Solution-Exam 1-Spring2008

Solution-Exam 1-Spring2008 - ACCTG 321 Exam I Spring, 2008...

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ACCTG 321 Exam I Spring, 2008 Solution I. A . 2006 Net Income: $ 3,000 UNDER 1 PT. 2006 Retained Earnings: No Effect 1 PT. 2006 Working Capital: No Effect 1 PT. 2007 Net Income: No Effect 1 PT. 2007 Retained Earnings: No Effect 1 PT. 2007 Working Capital: No Effect 1 PT. Details for the purchases and inventories (affects Purchases, Accounts Payable, and Ending Inventory): 2005 2006 2007 Beg Inv. 3,000 Over 12,000 Under + Purch. 12,000 Under 12,000 Over - End. Inv. 3,000 Over 12,000 Under __________ CGS 3,000 Under 3,000 Over N.E. Net Income 3,000 Over 3,000 Under N.E. R.E. 3,000 Over N.E. N.E. W.C. 3,000 Over N.E.* N.E. *Both Ending Inventory and Accounts Payable are understated by the same amount.
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B. 2006 Net Income: $16,000 UNDER 1 PT. 2006 Retained Earnings: $13,000 OVER 1 PT. 2006 Working Capital: $13,000 OVER 1 PT. 2007 Net Income: $ 7,000 UNDER 1 PT. 2007 Retained Earnings: $ 6,000 OVER 1 PT. 2007 Working Capital: $ 6,000 OVER 1 PT. 2006 2007 Interest Income 18,000 Under 9,000 Under - Supplies Exp. 2,000 Under 2,000 Under Net Income 16,000 Under 7,000 Under R.E. 13,000 Over 6,000 Over W.C. 13,000 Over 6,000 Over
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C. 2006 Net Income: $75,000 OVER 1 PT. 2006 Retained Earnings: $65,000 UNDER 1 PT. 2006 Working Capital: No Effect 1 PT. 2007 Net Income: $10,000 OVER 1 PT. 2007 Retained Earnings: $55,000 UNDER 1 PT. 2007 Working Capital: No Effect 1 PT. 2006 2007 Depreciation Exp. 20,000 Under 20,000 Under 55,000 Under 10,000 Over Net Income 75,000 Over 10,000 Over R.E. 65,000 Under* 55,000 Under W.C.** N.E. N.E. *The machine cost of $200,000 was all expensed in 2003 and cumulatively understated Retained Earnings through 2005 by $140,000. **Both Fixed Assets and Intangible Assets are non-current.
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II. A. Inquiries from new or existing customers Enrollment Forms from new customers Credit Report on new customer Orders from new or existing customers Orders for free books Member payments on account (Cash receipts) B. Sales order form Shipping advise Picking List Packing Slip Bill of Lading Sales invoice Monthly statements sent to customers C. Data entry edit checks such as when entering a customer order Credit approval by credit manager Signatures (includes digital signatures) on documents Passwords to control access Verification that items shipped equal items ordered Separation of shipping and billing functions Prenumbering documents such as sales invoices Reconciliation of subsidiary and control accounts for Accounts Receivable
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Solution-Exam 1-Spring2008 - ACCTG 321 Exam I Spring, 2008...

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