously recorded

in our books for $240

Deposit by Acme Company erroneously

credited to the Matrix bank account by

the bank$486

2. Prepare a standard bank reconciliation and answer the multiple choice questions in this exercise.

QUESTIONS BELOW

Question 1

1.How are the outstanding checks of $2,417 shown on the bank reconciliation?

Reduction of the book balance.

Reduction of the bank balance.

Added to the book balance.

Added to the bank balance.

Outstanding checks are not shown on the bank reconciliation.

Question 2

1.How is the check of $500 that was mailed to the bank, but not yet received by the bank, shown on the bank reconciliation?

Reduction of the book balance.

Reduction of the bank balance. Added to the book balance. Added to the bank balance.

This item is not shown on the bank reconciliation.

Question 3

1.How is the non sufficient funds (NSF) check shown on the bank reconciliation?

Reduction of the book balance.

Reduction of the bank balance. Added to the book balance. Added to the bank balance. This item is not shown on the bank reconciliation.

Question 4

1.How is the interest earned shown on the bank reconciliation?

Reduction of the book balance. Reduction of the bank balance. Added to the book balance.

Added to the bank balance.

Outstanding checks are not shown on the bank reconciliation.

Question 5

1.Check #781 for supply expense was written for $268 and cleared the bank for that amount. However, when Matrix Inc. recorded the check in their books for $240. How is this error shown on the bank reconciliation?

Reduction of the book balance of $268.

Reduction of the bank balance of $268.

Reduction of the book balance of $28.

Reduction of the bank balance of $28.

Reduction of the book balance of $240.

Question 6

1.How is the erroneous deposit of $486 shown on the bank reconciliation?

Reduction of the book balance. Reduction of the bank balance. Added to the book balance. Added to the bank balance. This item is not shown on the bank reconciliation.

Question 7

1.What is the up to date ending cash balance (book) on the bank reconciliation?

$7,207

$7,657

$7,707

$7,177

$9,624

Question 8

1.What journal entry must be made on the Matrix Inc. books to record the NSF check of $225?

Debit Cash $225; Credit Accounts Receivable $225

Debit Accounts Receivable $225; Credit Cash $225

Debit NSF Expense $225; Credit Cash $225

Debit Cash $225; Credit Interest Income $225

Question 9

1.What journal entry must be made on the Matrix Inc. books to record the interest income of $30?

Debit Interest Income $30; Credit Cash $30

Debit Interest Expense $30; Credit Cash $30

Debit Interest Receivable $30; Credit Interest Income $30

Debit Cash $30; Credit Interest Income $30

Question 10

1.What journal entry must be made on the Matrix Inc. books to record the check #781 error?

Debit Cash $28; Credit Supply Expense $28

Debit Cash $268; Credit Supply Expense $268

Debit Cash $240; Credit Supply Expense $240

Debit Supply Expense $28; Credit Cash $28

Debit Supply Expense $240; Credit Cash $240

Question 11

1.What journal entry must be made on the Matrix Inc. books to record the erroneous deposit of $486?

Debit Cash $486; Credit Bank Account $486

Debit Bank Account $486; Credit Cash $486