FINAL EXAM (TAKE HOME) VERSION B STUDENT NAME: Principles of Accounting II BTA112.7006 Prof. E. Flores NOTE: THIS EXAM MUST BE COMPLETED ON YOUR OWN!!! MULTIPLE CHOICE (2 points each): There is only one correct answer for each question. Circle your choice of answer. 1. Nate is investing in a partnership with David. Nate contributes as part of his initial investment, Accounts Receivable of $60,000; an Allowance for Doubtful Accounts of $9,000; and $6,000 cash. The entry that the partnership makes to record Nate s initial contribution includes a a. debit to Allowance for Doubtful Accounts for $9,000. b. credit to Nate, Capital for $57,000 c. debit to Accounts Receivable for $51,000. d. credit to Nate, Capital for $66,000. 2. In the liquidation of a partnership, it is necessary to (1) distribute cash to the partners, (2) sell noncash assets, (3) allocate any gain or loss on realization to the partners, and (4) pay liabilities. These steps should be performed in the following order: a. (2), (3), (4), (1). b. (2), (3), (1), (4). c. (3), (2), (1), (4). d. (3), (2), (4), (1). 3. When preferred stock is cumulative, preferred dividends not declared in a period are a. distributions of earnings. b. considered a liability. c. called dividends in arrears. d. never paid. 4. Mozart Company has beginning and ending work in process inventories of $130,000 and $145,000 respectively. If total manufacturing costs are $680,000, what is the total cost of goods manufactured? a. $810,000. b. $825,000. c. $665,000. d. $695,000. 5. The purchase of treasury stock a. decreases common stock outstanding. b. decreases common stock authorized. c. decreases common stock issued. d. has no effect on common stock outstanding. 6. A corporation recognizes a gain or loss a. when bonds are converted into common stock and when they are redeemed before maturity. b. only when bonds are converted into common stock. c. only when bonds are redeemed before maturity. d. when bonds are redeemed at or before maturity. 7. Which one of the following is not a cost element in manufacturing a product? a. Manufacturing overhead b. Direct materials c. Office salaries d. Direct labor TAKE HOME EXAM p. 1
8. Pioneer Company reported total manufacturing costs of $528,000, manufacturing overhead totaling $78,000, and direct materials totaling $96,000. How much is direct labor cost? a. Cannot be determined from the information provided. b. $276,000 c. $624,000 d. $354,000 9. Sales commissions are classified as a. overhead costs b. period costs. c. product costs. d. indirect labor. 10. Bodkin, Inc. has 5,000 shares of 6%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2016, and December 31, 2017. The board of directors declared and paid a $25,000 dividend in 2016. In 2017, $65,000 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 2017? Preferred Common a. $25,000 $40,000 b. $35,000 $30,000 c. $32,500 $32,500 d. $30,000 $35,000 11. Cost of goods manufactured is calculated as follows: a. Beginning WIP + direct materials used + direct labor + manufacturing overhead + ending WIP. b. Beginning WIP + direct materials used + direct labor + manufacturing overhead ending WIP. c. Direct materials used + direct labor + manufacturing overhead beginning WIP + ending WIP. d. Direct materials used + direct labor + manufacturing overhead ending WIP beginning WIP. 12. A manufacturing company reports cost of goods manufactured as a(n) a. current asset on the balance sheet. b. component in the calculation of cost of goods sold on the income statement. c. component of the raw materials inventory on the balance sheet. d. administrative expense on the income statement. 13. Which of the following is not a manufacturing cost category? a. Cost of goods sold b. Direct materials c. Direct labor d. Manufacturing overhead 14. Which one of the following would not be classified as manufacturing overhead? a. Indirect labor b. Direct materials c. Insurance on factory building d. Indirect materials 15. The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is a. indirect materials. b. direct labor. c. manufacturing overhead. d. indirect labor. TAKE HOME EXAM p. 2
PROBLEM 1 (10 points) Johnson & Bosh have capital balances on January 1 of $80,000 and $60,000 respectively. The partnership agreement provides for (1) annual salaries of $25,000 for Johnson and $15,000 for Bosh, (2) interest allowance of 20% on capital balances; and (3) any remaining income or loss is to be shared 60% by Carson and 40% by Stern. Instructions: a) Determine the amount of net income allocated to each partner. b) Prepare the closing entries for the division of net income. Note: Write clearly and use proper labels [do not abbreviate]. To earn full credit, you must show all the steps using appropriate levels and calculations as needed to allocate salary and interest allowance to partners. Do not simply show calculated amounts. DIVISION OF NET INCOME Johnson Bosh NI = Total General Journal Date Account Titles and Explanation Ref. Debit Credit J1 TAKE HOME EXAM p. 3
PROBLEM 2 (10 points) The ledger of Marquina Corporation contains the following stockholders equity accounts at December 31, 2017. Preferred Stock (8%, $30 par, noncumulative) 540,000 Paid-in Capital in Excess of Par Preferred Stock 410,000 Paid-in Capital in Excess of Stated Value Common Stock 500,000 Common Stock ($10 stated value) 950,000 Retained Earnings 800,000 Treasury Stock Common (9,000 shares) 288,000 Instructions: Prepare the stockholders equity section of the balance sheet at December 31, 2017 assuming that the number of authorized common stock shares is 120,000 and the number of authorized preferred shares is 40,000. Note: Write clearly and use proper labels [do not abbreviate]. To earn full credit, you must write down the appropriate levels for each shown amount. STOCKHOLDERS' EQUITY MARQUINA CORPORATION Balance Sheet (Partial) December 31, 2017 TAKE HOME EXAM p. 4
PROBLEM 3 (15 points) Cimas Corporation has the following cost records for June 2017. Indirect factory labor $ 6,000 Factory utilities $ 1,000 Direct materials used 23,000 Depreciation, factory equipment 1,200 Work in process, 6/1/17 4,500 Direct labor 28,000 Work in process, 6/30/17 2,000 Maintenance, factory equipment 2,200 Finished goods, 6/1/17 5,500 Indirect materials 2,500 Finished goods, 6/30/17 9,000 Factory manager s salary 4,300 Instructions: (a) Prepare a cost of goods manufactured schedule for June 2017. Note: Write clearly and use proper labels [do not abbreviate]. To earn full credit, you must write down the appropriate levels for each shown amount. TAKE HOME EXAM p. 5
(b) Prepare an income statement through gross profit for June 2017 assuming net sales are $94,000. Note: Write clearly and use proper labels [do not abbreviate]. To earn full credit, you must write down the appropriate levels for each shown amount. CIMAS CORPORATION Income Statement (partial) For the Month Ended June 30, 2017 PROBLEM 4 (15 points) A comparative balance sheet for Bernard Company appears below: BERNARD COMPANY Comparative Balance Sheet Dec. 31, 2017 Dec. 31, 2016 Assets Cash $113,000 $60,000 Accounts receivable 85,000 76,000 Inventory 172,000 193,000 Land 72,000 100,000 Equipment 220,000 200,000 Accumulated depreciation equipment (66,000) (32,000) Total assets $596,000 $597,000 Liabilities and Stockholders' Equity Accounts payable $ 31,000 $ 97,000 Bonds payable 100,000 180,000 Common stock 300,000 240,000 Retained earnings 165,000 80,000 Total liabilities and stockholders' equity $596,000 $597,000 Additional information: 1. Net income for the year ending December 31, 2017 was $170,000. 2. Land was sold at cost. 3. Additional Equipment was purchased for $80,000 cash. 4. $70,000 Equipment, with a book value of $50,000, was sold for $48,000 during 2017. 5. Bonds payable were redeemed for cash $80,000. 6. Cash dividends of $35,000 were declared and paid during the year. 7. Several shares of common stock were issued for a $10,000 Equipment. TAKE HOME EXAM p. 6
Instructions: Prepare a statement of cash flows for the year ended December 31, 2017. Note: Write clearly and use proper labels [do not abbreviate]. To gain full credit, you must write down the appropriate levels for each shown amount. TAKE HOME EXAM p. 7
PROBLEM 5 (12 points): On January 1, 2017, Getsi Corporation had the following stockholders equity accounts. Common Stock ($10 par value, 100,000 shares issued and outstanding) $1,000,000 Paid-in Capital in Excess of Par Common Stock 200,000 Retained Earnings 450,000 During the year, the following transactions occurred. Jan. 15 Declared a $1 cash dividend per share to stockholders of record on January 31, payable February 15. Feb. 15 Paid the dividend declared in January. Mar. 1 Issued 10,000 shares of common stock at $12 per share. Apr. 15 Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $13 per share. May 15 Issued the shares for the stock dividend. June 20 Purchased 2,000 shares of its $10 par common stock at $15 per share. July 1 Announced a 2-for-1 stock split. The market price per share prior to the announcement was $17. Dec. 1 Declared a $0.50 per share cash dividend to stockholders of record on December 15, payable Jan.5, 2018. Dec. 31 Determined that net income for the year was $200,000. Instructions: Journalize the transactions and closing entries for net income and dividends. Note: Write clearly and use complete account names [do not abbreviate]. General J ournal J1 Date Account Titles and Explanation Ref. Debit Credit TAKE HOME EXAM p. 8
General J ournal Date Account Titles and Explanation Ref. Debit Credit J1 PROBLEM 6 (8 points): Lexis Co. issued $800,000, 9%, 10-year bonds on January 1, 2017, at 105. Interest is payable annually on January 1. The company uses the straight-line method of amortization for bond premium or discount. Prepare the journal entries to record the following: Note: Write clearly and use complete account names [do not abbreviate]. (a) The issuance of the bonds. (b) The accrual of interest and the premium amortization on December 31, 2017. (c) The payment of interest on January 1, 2018. (d) On January 1, 2019, when the carrying value of the bonds was $832,000, the company redeemed the bonds at 106. Record the redemption of bonds assuming interest for the period has been paid and recorded. General J ournal Date Account Titles and Explanation Ref. Debit Credit J1 TAKE HOME EXAM p. 9