umuc acct220 final exam latest 2015 november

QUESTION

Question 1:Floppy Company’s December 31, 2014 trial balance is as follows:Floppy CorporationTrial BalanceDecember 31, 2014Account DebitCreditCash$43,500Accounts Receivable53,500Allowance for Doubtful Accounts1,500Notes Receivable30,000Merchandise Inventory55,000Land20,000Building150,000Accumulated Depreciation, Building 15,000Equipment50,000Accumulated Depreciation, Equipment 21,000Goodwill26,000Accounts Payable 25,000Long Term Notes Payable 75,000Common Stock, $10 par, 2,000 shares authorized & outstanding 20,000Retained Earnings 147,000Sales Revenue 700,000Salaries Expense150,000Utilities Expense3,500Cost of Goods Sold350,000Administrative Expenses55,000Sales Expenses 15,000_______Totals $1,003,000$1,003,000Floppy is a small company and records adjusting entries & closing entries only at fiscal (calendar) year end. Correcting and adjusting entries have not been recorded.Additional Information:a. Notes Receivable is a 3-months, 6% note accepted on November 1, 2014.b. Long Term Notes Payable is a 5-year, 5% note, that was signed on July 1, 2014. Interest is payable annually.c. Building is depreciated at 3% per year. There is no salvage value.d. Equipment is depreciated at 15% year. There is no salvage value.e. Floppy discovered, on December 30th, that the inexperienced bookkeeper recorded in the general journal and general ledger that day’s $1,500 cash sales as a debit to Accounts Receivable and a credit to Sales Revenue.f. The year-end physical count for Merchandise Inventory reflected a value of $51,500. Any difference in value will not be considered theft or loss.g. Salaries for the last half of December, payable in January, amount to $5,500.h. Floppy estimates that of the Accounts Receivable 5% will not be collectable.Required:a. Prepare in journal form, any required correcting entriesb. Prepare in journal form, all end-of-the period adjusting entriesc. Prepare a December adjusted trial balanced. Prepare a classified balance sheet for the year ended December 31, 2014e. Prepare in journal form, the closing entries for the year ended December 31, 2014Question 2: InventoryFloppy uses the period method and had the following inventory events during JanuaryDateUnits PurchasedUnit CostDateUnits SoldUnit Sales PriceJan 1150$7.00Jan 2100$10.00Jan 52257.20Jan 712510.00Jan 101007.50Jan 127512.00Jan 151507.80Jan 1720012.50Jan 202007.95Jan 2415015.00Jan 251508.00Jan 30758.20Note:January 1 amount was the beginning inventory and unit value.(Round all total dollar values to the nearest dollar. Round all unit values to the nearest penny.)Required:a. Calculate cost of goods available for sale.b. Calculate the dollar value of sales.c. Calculate the value of Ending Inventory and Cost of Good Sold under the following independent assumptions:1) LIFO method2) FIFO method3) Average-cost methodQuestion 3:Required:Prepare Flipper’s Supply Co. general journal entries for the following transactions:Jan 1Accepted Flop’s 120 days, 10% note, as settlement of an outstanding $15,000 account receivable for goods sold last yearJan 15Purchased $10,000 Equipment from Floppy, signing a 9 month, 12% noteJan 25Loaned Flam Co. $30,000 cash, accepting a 90 days, 10% noteJan 31Prepared accrual adjusting entry for any interest revenueApr 25Received payment in full from Flam Co. for outstanding note & interestMay 1Received payment in full from Flop Co. for outstanding note & interestOct 15Paid in fullQuestion 4:Floppy Company purchased a refrigerated delivery truck for $65,000 on April 1, 2016. The plan is to use the truck for 5 years and then replace it. At the end of its useful life the truck is expected to have a salvage value of $10,000.a. Prepare the depreciation table for Floppy’s truck assuming that the company uses the straight-line method for depreciation.b. Prepare the depreciation table for Floppy’s truck assuming that the company uses the double-declining-balance depreciation method.c. Compute the depreciation expense for 2016 for Floppy’s truck assuming the truck has an expected life of 200,000 miles and during 2016 the truck was driven 24,540 miles. Round your depreciation expense per mile to three decimal placesQuestion 5:Flipper Company has a January 15 mid-month gross salaries expense of $25,000. All is subject to FICA Social Security (6.2%), FICA Medicare (1.45%), state income tax (5%) and federal income tax (15%) withholdings. Additionally, all is subject to employer taxes to include FUTA (0.8%) and SUTA (5.4%) taxes. (Round all calculations to the nearest penny.)Required:a. Prepare the general journal entry to record the employer’s payroll liability.b. Prepare the general journal entry to record the employer’s payroll tax liability.c. Prepare the general journal entry to liquidate the liabilities accrued in parts (a) and (b) on January 22.Question 6:Flipper Company at the end of the fiscal 2014 year has the following information: Credit Sales, $2,500,000 Sales Returns & Allowances $25,000 Accounts Receivable $200,000 and Allowance for Doubtful Accounts with a debit o $1,500.Required:a. Prepare the general journal entry to record the end of the year adjusting entry if Flipper uses 0.5% of Net Credit Sales as the basis for determining Bad Debt Expense.b. Prepare the general journal entry to record the end of the year adjusting entry if Flipper uses 5% of Accounts Receivable as the basis for determining Bad Debt Expense.Multiple choice questions allocated 1% point each. Make your selection by recording the letter in the answer box provided.Question 7: After the bank reconciliation is prepared, the entry to record bank service charges would have a credit to:a. Bank Service Charge Expenseb. Cashc. Petty Cashd. Cash Short and Overe. None of the aboveQuestion 8: Frick Company estimates uncollectible accounts using the percentage-of-receivables method and expects that 5 percent of outstanding receivables will be uncollectible for 2010. The balance in Accounts Receivable is $200,000, and the allowance account has a $3,000 credit balance before adjustment at year-end. The uncollectible accounts expense for 2010 will be:a $7,000b. $10,000c. $13,000d. $9,850e. None of the aboveQuestion 9:Frick Company issued its own $10,000, 90-day, non interest-bearing note to a bank. If the note is discounted at 10 percent, the proceeds to Frick are:a. $10,000b. $9,000c. $9,750d. $10,250e. None of the aboveQuestion 10:On 2010 July 1, Frick Company purchased equipment for $400,000, and installation and testing costs totaled $40,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $40,000. If Frick uses the double-declining-depreciation method, the depreciation expense for 2010 is:a. $88,000b. $72,000c. $36,000d. $44,000e. $40,000Question 11:The result of recording a capital expenditure as a revenue expenditure is an:a. Overstatement of current year’s expenseb. Understatement of current year’s expensec. Understatement of subsequent year’s net incomed. Overstatement of current year’s net incomee. None of the aboveQuestion 12:A truck costing $45,000 and having an estimated salvage value of $4,500and an original life of five years is exchanged for a new truck. The cash price of the new truck is $57,000, and a trade-in allowance of $22,500 is received. The old truck has been depreciated for three years using the straight-line method. The new truck would be recorded at:a. $55,200b. $57,000c. $34,500d. $43,200e. None of the aboveQuestion 13:Which of the following is not an advantage of the corporate form of organization?a. Continuous existence of the entityb. Limited liability of stockholdersc. Government regulationd. Easy transfer of ownershipQuestion 14: Treasury stock should be shown on the balance sheet as a(n):a. Reduction of the corporation’s stockholders’ equityb. Current assetc. Current liabilityd. Investment assetQuestion 15:When the stockholders invest cash in the business, what is the effect?a Liabilities increase and stockholders’ equity increasesb Both assets and liabilities increasec Both assets and stockholders’ equity increased None of the aboveQuestion 16:The ending balance in retained earnings is shown in the:a. Income statementb. Statement of retained earningsc. Balance sheetd. Both (b) and (c)e. Both (a) and (c)f. (a), (b) and (c)Question 17:A cash dividend of $500 was declared and paid to stockholders. The correct journal entry to record the declaration is:a. DR Capital stock 500 and CR Cash 500b. DR Cash 500 and CR Dividends 500c. DR Dividends 500 and CR Cash 500d. DR Cash 500 and CR Capital stock 500Question 18:If $3,000 has been earned by a company’s workers since the last payday in an accounting period, the necessary adjusting entry would be:a. Debit an expense and credit a liability.b. Debit an expense and credit an asset.c. Debit a liability and credit an asset.d. Debit a liability and credit an expense. Question 19:The accrual basis of accounting:a. Recognizes revenues only when cash is receivedb. Is used by almost all companiesc. Recognizes expenses only when cash is paid outd. Recognizes revenues when sales are made or services are performed and recognizes expenses only when cash is paid out.Question 20:The need for adjusting entries is based on:a. The matching principleb. Source documentsc. The cash basis of accountingd. Activity that has already been recorded in the proper accounts.Question 21:Which of the following statements is false regarding the closing process?a. The Dividends account is closed to Income Summary.b. The closing of expense accounts results in a debit to Income Summary.c. The closing of revenues results in a credit to Income Summary.d. The Income Summary account is closed to the Retained Earnings account.Question 22:Which of the following statements is true regarding the classified balance sheet?a. Current assets include cash, accounts receivable, and equipment.b. Plant, property, and equipment is one category of long-term assets.c. Current liabilities include accounts payable, salaries payable, and notes receivable.d. Stockholders’ equity is subdivided into current and long-term categories.Question 23:The underlying assumptions of accounting includes all the following except:a. Business entityb. Going concernc. Matchingd. Money measurement and periodicityQuestion 24:Frick Company began the accounting period with $60,000 of merchandise, and net cost of purchases was $240,000. A physical inventory showed $72,000 of merchandise unsold at the end of the period. The cost of goods sold of Frick Company for the period is:a. $300,000b. $228,000c. $252,000d. $168,000e. None of the aboveQuestion 25:A classified income statement consists of all of the following major sections except for:a. Operating revenuesb. Cost of goods soldc. Operating expensesd. Non-operating revenues and expensese. Current assetsQuestion 26:A business purchased merchandise for $12,000 on account; terms are 2/10, n/30. If $2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount would be:a. $240b. $200c. $1,200d. $1,000e. $3,600Question 27:Frick Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of ending inventory using weighted-average is:a. $114,750b. $157,600c. $122,400d. $109,650e. None of the aboveQuestion 28:Frick Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of goods sold using weighted-average is:a. $147,200b. $160,350c. $155,250d. $114,000e. None of the aboveQuestion 29:During a period of rising prices, which inventory method might be expected to give the highest net income?a. Weighted-averageb. FIFOc. LIFOd. Specific identificatione. Cannot determineQuestion 30:The following information: related to the bank reconciliation of the Flipper CompanyBalance per bank statement$1951.20Balance per ledger1,869.60Deposits in transit271.20Outstanding checks427.80NSF CheckNSF CheckService Charges13.80The adjusted/correct cash balance is:a. $1,794.60b. $1,719.60c. $1,638.00d. $1,713.00e. $1,876.20Question 31: In a bank reconciliation, deposits in transit should be:a. Deducted from the balance per booksb. Deducted from the balance per bank statementc. Added to the balance per ledgerd. Added to the balance per bank statemente. Disregarded in the bank reconciliation

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