ExamII-2004-Solutions

ExamII-2004-Solutions - NAME: PENN ID.: ACCOUNTING 101,...

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1 NAME: PENN ID.: ACCOUNTING 101, EXAMINATION 2 Fall Semester, 2004 INSTRUCTIONS: 1. There are 11 numbered pages in this booklet. There is a second booklet with financial information (7 pages total). Make sure you have all of the pages. 2. Please print your name and student number in the space provided on top of this page AND on all subsequent pages (especially if you un-staple the exam booklet). 3. This is a 82 point exam. You have 120 minutes to complete it. Budget your time to achieve maximum points. 4. Answer the problems in the space provided within this booklet. Present your work in an orderly fashion to facilitate the awarding of partial credit. For partial credit, you must show your work. Partial credit can only be given for work that is presented in a clear, legible and logical manner. 5. In the interest of fairness to all students, NO questions will be answered during the exam. If you think a question is ambiguous, state an appropriate assumption explicitly and continue. 6. The exam is closed book. You are allowed only ONE 8.5 x 11 inch double-sided page of paper for notes. 7. To submit a re-grade request this exam must be completed in ink. Part Points Allocated Points Scored I 17 II 17 III 16 IV 15 V 17 Total 82
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2 PART I (17 points) The following questions relate to the financial statement extracts for Teledyne Technologies Inc. for the fiscal year ended December 28, 2003. For this question assume that there are no foreign currency translation adjustments affecting inventories, nor are there any merger, acquisition or divesituture activities related to receivable accounts. Teledyne’s tax rate is 35 percent. There are no surprise reinstatements (i.e., there are no cash collections from accounts previously written off). Net revenue is reported net of bad debt expense and there are no sales discounts or returns and allowances. 1. What is the total amount owed to Teledyne from its customers (US government, prime contractors, commercial and other customers). (2 points). 123.7 from note 6. This is the gross receivables balance 2. What is the journal entry Teledyne made at the end of fiscal year 2003 to record bad debt expense? (3 points) Dr Bad Debt Expense 0.2 Cr Reserve for doubtful accounts 0.2 in millions from schedule II 3. How much greater or less would Teledyne’s fiscal 2003 net income have been if Teledyne had always used the direct write-off method instead of the allowance method? (4 points) wrote off 0.5 million. So expense would have been 0.3 greater. Pre-tax income would be 0.3 million lower. After-tax income lower by (1-0.35)*0.3=0.195 million From schedule II
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3 4. Using information only from the statement of cash flows and income statement (and assumptions made above), what amount of cash did Teledyne collect from customers in fiscal 2003? (4 points) Net Revenue - change in net AR = 840.7 – 7 = 833.7 million (SCF data) 5. Teledyne uses an ageing of its accounts receivables to determine its bad debt expense.
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ExamII-2004-Solutions - NAME: PENN ID.: ACCOUNTING 101,...

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