Spring 2007 exam 2

Spring 2007 exam 2 - MISCH SPRING 2007 NAME_ FINANCIAL...

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MISCH NAME_______________________________________ SPRING 2007 FINANCIAL ACCOUNTING EXAM II PROBLEM POSSIBLE POINTS ACTUAL POINTS 1. Journal Entries/Cost of Goods Sold 25 2. Inventory Computation 16 3. Accounts Receivable/Bad Debts 16 4. Bank Reconciliation 09 5. Investments 16 6. Depreciation and Disposition of Assets 17 7. Quibble Point 01 ---------- Total 100 NOTE: A. If you are asked for an entry or an amount when none is required, write “no entry” or “zero” in the space provided. B. Round all journal entry amounts to the nearest dollar. C. Partial credit will be given only when supporting computations are shown in good form. D. Calculators with stored-text capabilities are prohibited on this examination. Use of such calculators and/or possession of any unauthorized materials will result in your receiving a zero on the examination. E. Good Luck! 1
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PART I—JOURNAL ENTRIES/COST OF GOODS SOLD (25 POINTS) Charlie Brown, Inc. began 2007 with normal balances of $21,000 in inventory and $125 in petty cash, uses a PERIODIC inventory system, accounts for depreciation on a straight-line basis, accounts for all purchases and sales on the gross method, and computes Cost of Goods Sold and depreciation monthly. During January 2007, the company had the following transactions: Jan. 2 Paid $50,000 to purchase land and a warehouse . The warehouse is expected to last 3 years, with no residual value. The land has an estimated fair value of $36,000, and the warehouse has an estimated fair value of $24,000. Jan. 4 Bought 1,500 units of inventory at $12 per unit from Linus, Inc. on terms 1/10, n/30, f.o.b. shipping point. Jan. 6 Received an invoice from Kanga transport for $65 of shipping costs on the January 4 th purchase. The invoice is due in 30 days. Jan. 8 Made a $24,000 sale on account to Heffalump Corporation on terms 1/5, n/20, f.o.b. destination. Jan. 9 Paid the amount due to Linus Corporation. Jan. 11 Received and paid an invoice from Roo transport for $30 of shipping costs on the January 8 th sale. Jan. 13 Heffalump returned merchandise valued at $2,000 because the company no longer wanted the merchandise. Charlie Brown issued a credit memorandum for the appropriate amount. Because the merchandise was not defective, Heffalump was required to pay for the shipping costs on the return. Jan. 18 Recorded a cash sale of $6,200. Jan. 24 Bought $7,900 of inventory on account from Schroeder Company on terms 2/10, n/30. Jan. 27 Received the amount due from Heffalump. Jan. 31 Noted that the petty cash box contained cash of $11 and vouchers for $41 for postage stamps and $72 for office supplies. All of the postage stamps and office supplies were used during the month. The company replenished the petty cash box. Jan. 31
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Spring 2007 exam 2 - MISCH SPRING 2007 NAME_ FINANCIAL...

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