Lebanese Association of Certified Public Accountants – Managerial ASccounting August Exam 2017 - Answers
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Course
Managerial Accounting
Institution
Managerial Accounting
Lebanese Association of Certified Public Accountants – Managerial ASccounting
August Exam 2017 - Answers
PROBLEM 2 (12%)
Sally Corporation’s financial statements appear below
Sally Corporation
Balance Sheet
December 31, N
Assets:
Current Assets
Cash $100,000
Marketable S...
Lebanese Association of Certified Public Accountants – Managerial ASccounting
August Exam 2017 - Answers
MULTIPLE CHOICE QUESTIONS ( 45 %)
1 B 16 D
2 B 17 D
3 D 18 A
4 A 19 D
5 C 20 D
6 C 21 C
7 D 22 A
8 A 23 B
9 D 24 D
10 D 25 B
11 A 26 A
12 D 27 B
13 D 28 D
14 B 29 A
15 A 30 C
PROBLEM SOLVING
PROBLEM 1 (4%)
A portfolio consists of assets A and B. asset A makes up one-third of the portfolio and has an
expected return of 18 percent. Asset B makes up the other two-thirds of the portfolio and is
expected to earn 9 percent.
Required:
What is the expected return on the portfolio?
Solution:
Asset Return (rj) Fraction wj rj
(wj)
A 18% ⅓ ⅓18% = 6%
B 9% ⅔ ⅔ 9% = 6%
rp =12%
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1
, Lebanese Association of Certified Public Accountants – Managerial ASccounting
August Exam 2017 - Answers
PROBLEM 2 (12%)
Sally Corporation’s financial statements appear below
Sally Corporation
Balance Sheet
December 31, N
Assets:
Current Assets
Cash $100,000
Marketable Securities 200,000
Inventory 300,000
Total Current Assets $ 600,000
Noncurrent Assets
Plant Assets 500,000
Total Assets $1,100,000
Liabilities and Stockholders’ Equity:
Current liabilities $200,000
Long-Term liabilities 100,000
Total liabilities $ 300,000
Stockholders’ Equity
Common stock, $1 par value, $100,000 shares $100,000
Premium on Common Stock 500,000
Retained Earnings 200,000
Total Stockholders’ Equity 800,000
Total liabilities and Stockholders’ Equity $1,100,000
Sally Corporation
Income Statement
For the year Ended December 31, N
Net Sales $10,000,000
Cost of Goods Sold 6,000,000
Gross Profit $ 4,000,000
Operating Expenses 1,000,000
Income before Taxes $ 3,000,000
Income Taxes (50% rate) 1,500,000
Net Income $ 1,500,000
Additional information available is a market price of $150 per share of stock and total dividends of
$600,000 for the year ‘N’, and $250,000 of inventory as of December 31, ‘N – 1’.
Required:
Compute the following ratios:
(a) Current ratio
(b) Quick ratio
(c) Inventory turnover
(d) Average age of inventory (Days sales in inventory)
2
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