ACC 281 Final Exam

| August 14, 2017

1.
Hans Albert Enterprises purchased computer equipment on May
1, 2006 for $5,000. The company expects
to use the equipment for 3 years, using straight line. It has no salvage value.
· What adjusting
journal entry should the company make at the end of each month if monthly
financials are prepared (round answer to the nearest dollar)?
· What is the
book value of the equipment at May 31, 2006?
2.
On June 1, during its first month of operations, Eggemeister Enterprises purchased supplies
for $3,500 and debited the supplies account for that amount. At January 30, an inventory of supplies showed
$1,200 of supplies on hand. What
adjusting journal entry should be made for January?
3.
Better Publications sold annual subscriptions to their
magazine for $24,000 in December, 2006.
The magazine is published monthly.
The new subscribers received their first magazine in January, 2007.
· What adjusting
entry should be made in January if the subscriptions were originally recorded
as a liability?
· What amount will be reported on the January 2007 balance
sheet for Unearned Revenue?
4.
Flynn Company
purchased merchandise inventory with an invoice price of $3,000 and credit
terms of 2/10, n/30. What is the net cost of the goods if Flynn Company pays
within the discount period?
5.
CMP Inc. maintains
perpetual inventory records. During
January, the company made purchases of $40,000 and sold goods with a cost of
$42,000 for $104,000. Cost of goods sold
for the month is:
6.
The income statement
of Miller, Inc. includes the items listed below:
Net sales $900,000
Gross profit 350,000
Beginning inventory 100,000
Purchase discounts 15,000
Purchase returns and allowances 8,000
Freight-in 10,000
Operating expenses 300,000
Purchases 540,000
7.
The following
information is available for Olson Company:

Beginning inventory

$45,000

Ending inventory

70,000

Freight-in

10,000

Purchases

300,000

Purchase returns and allowances

8,000

8.
The cost of goods
available for sale is allocated to the cost of goods sold and the
9.
Adler Department
Store prepares monthly financial statements but only takes a physical count of
merchandise inventory at the end of the year. The following information has
been developed for the month of July:
10.
The inventory of
Snider Company was destroyed by fire on April 1. From an examination of the accounting
records, the following data for the first three months of the year are
obtained:

Sales

$225,000

Sales Returns and Allowances

5,000

Purchases

90,000

Freight-In

3,500

Purchase Returns and Allowances

4,000

Instructions

Determine the merchandise lost by fire, assuming a
beginning inventory of $60,000 and a gross profit rate of 40% on net sales.

11.
Both the gross amount
of receivables and the allowance for doubtful accounts should be reported in
the balance sheet.
12.
Trade accounts
receivable are valued and reported on the balance sheet
A)
in the investment
section.
B)
at gross amounts less
sales returns and allowances.
C)
at net realizable
value.
D)
only if they are not
past due.
13.
King Company uses the
percentage of sales method for recording bad debts expense. For the year, cash
sales are $500,000 and credit sales are $2,000,000. Management estimates that
2% is the sales percentage to use. What adjusting entry will King Company make
to record the bad debts expense?
14.
Seely Company
receives a $4,000, 3-month, 8% promissory note from Dodd Company in settlement
of an open accounts receivable. What entry will Seely Company make upon
receiving the note?
15.
All plant assets
(fixed assets) must be depreciated for accounting purposes.
A)
TRUE
B)
FALSE
16.
General Molding is
building a new plant that will take three years to construct. The construction will be financed in part by
funds borrowed during the construction period.
There are significant architect fees, excavation fees, and building
permit fees. Which of the following
statements is true?
A)
Excavation fees are
capitalized but building permit fees are not.
B)
Architect fees are
capitalized but building permit fees are not.
C)
Interest is
capitalized during the construction as part of the cost of the building.
D)
The capitalized cost
is equal to the contract price to build the plant less any interest on borrowed
funds.
17.
Tanner Company
purchased equipment on January 1, 2006 for $60,000. It is estimated that the
equipment will have a $5,000 salvage value at the end of its 5-year useful
life. It is also estimated that the equipment will produce 100,000 units over
its 5-year life.
Answer
the following independent questions.
18.
A current liability
is a debt that can reasonably expected to be paid
A)
within one year.
B)
between 6 months and
18 months.
C)
out of currently
recognized revenues.
D)
out of cash currently
on hand.
19.
Chase County Bank agrees to lend Agler Brick Company $300,000 on January
1. Agler Brick Company signs a $300,000, 8%, 9-month note.
·
What is the adjusting
entry required if Agler Brick Company prepares financial statements on June 30?
20.
Three plans for financing
a $20,000,000 corporation are under consideration by its organizers. Under each
of the following plans, the securities will be issued at their par or face
amount and the income tax rate is estimated at 30%.It is estimated that income
before interest and taxes will be $6,000,000.
·
Determine for each
plan, the expected net income and the earnings per share on common stock.
21.
Neutron Company
issued $1,500,000, 10%, 20-year bonds on December 31, 2005, for $1,460,000.
Interest is payable semiannually on June 30 and December 31. Neutron uses the
straight-line method of amortization and has a calendar year end.
·
Prepare the
appropriate journal entries on
22.
Ann Welch’s regular
hourly wage is $18 an hour. She receives overtime pay at the rate of time and a
half. The FICA tax rate is 8%. Ann is paid every two weeks. For the first pay
period in January, Ann worked 86 hours of which 6 were overtime hours. Ann’s
federal income tax withholding is $400 and her state income tax withholding is
$170. Ann has authorized that $50 be withheld from her check each pay period
for savings bonds.
·
Compute Barb Welch’s
gross earnings and net pay for the pay period showing each payroll deduction in
arriving at net pay.
23.
Cash equivalents do not
include
24.
Financing activities
involve
A)
the day-to-day
operations of the company.
B)
acquiring investments
in the stocks and bonds of other companies.
C)
issuing debt and
equity.
D)
acquiring long-lived
assets.
25.
Utley Company had an
increase in inventory of $40,000. The cost of goods sold was $90,000. There was
a $5,000 decrease in accounts payable from the prior period. What were Utley’s
cash payments to suppliers?
26.
Benton Corporation
shows income tax expense of $70,000. There has been a $5,000 decrease in
federal income taxes payable and a $7,000 increase in state income taxes
payable during the year. What was Benton’s cash payment for income taxes?
27.
Dolan Company’s
income statement showed revenues of $270,000 and operating expenses of
$160,000. Accounts receivable decreased by $60,000 and accounts payable increased
by $50,000 during the year.
·
Compute (a) cash
receipts from customers and (b) cash payments for operating expenses using the
direct method.

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