Fall 2006 exam 2

Fall 2006 exam 2 - MISCH FALL 2006 FINANCIAL ACCOUNTING...

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MISCH NAME_____________________________ FALL 2006 FINANCIAL ACCOUNTING EXAM II PROBLEM POSSIBLE POINTS ACTUAL POINTS 1. Journal Entries/Cost of Goods Sold 22 2. Inventory Computation 17 3. Accounts Receivable/Bad Debts 16 4. Bank Reconciliation 09 5. Investments 15 6. Depreciation and Disposition of Assets 17 7. Multiple Choice 03 8. 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/MERCHANDISING CLOSING ENTRIES (22 POINTS) Nevada, Inc. uses a PERIODIC inventory system, accounts for all purchases and sales on the gross method, and computes Cost of Goods Sold monthly. The company’s December 31, 2005 balance sheet showed an inventory balance of $47,200. During January 2006, the company had the following transactions: Jan. 3 Sold merchandise to Iowa, Inc. on account for $14,400, on terms 2/10, n/30, f.o.b. destination. Jan. 4 Established a $75 petty cash fund. Jan. 5 Received and paid a $60 invoice from South Dakota Shipping for transportation costs on the merchandise sold on January 3 rd . Jan. 10 Bought $36,500 of inventory on account from Kansas Corporation on terms 1/10, n/30, f.o.b. shipping point. Jan. 11 Received the amount due from Iowa. Jan. 12 Received a $95 invoice from Tennessee Transportation for the freight charges on the inventory bought on January 10 th . The bill is due on February 9 th . Jan. 13 Returned $1,000 of the merchandise bought on January 8th to Kansas because it was defective, and received a debit memorandum for that amount. Because the goods were defective, Kansas paid the shipping charges on the returned merchandise. Jan. 17 Sold $31,700 of inventory to Georgia, Inc. on terms 1/5, n/30, f.o.b. shipping point. Jan. 18 Paid the amount owed to Kansas Corporation. Jan. 23 Bought $16,300 of merchandise for cash from New Jersey Corporation. Jan. 29 Noted that the petty cash box had $6.00 of cash remaining, and vouchers of $19.00 for office supplies that had been used during the month, $14.00 for a reimbursement to an employee for long distance phone charges relating to business calls the employee had made at a sales conference, and $38.00 for flowers that the company had sent to a customer who was celebrating a 25 th anniversary. Replenished the petty cash fund and recorded the necessary journal entry. In addition, at January 31
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Fall 2006 exam 2 - MISCH FALL 2006 FINANCIAL ACCOUNTING...

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