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MGT201 - Test _1 - solutions - winter 2010

# MGT201 - Test _1 - solutions - winter 2010 - • total...

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MGT 201 Winter 2010 Term Test – Solutions Part 1 (15 marks) 1. C 2. A 3. D 4. D 5. B 6. C 7. D 8. D 9. A 10. C 11. B 12. A 13. B 14. C 15. D Part B ( 10 marks) ASSETS = LIABILITIES + SHAREHOLDERS’ EQUITY Trans. Cash A/R Inv. Prepaid expense Land Building A/P Dividend Payable Long-term debt CS R/E a. +250,000 +250,000 b. +25,000 +25,000 c. –4,800 +4,800 d. –25,000 +100,000 +75,000 e. +9,000 +9,000 f. –750 –750 g. +16,000 –8,000 +8,000 h. –2,500 -2,500 i. +1,000 –1,000 j. -200 -200 +7,950 +1,000 +4,600 +250,000 +100,000 +6,500 +1,000 +75,000 +275,000 +6,050 =363,550 = 363,550

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Part C (10 marks) a) Total assets = \$42,000 + \$13,000 + \$100,000 = \$155,000 b) Working Capital = Current Assets - Current Liabilities 62,000-42,000 \$20,000 c) current assets = \$62,000 + \$40,000 -\$18,000 = \$84,000 total assets = \$93,000 + 84,000 = \$177,000 equity = \$100,000 + \$13,000 + \$40,000 - \$18,000 = \$135,000
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Unformatted text preview: • total liabilities & equity = \$135,000 +42,000 = \$177,000 d) Reasonable supported answer that matches your calculations Part D (10 marks) 1) Land is a non depreciable non-current asset. The company owns it and therefore it belongs on the balance sheet. 2) • Cash \$1642 • Inventory \$1480 • Land \$4510 • Total Assets \$7632 3) Share capital on the balance sheet accounts for initial cash paid by shareholders who purchased shares from company. Looking at cash, \$1642, the initial cash paid is no longer available for use. 4)R/E is the sum of the company's profits after dividend payments since the company's inception. 5) \$10116- \$9881 = \$235 Net Income 6) R/E = \$1,107 October 1, 2008 \$1222-\$115...
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MGT201 - Test _1 - solutions - winter 2010 - • total...

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