Final (Tsang) - Solutions included

Final (Tsang) - Solutions included - Practice Final Exam...

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Unformatted text preview: Practice Final Exam Questions Fall 2008 Intermediate Financial Accounting 1 ACCT 351 Question 1 Amazing Race Corporation is a multi-product sports equipments firm. Presented below is information concerning one of its product, Agassi-style tennis racquets for 2005: Date Transactions Quantity Price/unit 1/1 Beginning Inventory 1,000 units $12 2/10 Purchases 2,000 18 2/20 Sale 2,500 30 11/8 Purchases 3,000 23 12/9 Sales 2,000 33 The company made all purchases on account. By the end of the year, it has not paid for the 11/8 purchases. The company has a perpetual inventory system and elected to use the average cost method to calculate its inventory. Additional information is as follows: 1. Physical count of the goods at the end of 2005 indicated $25,000 was actually on hand. 2. Consignment goods of $1,000 from Phil Corporation, the consignor, were included in the physical count of Amazing Race Corp. at the end of 2005 and in accounts payable at December 31, 2005. 3. Tennis racquets costing $11,000 were purchased by a customer f.o.b. shipping point on December 31, 2005. The sales price was at $17,000 and the customer paid in cash. However, the goods were still included in the physical count at the end of 2005 because the racquets were sitting at the loading dock waiting to be shipped. No journal entry related to this transaction has been recorded so far. 4. Racquets returned by customer amounted to a cost of $7,500. These racquets were held for inspection and were excluded from the physical count at year-end. On January 10, the racquets were inspected and were returned to inventory. Credit memos totaling $12,000 were issued to the customer on the same date. 5. Goods shipped to customer f.o.b. destination on December 28, 2005 were still in transit at December 31 and had a cost of $12,000. Upon notification of receipt by customer on January 5, 2006, Amazing Race Corp. recorded the sales for $22,000. No journal entry has been recorded so far. 6. New purchases were in transit from a vendor to Amazing Race Corp. on December 31 for 1,000 units at a unit price of $24. The goods were shipped f.o.b. shipping point on December 28, 2005. No journal entry has been recorded so far. 7. In January 2006, it was discovered that an invoice covering purchases of $15,000 related to the November purchases was entered twice in the accounting periods. Required: Fill in the schedule of adjustments below. You must first determine the initial ending inventory, sales and accounts payable for Amazing Race Corp. Then for each of the seven transactions, show the effect, if any, separately. If the transactions have no effect on the amount shown, state NONE. Inventory Accounts Payable Net Sales Initial Amount Adjustment increase (decrease) 1 2 3 4 5 6 7 Total adjustments Adjusted amounts Solution: Inventory Accounts Payable Net Sales Initial Amount 33,000 69,000 141,000 Adjustment increase (decrease) 1 (8000) NONE NONE 2 (1000) (1000) NONE 3 NONE NONE NONE 4 7,500 NONE (12,000) 5 12,000...
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Final (Tsang) - Solutions included - Practice Final Exam...

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