UMUC ACCt220 final exam November 2015

QUESTION

Ensure to include correct
dollar signs, commas, underlines & double underlines where required.
Question 1:

Floppy Company’s
December 31, 2014 trial balance is as follows:

Floppy Corporation

Trial Balance

December 31, 2014

Account

Debit

Credit

Cash

$43,500

Accounts
Receivable

53,500

Allowance for
Doubtful Accounts

1,500

Notes Receivable

30,000

Merchandise
Inventory

55,000

Land

20,000

Building

150,000

Accumulated
Depreciation, Building

15,000

Equipment

50,000

Accumulated
Depreciation, Equipment

21,000

Goodwill

26,000

Accounts Payable

25,000

Long Term Notes
Payable

75,000

Common Stock, $10
par, 2,000 shares authorized & outstanding

20,000

Retained Earnings

147,000

Sales Revenue

700,000

Salaries Expense

150,000

Utilities Expense

3,500

Cost of Goods Sold

350,000

Administrative
Expenses

55,000

Sales Expenses

15,000

_______

Totals

$1,003,000

$1,003,000

Floppy
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 entries
b. Prepare in
journal form, all end-of-the period adjusting entries
c. Prepare a
December adjusted trial balance
d. Prepare a
classified balance sheet for the year ended December 31, 2014
e. Prepare in
journal form, the closing entries for the year ended December 31, 2014

Question 2:
Inventory
Floppy
uses the period method and had the following inventory events during January

Date

Units Purchased

Unit Cost

Date

Units Sold

Unit Sales Price

Jan 1

150

$7.00

Jan 2

100

$10.00

Jan 5

225

7.20

Jan 7

125

10.00

Jan 10

100

7.50

Jan 12

75

12.00

Jan 15

150

7.80

Jan 17

200

12.50

Jan 20

200

7.95

Jan 24

150

15.00

Jan 25

150

8.00

Jan 30

75

8.20

Note: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 method
2) FIFO method
3)
Average-cost method
Question 3:
Required:Prepare Flipper’s Supply Co. general journal entries for the following
transactions:

Jan 1

Accepted Flop’s 120 days, 10% note, as settlement of an
outstanding $15,000 account receivable for goods sold last year

Jan 15

Purchased $10,000
Equipment from Floppy, signing a 9 month, 12% note

Jan 25

Loaned Flam Co.
$30,000 cash, accepting a 90 days, 10% note

Jan 31

Prepared accrual
adjusting entry for any interest revenue

Apr 25

Received payment
in full from Flam Co. for outstanding note & interest

May 1

Received payment in full from Flop Co. for
outstanding note & interest

Oct 15

Paid in full

Question
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 places
Question
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 Expense
b. Cash
c. Petty Cash
d. Cash Short and Over
e. None of the above
Question
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 $7,000
b. $10,000
c. $13,000
d. $9,850
e. None of the above
Question 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. $10,000
b. $9,000
c. $9,750
d. $10,250
e. None of the above

Question 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. $88,000
b. $72,000
c. $36,000
d. $44,000
e. $40,000

Question 11:The result of recording a capital
expenditure as a revenue expenditure is an:
a. Overstatement of
current year’s expense
b. Understatement of
current year’s expense
c. Understatement of
subsequent year’s net income
d. Overstatement of
current year’s net income
e. None of the above

Question 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. $55,200
b. $57,000
c. $34,500
d. $43,200
e. None of the above

Question 13:Which of the following is not an advantage
of the corporate form of organization?
a. Continuous
existence of the entity
b. Limited liability
of stockholders
c. Government
regulation
d. Easy transfer of
ownership

Question 14: Treasury stock should be shown on the
balance sheet as a(n):
a. Reduction of the
corporation’s stockholders’ equity
b. Current asset
c. Current liability

d.
Investment asset
Question 15:When the stockholders invest cash in the
business, what is the effect?
a Liabilities
increase and stockholders’ equity increases
b Both assets and
liabilities increase
c Both assets and
stockholders’ equity increase
d None of the above

Question 16:The ending balance in retained earnings is
shown in the:
a. Income statement
b. Statement of retained earnings
c. Balance sheet
d. 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 500
b. DR Cash 500 and
CR Dividends 500
c. DR Dividends 500
and CR Cash 500
d. DR Cash 500 and
CR Capital stock 500

Question 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 received
b. Is used by almost
all companies
c. Recognizes
expenses only when cash is paid out
d. 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 principle

b. Source documents
c. The cash basis of
accounting
d. 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 entity
b. Going concern
c. Matching
d. Money measurement
and periodicity

Question 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. $300,000
b. $228,000
c. $252,000
d. $168,000
e. None of the above

Question 25:A classified income statement consists of
all of the following major sections except for:
a. Operating
revenues
b. Cost of goods
sold
c. Operating
expenses
d. Non-operating
revenues and expenses
e. Current assets

Question 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. $240
b. $200
c. $1,200
d. $1,000
e. $3,600

Question 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. $114,750
b. $157,600
c. $122,400
d. $109,650
e. None of the above

Question 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. $147,200
b. $160,350
c. $155,250
d. $114,000
e. None of the above

Question 29:During a period of rising prices, which
inventory method might be expected to give the highest net income?
a. Weighted-average
b. FIFO
c. LIFO
d. Specific
identification
e. Cannot determine

Question 30:The following information: related to the
bank reconciliation of the Flipper Company

Balance per bank
statement

$1951.20

Balance per ledger

1,869.60

Deposits in
transit

271.20

Outstanding checks

427.80

NSF Check

NSF Check

Service Charges

13.80

The adjusted/correct
cash balance is:
a. $1,794.60
b. $1,719.60
c. $1,638.00
d. $1,713.00
e. $1,876.20

Question 31: In a bank reconciliation, deposits in transit should
be:
a. Deducted from the
balance per books
b. Deducted from the
balance per bank statement
c. Added to the
balance per ledger
d. Added to the
balance per bank statement
e. Disregarded in
the bank reconciliation

 

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