accounting final exam

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2020

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Accounting

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Apr 3, 2024

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Chapters 1-3: P3-7A Crimson Tide Music Academy offers lessons in playing a wide range of musical instruments. The unadjusted trial balance as of December 31, 2021, appears below. December 31 is the company’s fiscal year-end. Accounts Debit Credit Cash $10,300 Accounts receivable 9,500 Interest Receivable 0 Supplies 2,000 Prepaid Rent 7,200 Land 78,000 Notes Receivable 20,000 Accounts Payable $7,700 Salaries payable 0 Deferred Revenue 5,300 Utilities Payable 0 Common Stock 79.000 Retained Earnings 19,700 Service Revenue 42,200 Interest Revenue 0 Salaries Expense 24,500 Rent Expense 0 Supplies Expense 0 Utilities Expense 2,400 Totals $ 153,900 $ 153,000 in addition, the company had the following year-end adjusting entries

Required: 1. Enter the unadjusted balances from the trial balance into T-accounts 2. Post the adjusting entries to the accounts 3. Prepare an adjusted trial balance 4. Prepare an income statement and a statement of shareholders’ equity for the year ended December 31, 2021, and a classified balance sheet as of December 31, 2021. Assume that no common stock is issued during the year.

Chapter 5 – Receivables and Sales Let’s Review p. 233/234 Snap-Crackle-Pop (SCP) Chiropractic normally charges $120 for a full spinal adjustment. Currently, the company is offering a $20 discount to senior citizens. In addition, SCP offers terms 2/10, n/30 to all customers receiving services on account. The following events occur. June 18 David, age 72, calls to set up an appointment June 20 David visits SCP and receives a spinal adjustment for the discounted price June 29 David pays for his office visit. Required: 1. On what date should SCP record patient revenue? 2. Record patient revenue for SCP 3. Record the cash collection for SCP assuming SCP receives David’s payment in full on June 29 (within the discount period). 4. Calculate the balance of Accounts Receivable after yeh collection of cash using a T- account format, and then calculate the balance of net revenues as shown in the income statement.

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E5-3 p. 264 On March 12, Medical Waste Services provides services on account to Grace Hospital for $11,000, terms 2/10, n/30. Grace pays for those services on March 30. Required: For Medical Waste Services, record the service on account on March 12 and the collection of cash on March 20. BE5-16 On October 1, 2021, Oberley Corporation loans one of its employees $40,000 and accepts a 12-month, 9% note receivable. Calculate the amount of interest revenue Oberley will recognize in 2021 and 2022. P5-8A On December 1, 2021, Liang Chemical provides services to a customer for $90,000. In payment for the services, the customer signs three-year, 10% note. The face amount is due at the end of the third year, while annual interest is due each December 1. Required: 1. Record the acceptance of the note on December 1, 2021 2. Record the interest collected on December 1 for 2022 and 2023, and the adjustment for interest revenue on December 31 for 2021, 2022, and 2023. 3. Record the cash collection on December 1, 2024.

Chapter 6 – Inventory and Cost of Goods Sold Let’s Review p. 292/293 NASCAR Unlimited sells remote-control cars. The company has the following beginning inventory and purchase for the year. Because of technological advances, NASCAR Unlimited has seen a decrease in the unit cost of its inventory. Throughout the year, the company maintained a selling price of $30 for each remote-control car and sold a total of 280 units, which leaves 20 units in ending inventory. Required: 1. Calculate cost of goods sold and ending inventory using the FIFO method 2. Calculate cost of goods sold and ending inventory using the LIFO method BE6-5 During the year, Wright Company sells 470 remote-control airplanes for $110 each. The company has the following inventory purchase transactions for the year.

Calculate ending inventory and cost of goods sold for the year, assuming the company uses FIFO. BE6-6 Refer to the table above (BE6-5). Calculate ending inventory and cost of goods sold for the year, assuming the company uses LIFO BE6-13 Shankar Company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February 2 for $40,000, with terms 3/10, n/30. On February 10, the company pays for the inventory that was purchased on account. Record the inventory purchase on February 2 and the payment on February 10. Let’s Review p. 303/304 Camcorder Central sells high-end Sony camcorders and accounts for its inventory using FIFO with a perpetual system, at the beginning of March, the company has camcorder inventory of $24,000 (=$240 x 100 units) Required: record the following inventory transactions for Camcorder Central 1. On March 7, Camcorder Central purchases on account 210 camcorders from Sony Corporation for $250 each, terms 2/10, n/30. 2. On March 8, Camcorder Central pays $2,000 for freight charges associated with the 210 camcorders purchased on March 7. 3. On March 10, Camcorder Central returns to Sony 10 defective camcorders from the March 7 purchase, receiving a credit of $250 for each camcorder.

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4. On March 16, Camcorder Central makes full payment for inventory purchased on March 7, excluding the 10 defective camcorders returned and the 2% discount received. 5. On March 20, Camcorder Central sells 300 camcorders for $90,000 ($300 each). All sales are for cash. BE6-11 Shankar Company uses a perpetual system to record inventory transactions. The company purchases inventory on account on February 2 for $40,000. In addition to the cost of inventory, the company also pays $600 for freight charges associated with the purchase on the same day. Record the purchase of inventory on February 2, including the freight charges. BE6-16 Using the amounts below, calculate the inventory turnover ratio, average days in inventory, and gross profit ratio.

Chapter 7 – Long Term Assets E7-1 McCoy’s Fish House purchases a tract of land and an existing building for $1,000,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCoy pays closing costs, including title insurance of $3,000. The company also pays $14,000 in property taxes, which includes $9,000 of back taxes (unpaid taxes from previous year) paid by McCoy on behalf of the seller and $5,000 due for the current fiscal year after the purchase date, shortly after closing, the company pays a contractor $50,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $5,000 and pays an additional $11,000 to level the land. Required: Determine the amount McCoy’s Fish House should record as the cost of the land. Let’s review 362/363 University Hero purchases new bread ovens at a cost of $110,000. On the date of purchase, the company estimates the ovens will have a residual value of $20,000. University Hero expects to use the ovens for four years or about 9,000 total hours. Required: Prepare a depreciation schedule using each of the following methods: 1. Straight-line 2. Double-declining-balance E7-10 Super Saver groceries purchased store equipment for $29,500. Super Saver estimates that at the end of its 10-year service life, the equipment will be worth $3,500. During the 10- year period, the company expects to use the equipment for a total of 13,000 hours. Super Saver used the equipment for $1,700 hours for the first year.

Calculate depreciation expense for the first year, using: 1. Straight-line 2. Double-declining-balance Chapter 8 – Current Liabilities BE8-3 p. 423 On July 1, Alaska Adventures issues a $160,000, eight-month, 6% note. Interest is payable at maturity. What is the amount of interest expense that the company would record in a year-end adjustment on December 31? Chapter 9 – Long Term Liabilities Self-Study question 12 p.471 Lincoln County retires a $50 million bond issue when the carrying value of the bond is $48 million, but the market value of the bond is $54,000. Lincoln County will record the retirement as a. A debit of $6 million to LOSS due to early extinguishment b. A credit of $6 million to GAIN due to early extinguishment c. No gain or loss on retirement d. A debit to Cash for $54 million P9-4A On January 1, 2021, Twister Enterprises, a manufacturer of a variety of transportable spin rides, issues $600,000 of 8% bonds, due in 20 years, with interstate payable semiannually on June 30 and December 31 each year. Required: 1. If the market interest rate is 9%, the bonds will issue at $544,795. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. 2. If the market interest rate is 7%, the bonds will issue at $664,065. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021.

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Chapter 10 – Stockholders’ Equity Let’s Review p. 506/507 Slacks 5 th Avenue has two classes of stock authorized: $100 par preferred and $1 par common. As of the beginning of the year, 1,000 shares of common stock and no preferred shares have been issued, the following transactions affect stockholder’s equity during the year: Slack 5 th Avenue has the following beginning balances in its stockholders’ equity accounts: Preferred Stock, $0: Common Stock, $1000; Pain-In Capital, $14,000; and Retained Earnings, $5,000. Net Income for the year ended December 31, 2021, is $4,000. Required: 1. Record each transaction

Let’s Review p. 513/514 Talking into consideration the beginning balances and all of the transactions during 2021, prepare the following for Slacks 5 th Avenue: 1. The stockholders’ equity sections of December 31, 2021 2. The statement of stockholders; equity for the year ended December 31, 2021.

E10-5 Italian Stallion has the following transactions during the year related to stockholders’ equity. Required: record each of these transactions. E10-9 Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2021. Power Drive has the following transactions affecting stockholders’ equity in 2021.

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Required: record each of these transactions. E10-12 Refer to the information in E10-9. Power Drive Corporation has the following beginning balances in its stockholders’ equity accounts on January 1, 2021: Common Stock, $100,000; Additional Paid-In Capital, $5,500,000; and retained Earnings, $3,000,000. Net Income for the year ended December 31, 2021, is $700,000. Required: Prepare the statement of stockholders’ equity for Power Drive Corporation for the year ended December 31, 2021

BE10-7 Rachel’s Designs has 2,000 shares of 7% par value cumulative preferred stock issued at the beginning of 2019. All remaining shares are common stock. Due to cash flow difficulties, the company was not able to pay dividends in 2019 or 2020. The company plans to pay total dividends of $23,000 in 2021. How much of the $23,000 dividend will be paid to preferred stockholders’ equity and how much will be paid to common stockholders’ equity P10-2A Donnie Hilfiger has two classes of stock authorized: $1 par preferred and $0.01 par value common. As of the beginning of 2021, 300 shares of preferred stock and 4,00 shares of common stock have been issued. The following transactions affect stockholders’ equity during 2021:

Donnie Hilfiger has the following beginning balances in its stockholders’ equity accounts on January 1, 2021: Preferred Stock, $300; Common Stock, $40; Additional Paid-In Capital, $76,000; and Retained Earnings, $30,500. Net income for the year ended December 31, 2021, is $10,800. Required: 1. Record each of these transactions P5-5A Taking into consideration the beginning balances on January 1, 2021, and all the transactions during 2021, respond to the following for Donnie Hilfiger: 1. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2021

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