Sol-Fall2007Exam1

Sol-Fall2007Exam1 - ACCTG 321 Fall 2007 Exam I Solution I 1 a Documents Sales Invoice Picking List Packing Slip Bill of Lading b c Journal Sales

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ACCTG 321 Fall 2007 Exam I Solution I. 1. a. Documents: Sales Invoice Picking List Packing Slip Bill of Lading b. Journal: Sales Journal c. Journal entry: Accounts Receivable 42,500 Sales 42,500 d. Subsidiary ledger: Accounts Receivable – Shah Company --- Debit for 42,500 2. a. Documents: Credit Memo Receiving Report b. Journal: Sales Journal c. Journal entry: Sales Returns and Allowances 875 Accounts Receivable 875 d. Subsidiary ledger: Accounts Receivable – Lewis Corporation --- Credit for 875 1
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3. a. Documents: Credit Memo b. Journal: General Journal c. Journal entry: Allowance for Doubtful Accounts 2,650 Accounts Receivable 2,650 d. Subsidiary ledger: Accounts Receivable – Hemphill Company --- Credit for 2,650 2
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II. A. Revenue ($27)(17,000) = $459,000 ($11)(17,000) = (187,000) Variable Overhead (1/3)($15)(17,000) = (85,000) Fixed Overhead (2/3)($15)(8,000) = (80,000) Depreciation (90,000 – 55,000)/7 = (5,000) Before Tax Net Income $102,000 Tax (35,700) After Tax Net Income $ 66,300 Depreciation 5,000 After Tax Cash Flow $ 71,300 B. Net Present Value = ($71,300)(5.2064) = $371,216 C. Revenue ($31)(17,000) = $527,000 ($9)(17,000) = (153,000) Variable Overhead (1/3)($12)(17,000) = (68,000) Fixed Overhead (2/3)($12)(8,000) = (64,000) Depreciation (175,000/7) = (25,000) Before Tax Net Income $217,000 Tax (75,950) After Tax Net Income $ 141,050 Depreciation 25,000 After Tax Cash Flow $ 166,050 D. Net Present Value = ($166,050)(4.5638) - $175,000 + $45,000 - (.35)[$45,000 – ($90,000 - $55,000)] = $624,319 3
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III. A. Net Taxable Income of the Business Gross Profit on sales $ 250,000 Cash operating expenses ( 80,000) Depreciation expense ( 25,000) NET INCOME OF THE BUSINESS $ 145,000 Allocations to Owners Darcy (sole proprietor) Allocation of net taxable income $ 145,000 Darcy is the sole proprietor and as such will report the net income of the business. The income will be included in Darcy’s adjusted gross income and reported on Schedule C of the Form 1040. It is subject to income tax and self-
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This note was uploaded on 09/09/2009 for the course ACCTG 321 taught by Professor Will during the Spring '08 term at San Diego State.

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Sol-Fall2007Exam1 - ACCTG 321 Fall 2007 Exam I Solution I 1 a Documents Sales Invoice Picking List Packing Slip Bill of Lading b c Journal Sales

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