Spring 05 - ACCOUNTANCY 321 Spring, 2005 EXAM II circle...

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Unformatted text preview: ACCOUNTANCY 321 Spring, 2005 EXAM II circle one: 1:00 p.m. class 7:00 p.m. class Name ________________________________ Internal Group # ___________ Professors Bob Capettini and Will Snyder 1. There are 23 pages and 5 questions (each with several subparts) on the exam. Question I 14 points Question II 21 points Question III 20 points Question IV 20 points Question V 25 points 2. BE SURE TO ANSWER THE QUESTION WHICH IS ASKED (not some other question on the same topic). For the essay questions, make your answers clear and specific. 3. Questions will be graded for PARTIAL CREDIT. You may receive partial credit ONLY FOR WRITTEN WORK we can follow. 4. DO NOT remove any pages from your test. 5. DO all of your work on this exam. DO NOT use any other sheets for scrap paper (other than your notes, WHICH MUST BE TURNED IN WITH YOUR EXAM). 6. You are expected to do your own work. 7. You will have two hours to take the exam. 1 I. Auditors are examining the accounts of the Trunkey Corporation. They were present when Trunkey's personnel physically counted the Trunkey inventory; however, the auditors made their own tests. Trunkey's records provided the following data for last year: Inventory, January 1 $ 300,000 at retail Inventory, January 1 180,500 at cost Net purchases 1,453,000 at retail Net purchases 970,000 at cost Markups 31,000 Markup cancellations 14,000 Markdowns 11,000 Markdown cancellations 3,000 Sales 1,302,000 Inventory, December 31 (per PHYSICAL COUNT, valued at retail) $400,000 A. Compute the ending inventory at Lower of Cost or Market as an audit of the overall reasonableness of the physical inventory count. Round the cost ratio to three decimal places. (5 points) 2 B. There is a discrepancy between the retail inventory method calculations and the physical count. What factors should the auditors consider in reconciling any differences in results from the analysis? (3 points) __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ 3 C. Record the SPECIFIC journal entry to reflect the discrepancy between the physical count and the results of the Conventional Retail method. (3 points) __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________ __________________________________________________________________________...
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Spring 05 - ACCOUNTANCY 321 Spring, 2005 EXAM II circle...

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