Financial Accounting. Final Exam

Transcription

1 Financial Accounting Final Exam When you feel confident that you have mastered the material in Financial Accounting, complete the following exam by answering the questions and compiling your answers into a word-processing document. When you re ready to submit your answers, refer to the instructions at the end of your exam booklet. Be certain to indicate the proper question number before each of your answers. Remember to show your work if an answer requires a mathematical solution. Part A begins on the following page.

2 Part A: Answer each of the following two questions. Each answer is worth 20 points. 1. The following information was made available from the income statement and balance sheet of Meranda Company: Item 12/31/10 12/31/09 Accounts Receivable $ 42,000 $45,100 Accounts Payable 27,900 24,500 Merchandise Inventory 68,000 63,000 Sales (2010) 170,000 Interest Revenue (2010) 3,200 Dividend Revenue (2010) 1,800 Tax Expense (2010) 11,600 Salaries Expense (2010) 22,400 COGS (2010) 57,000 Interest Expense (2010) 2,200 Operating Expenses 19,400 Complete the cash flow from operating activities section for Meranda Company using the direct method for the year ended December 31,

3 2. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent. Jessica s Jewelry Store Comparative Balance Sheet For Years Ended December 31, 2011 and 2010 (in thousands) Difference Percentage Assets Current Assets Cash and Equivalents $319 $288 Accounts Receivable, net Inventory Total Current Assets Property, Plant and Equipment Total Assets $1,299 $1,273 Liabilities Current Liabilities Accounts Payable Accrued Liabilities Total Current Liabilities Long-Term Liabilities Total Liabilities Stockholders Equity Common Stock Retained Earnings Total Stockholders Equity Total Liabilities and Stockholders Equity $1,299 $1,273 3

4 Part B: Answer each of the following 15 questions. Each answer is worth 4 points. 1. Given the following information, show the increase or decrease in the accounting equation: A. Deanne invests $45,000 and $10,000 of office equipment into the business. B. Furniture is purchased for $8,000 cash. C. Supplies are purchased on credit for $2,300. D. The month s electric bill of $775 was paid. E. The month s cash sales were $5, Journalize the following transactions and include the explanations. A. Tammy invested $40,000 into her corporation on June 11. B. Tammy purchased inventory for $95,000, of which $70,000 was on account on June 14. C. Tammy paid one month s rent of $2,400 on June 16. D. Tammy had sales of $15,000 on account on June 19. E. Tammy had paid $2,500 on her payables account on June 21. 4

5 3. Prepare a trial balance from the following information for Computer Systems, Inc. for December 31, 2012: Accounts payable $4,298 Common stock $4,073 Sales $8,302 Cash $1,902 Notes payable $888 Wages expense $777 Supplies expense $1,028 Equipment $5,183 Accounts receivable $1,733 Inventory $6, Compute the missing information from this post-closing trial balance: Cash $38,502 Accounts Receivable 14,372 Prepaid Rent 18,229 Prepaid Insurance 4,583 Supplies (A) Accounts Payable (B) Wages Payable 29,428 Common Stock 30,049 Retained Earnings 18,423 Total $80,436 $80,436 5

6 5. Journalize the following transactions using the perpetual inventory method: Nov. 1 Purchased $3,600 of merchandise from Hilltop, terms 2/10, n/30. Nov. 5 Purchased $1,750 of merchandise for cash from Owen s Supply. Nov. 7 Purchased $3,400 of merchandise from Seaside, terms 1/15, n/30. Nov. 10 Returned $500 of merchandise to Seaside. Credit Memo #131. Nov. 11 Paid the invoice from Hilltop. 6. Given the following information, prepare a balance sheet for Brandon s Campstore for the year ending December 31, 2012: Cash $38,745 Retained Earnings $171,309 Common Stock $43,500 Equipment $37,200 Accounts $14,109 Accounts Payable $26,351 Receivable Land $35,000 Inventory $81,311 Prepaid Supplies $9,003 Income Taxes $5,284 Payable Office Computers $16,399 Other PPE $26,550 Accum. Depr. (all) $21,013 Prepaid Insurance $9,140 6

7 7. Rick Company s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note: The company uses a perpetual system of inventory.) Units Unit Price Total Cost January 1 Beginning 18 $24 $432 inventory March 12 Sold 13 April 11 Purchase 45 $29 $1,305 June 20 Sold 33 Aug 16 Purchase 35 $27 $945 Sept 11 Sold 29 Total Cost of Inventory Ending inventory is 23 units. $2,682 What is the ending inventory of Rick Company for 2012 using FIFO? 7

8 8. Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for Years 1 and 2. Item Year 1 Year 2 Gross Profit Net Income Ending Retained Earnings 9. Below is a list of treatments of accounting topics. Place GAAP on the line if the treatment is GAAP-based and place IFRS on the line if the treatment is IFRS-based. A. The use of LIFO is allowed. B. Both research and development costs are expensed as incurred. C. Market is defined as current replacement cost. 8

9 10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011: Bank Balance, July 31, 2011 $ 28,542 Checkbook Balance, July 31, ,344 Bank collection of note receivable 1, interest Bank service charge 75 Deposits in transit 3,145 Outstanding checks 2,685 NSF check from customer 770 Correction of book error (check #456 written for $280, recorded at $28) maintenance expense 9

10 11. Journalize the following transactions for Ryan Company: July 1 Sold $5,300 of merchandise to Rick on account. Nov. 1 Exchanged Rick s account receivable for an eight-month, 6% note for $5,300. Dec. 31 Recorded accrued interest on Jim s note (round to nearest dollar). July 1 Rick paid off his note with interest (round to nearest dollar). 12. A computer system was purchased on July 1 at a cost of $125,000. It s expected to be used for four years and to have a residual value of $5,000 after 8,000 hours of service. The system was used for 1,750 hours the first year and 2,100 hours the second year. Calculate the depreciation expense to the nearest dollar for the first and second years. Method Year 1 Year 2 Straight-line Double-declining-balance Units-of-production 10

11 13. Prepare journal entries for the following transactions for Ryan Company in the general journal: Feb. 28 Machinery that cost $57,000 and had accumulated depreciation of $46,000 was sold for $2,500. April 10 A van that cost $23,700 and had accumulated depreciation of $21,000 was sold for $1,250. July 16 Equipment that cost $120,000 and had accumulated depreciation of $112,000 was traded in for new equipment with a fair-market value of $140,000. The old equipment and $135,000 in cash were given for the new equipment. 14. Journalize the following treasury stock transactions: May 1 Reacquired 800 shares of $15 par common stock for $13 per share. May 7 Sold 400 shares at $11 per share. May 9 Sold 250 shares at $17 per share. 11

12 15. The following information was taken from the financial statements of Brandon Company for 12/31/10 and12/31/09: Net income for 2010: $313,000 Depreciation expense for 2010: $28,400 Loss on sale of equipment: $7,300 Balance Sheet 12/31/10 12/31/09 Accounts Receivable $46,000 $50,000 Merchandise Inventory 35,000 28,000 Accounts Payable 27,000 24,000 Interest Payable 6,000 8,000 Prepare the operating activities section of the statement of cash flows under the indirect method for the year ended December 31, Submitting Your Assignment You can submit your final exam online: 1. On your computer, save a revised and corrected version of your project. Be sure to include your student number and exam number on your saved documents. 2. Go to and log in. 3. Go to My Courses. 4. Click on Take Exam next to the lesson you re working on. 5. Enter your address in the box provided. (Note: This information is required for online submission.) 6. Attach your file or files as follows: 12

13 a. Click on the Browse box. b. Locate the file you wish to attach. c. Double-click on the file. d. Click on Upload File. e. If you have more than one file to attach, repeat steps a d. 7. Click on Submit Files. Be sure to keep a backup copy of your completed assignment. 13