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ACC 550 Final Exam Answer Set 1 and 2_Complete_A+ Answer

ACC 550 Final Exam Answer Set 1 and 2_Complete_Perfect Answer

ACC 550 Final Exam Answer Set 1 and 2_Complete_Perfect Answer

SET 1:

1. (TCO A) Listed below are several information, characteristics, and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application.
(Points : 30)
Potential Matches:

1 : Earnings process completed and realized or realizable

2 : Cost of providing financial information versus the benefits derived from its use

3 : Accruals and deferrals in adjusting and closing process

4 : Business enterprise assumed to have a long life

5 : Stable dollar assumption

6 : Notes as part of necessary information to a fair presentation

7 : Valuing assets at amount originally paid for them

8 : The impact of an item on the overall financial operations of a company

9 : Presentation of error-free information with representational faithfulness

Answer

: Historical cost principle

: Going concern principle

: Matching principle

: Monetary unit

: Revenue recognition principle

: Full disclosure principle

: Reliability characteristic

: Cost-benefit relationship

: Materiality constraint

2. (TCO B) Adjusting Entries: Unearned rent at 1/1/12 was $28,300 and at 12/31/12 was $48,200. The records indicate cash receipts from rental sources during 2010 amounted to $145,200, all of which was credited to the Unearned Rent Account. You are to supply the missing adjusting entry.

3. (TCO B) Adjusting Entries: Information relating to the balances of various accounts affected by adjusting or closing entries appear below. You are asked to supply the missing journal entries which would account for the changes in the account balances. Interest receivable at 1/1/12 was $8,000. During 2010 cash received from debtors for interest on outstanding notes receivable amounted to $11,000. The 2010 income statement showed interest revenue in the amount of $8,900. You are to provide the missing adjusting entry that must have been made, assuming reversing entries are not made.

4. (TCO B) Adjusting Entries: Accumulated depreciation-machinery at 1/1/10 was $150,000. At 12/31/10, the balance of the account was $300,000. During 2010, one piece of equipment was sold. The equipment had an original cost of $100,000 and was 1/2 depreciated when sold. You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

5. (TCO B) Adjusting Entries: Allowance for Doubtful accounts made on 1/1/10 was $40,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $60,000 and during 2010 bad debts written off amounted to $30,000. You are to provide the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

Second Part

1. (TCO B) Adjusting Entries: Prepaid rent at 1/1/10 was $9,000. During 2010 rent payments of $110,000 were made and charged to “rent expense.” The 2010 income statement shows as a general expense the item “rent expense” in the amount of $111,000. You are to prepare the missing adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit.

2. (TCO B) Adjusting Entries: Retained earnings at 1/1/10 were $100,000 and at 12/31/10 it was $300,000. During 2010, cash dividends of $40,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. For each journal entry write Dr. for debit and Cr. for credit.

3. (TCO C) Here is information related to the DRF Corporation.
Retained earnings, December 31, 2012
$ 3,890,000
Sales
4,500,000
Selling and administrative expenses
387,000
Extraordinary Item(Loss)(Net of Tax)
178,000
Cash dividends declared on common stock
82,600
Cost of good sold
1,780,000
Other revenue
142,500
Other expenses
77,800

Instructions: Prepare a multiple step income statement.

4. (TCO D) This is a balance sheet for the ABC corporation as of 12/31/12.
Cash
$ 60,000
Accounts payable
$ 55,000
Accounts receivable (net)
42,200
Long-term liabilities
60,000
Inventories
47,000
Stockholders’ equity
208,500
Investments
66,300
Equipment (net)
86,000
Patents
22,000
Total $323500
Total $323500

The following additional information is provided:
(1) Cash includes the cash surrender value of a life insurance policy $7,400 and a bank overdraft of $1,500 has been deducted.
(2) The net accounts receivable balance includes:
(a) accounts receivable debit balances $56,000;
(b) accounts receivable credit balances $6,000; and
(c) allowance for doubtful accounts $7,800.
(3) Inventories do not include goods costing $6,000 shipped out on consignment. Receivables of $2,000 were recorded on these goods.
(4) Investments include investments in common stock, trading $14,000, available-for-sale $48,300, and franchises $4,000.
(5) Equipment costing $5,000 with accumulated depreciation $4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.
Instructions:
Prepare a balance sheet in good form (stockholders’ equity details can be omitted).
Do not worry about balancing the statement but rather use your time to compute the account balances properly for presentation purposes.

5. (TCO E) Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $3,500 at the end of each year and provides the leaser (John) with an 8% return on its investment. You may use the following 8% interest factors.

9 Periods
10 Periods
11 Periods
Future Value of 1
1.99900
2.15892
2.33164

Present Value of 1
.50025
.46319
.42888
Future Value of
12.48756
14.48656
16.64549
Ordinary Annuity of 1
Present Value of
6.24689
6.71008
7.13896
Ordinary Annuity of 1
Present Value of
6.74664
7.24689
7.71008
Annuity Due of 1
Instructions
(a) Assuming the computer has an 11-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
(b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period?

6. (TCO F) Daniels Company deposits all receipts and makes all payments by check. The following information is available from the cash records.
MARCH 31
BANK RECONCILIATION
Balance per bank
$26,746
Add: Deposits in transit
2,100
Deduct: Outstanding checks
(3,800)
Balance per books
$25,046
Month of April Results
Per Bank
Per Books
Balance April 30
$27,995
$24,355
April deposits
8,864
13,889
April checks
13,100
14,080
April note collected
3,000
-0-
(not included in April deposits)

April bank service charge
35
-0-
April NSF check of a customer returned by the bank
(recorded by bank as a charge)
900
-0-
Instructions
Calculate the amount of the April 30
(1) deposits in transit; and
(2) outstanding checks.
Show all your work for potential partial credit.

7. Steve Company was formed on December 1, 2010. The following information is available from Steve’s inventory record for Product X.

Units Unit Cost

January 1, 2012 (beginning inventory) 2800 $17.00

Purchases:

05-Jan-12 3600 $25.00

25-Jan-12 2800 $27.00

16-Feb-12 2400 $32.00

15-Mar-12 3300 $34.00

A physical inventory on March 31, 2012, shows 4800 units on hand.
Instructions:
Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods.
(a) FIFO
(b) LIFO
(c) Weighted-average
Show supporting computations in good form. (Points : 40)

8. (TCO H) A machine cost $300,000 on April 1, 2012. Its estimated salvage value is $60,000 and its expected life is 8 years.
Instructions:
Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used.
(a) Straight-line for 2012
(b) Double-declining balance for 2013
(c) Sum-of-the-years’-digits for 2013.

SET 2:

1. Question : (TCO A) Listed below are several information, characteristics, and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application.

2. Question : (TCO B) Adjusting Entries: Unearned rent at 1/1/10 was $5,300 and at 12/31/10 was $6,000. The records indicate cash receipts from rental sources during 2010 amounted to $60,000, all of which was credited to the Unearned Rent Account.

You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

3. Question : (TCO B) Adjusting Entries: Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given.) You are asked to supply the missing journal entries which would logically account for the changes in the account balances. Interest receivable at 1/1/10 was $1,000. During 2010 cash received from debtors for interest on outstanding notes receivable amounted to $1,000. The 2010 income statement showed interest revenue in the amount of $2,900. You are to provide the missing adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit.

4. Question : (TCO B) Adjusting Entries: Accumulated depreciation-machinery at 1/1/10 was $150,000. At 12/31/10, the balance of the account was $300,000. During 2010,

one piece of equipment was sold. The equipment had an original cost of $100,000 and was 1/2 depreciated when sold. You are to prepare the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

5. Question : (TCO B) Adjusting Entries: Allowance for doubtful accounts on 1/1/10 was $70,000. The balance in the allowance account on 12/31/10 after making the annual adjusting entry was $70,000 and during 2010 bad debts written off amounted to $40,000. You are to provide the missing adjusting entry. For each journal entry write Dr. for debit and Cr. for credit.

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1. Question : (TCO B) Adjusting Entries: Prepaid rent at 1/1/10 was $30,000. During 2010 rent payments of $100,000 were made and charged to “rent expense.” The 2010 income statement shows as a general expense the item “rent expense” in the amount of $130,000. You are to prepare the missing

adjusting entry that must have been made, assuming reversing entries are not made. For each journal entry write Dr. for debit and Cr. for credit.

2. Question : (TCO B) Adjusting Entries: Retained earnings at 1/1/10 were $100,000 and at 12/31/10 it was $300,000. During 2010, cash dividends of $40,000 were paid and a stock dividend of $40,000 was issued. Both dividends were properly charged to retained earnings. You are to provide the missing closing entry. For each journal entry write Dr. for debit and Cr. for credit.

3. Question : (TCO C) Presented below is information related to Bruce Van Company. Retained earnings, December 31, 2010 $650,000
Sales 1,400,000
Selling and administrative expenses 240,000
Hurricane loss (pre-tax) on plant (extraordinary item) 290,000
Cash dividends declared on common stock 33,600
Cost of goods sold 780,000
Gain resulting from computation error on depreciation charge in 2009(pre-tax) 520,000
Other revenue 120,000

Other expenses 100,000

Instructions: Prepare in good form a multiple-step income statement for the year 2011. Assume a 30% tax rate and that 80,000 shares of common stock were outstanding during the year. Show EPS computations as well.

4. Question : (TCO D) The following balance sheet was prepared by the bookkeeper for Purple Company as of December 31, 2011 Purple Company Balance Sheet as of December 31, 2011 Cash $ 80,000 Accounts payable $ 75,000
Accounts receivable (net) 52,200 Long-term liabilities 100,000
Inventories 57,000 Stockholders’ equity 218,500
Investments 76,300
Equipment (net) 96,000
Patents
$393,500 $393,500
The following additional information is provided:
(1) Cash includes the cash surrender value of a life insurance policy $12,000, and a bank overdraft of $2,500 has been deducted.
(2) The net accounts receivable balance includes:
(a) accounts receivable debit balances $60,000;
(b) accounts receivable 0;
(c) allowance for doubtful accounts $3,800.
(3) Inventories do not include goods costing $3,000 shipped out on consignment. Receivables of $3,000 were recorded on these goods.
(4) Investments include investments in common stock, trading $13,000, available-for-sale $48,300, and franchises $15,000.
(5) Equipment costing $5,000 with accumulated depreciation

$4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is $40,000.
(6) An unrecorded liability was not recorded on the balance sheet of $2000.
Instructions
Prepare a balance sheet in good form (stockholders’ equity details can be omitted.)

5. Question : (TCO E) Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $2,500 at the end of each year and provides the leaser (John) with an 8% return on its investment. You may use the following 8% interest factors:

9 Periods 10 Periods 11 Periods
Future Value of 1 1.99900 2.15892 2.33164
Present Value of 1 .50025 .46319 .42888
Future Value of 12.48756 14.48656
Ordinary Annuity of 1
Present Value of 6.24689 6.71008 7.13896
Ordinary Annuity of 1
Present Value of 6.74664 7.24689 7.71008
Annuity Due of 1
(a) Assuming the computer has an eleven-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
(b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period?

6. Question : (TCO F) Daniels Company deposits all receipts and makes all payments by check. The following information is available from the cash records:
MARCH 31
BANK RECONCILIATION

Balance per bank $26,746
Add: Deposits in transit 2,100
Deduct: Outstanding checks (3,800)
Balance per books $25,046
Month of April Results Per Bank Per Books
Balance April 30 $27,995 $24,355
April deposits 8,864 13,889
April checks 13,100 14,080
April note collected 3,000 -0-
(not included in April deposits)
April bank service charge 35 -0-
April NSF check of
a customer returned by the bank
(recorded by bank as a charge) 900 -0-
Instructions
Calculate the amount of the April 30:
(1) Deposits in transit
(2) Outstanding checks
Show all your work for potential partial credit.

7. Question : (TCO G) Rye Company was formed on December 1, 2010. The following information is available from Rye’s inventory record for Product Bread. Units Unit Cost
January 1, 2011 (beginning inventory) 1,700 $17.00
Purchases:
January 5, 2011 2,600 $20.00
January 25, 2011 2,400 $21.00
February

16, 2011 1,000 $22.00
March 15, 2011 2,100 $25.00

A physical inventory on March 31, 2011, shows 3,000 units on hand.
Instructions
Prepare schedules to compute the ending inventory at March 31, 2011, under each of the following inventory methods:
(a) FIFO.
(b) LIFO.
(c) Weighted-average.
Show supporting computations in good form.

8. Question : (TCO H) A machine cost $500,000 on April 1, 2010. Its estimated salvage value is $50,000 and its expected life is eight years.
Instructions
Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used.
(a) Straight-line for 2010
(b) Double-declining balance for 2011
(c) Sum-of-the-years’-digits for 2011

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AC 550 Final Exam Answer Set 1 Part 1_Complete_Perfect Answer