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accounting crash course actual exam version 4 from wall street prep q’s & answers
Review: Accounting Crash Course Exam v4
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Question 1
Assume US GAAP to answer this question.In 2017, $2 million in wages were earned and no cash wages were paid.In 2018, $8 million in wages were earned and $7 million in cash wages were paid.Cash wages were used to first pay wages earned in 2017 with the remainder used to pay wages earned in 2018.Any earned but unpaid wages will be paid during the first quarter of 2019.Using only the information provided, which of the following statements is most accurate?Liabilities increased by $1.0 million in 2018 Liabilities increased by $3.0 million in 2018 Assets decreased by $5.0 million in 2018 Retained earnings decreased by $10.0 million in 2018 Retained earnings decreased by $7.0 million in 2018
Question 2
A company reported gross profit of $20 million in 2018. In addition, it recorded the following activities: Sales and marketing expenses were $5 million.Interest income was $2 million.Sold equipment for $5 million that had a net book value of $9 million.$3 million in preferred stock issuance.Companyʼs tax rate is 40%.Calculate the companyʼs net income.$5.4 million $6.0 million $6.8 million $7.2 million $7.8 million
Question 3
The next two questions use the following data from TGX Global, a heavy equipment manufacturer (this information will be
repeated on the next question):
TGX Global sells excavators, with an average sale price of $500,000 per excavator. 1 / 2
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TGX p re r c o e d i u v c e eddd n & ew de o l r iv d ere s d fo 1 r 2 9
ex e c x a c v a a v t a o t r o s rs in in 20 20 18 18
:
.50 excavators were ordered in 2017 and the rest (70 excavators) were ordered in 2018.TGX received payment for 110 excavators.TGX began selling 1-year maintenance services contracts for $50,000 per excavator in 2018, which begin after the excavator is delivered. Contracts were sold on 50% of all excavator orders made in 2018 (no contracts were sold on orders placed in 2017).
Assume all excavators delivered in 2018 are delivered at year end, calculate TGXʼs 2018 revenue based on the transactions described above.$45.0 million $55.0 million $60.0 million $61.0 million $66.0 million
Question 4
This question uses the same TGX Global data as the previous question, repeated below: TGX Global sells excavators, with an average sale price of $500,000 per excavator.TGX received new orders for 90 excavators in 2018.
TGX produced & delivered 120 excavators in 2018: 50 excavators were ordered in 2017 and the rest (70 excavators) were ordered in 2018.TGX received payment for 110 excavators.TGX began selling 1-year maintenance services contracts for $50,000 per excavator in 2018, which begin after the excavator is delivered. Contracts were sold on 50% of all excavator orders made in 2018 (no contracts were sold on orders placed in 2017).
Assume now that instead of the revenue recognized in the previous question, TGX recognized $50 million in revenue for 100 excavators (and assume no maintenance contract revenue was recognized). In addition, the following occurred in 2018: TGX recognized $2 million in shipping and delivery costs for its excavators.TGX recognized $6 million in direct labor expenses.TGX recognized $3 million in commissions paid to its salespeople for selling the excavators.TGX purchased $60 million in raw materials in 2018, of which $50 million was in cash.Raw materials required to assemble each excavator cost $300,000 per excavator.Calculate TGXʼs 2018 gross profit based on the transactions described above.$(15.0 million) $9.0 million $12.0 million $14.0 million $18.0 million
Question 5
Fairview Corporation recorded the following in 2018:
After-tax net income was $20 million in 2018.The actual share count at the beginning of the year was 10.0 million.
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