158_849_final

158_849_final - 129 The Final Exam ANSWERS ARE AT 5.29 ....

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Unformatted text preview: 129 The Final Exam ANSWERS ARE AT 5.29 . Students; The final exam is multiple choice. This is due to a number of factors: 1) We do not have the graduate students available to help with the grading, and two, we only have a limited time after the exam to get the grades in. F all quarter of 2002 was the first multiple choice Accounting 101 final based on the Map. The students did worse than we expected and we curved the grades on the exam about 15 points. We felt this was because the students did not know what to expect and therefore did not know how to study. The following is one of the versions of that exam. You do now know what to expect and there will he no curve on the final. Where necessary, all answers are rounded to two digits. 1) Babs Corporation is buying all the assets and assuming all the liabilities of Zexler. The following information is available for Zexler at the day of the purchase. ‘00. 000 v , 052, :y ‘0‘ m Cash 300,000 Accounts payable 50,000 I O Goo x 2 qqa? ‘ 3g qr) Accounts Rec 100,000 Bond Payable 100,000 ‘ i "’ 1 ‘ ' Inventory 100,000 Common Stock 200,000 ‘00'00‘3 * “WM ’ L" 9'0“) Land 300,000 Retained Earnings 250,000 a l 0"» 99’} The inventory is worth $50,000 and the land is worth $500,000. Additionally, the Bond Payable debt is payable interest only at 10% per year for the next 5 years and then the principal is due. Current interest rates for similar are debt is 8%. Babs will pay $1,000,000 for Zexler. How much of the purchase price will Babs debit to f goodWiH? E: 00, Doc / L A. $450,000 \ 00, 000 1,006,0GO \l B. s 200,000 - So, 000 7 92, 03> W“ C. $ 550,000 ‘ é/oo,ooo awe, fig 7 ® 8 207,987. [,3 353.023}: E. Some other number which is not'here 7 gators \ 2) A 10 year, $100,000 zero coupon bond is priced to yield 10%. The amount the issuing company will receive when it is issued is: A. 3 4,240.50 $005000 x , ; (Egg B, $100,000 3 ’ a" @- $ 38,550 D. 3 42,405 E. $385,000 3) If the above zero bond was sold on Jan 1 of 2002, the interest expense for 2003 (the second year) would be g r N A“; $ 4,240.50 52,550»: we a case ‘. 3 3,705.60 493.4on toe}; ; 14.3%ng C. $10,000.00 . D. S 42,405.00 E. Some other number 130 4) A caital lease is really: A purchase of the asset B. A “ti—haul” it or temporary lease , C. A better lease than an non-capital lease D. A current asset E. Some other thing 5) Sally wants to retire in five years. She wants to live on $100,000 per year and she will stay retired for 40 years. She thinks that her retirement funds can earn 12% per year. If she takes her first annual check in exactly five years, how much does she need to deposit today to accomplish her goal? (Rounded to the nearest dollar) A. $467,753 B. $ 46,775 c. $ 52,389 (23 $523,893 6) The term “seasoned” when referringito a loan means the payments on the loan have been made when due. . the payments on the loan have not been made when due. c. the interest payments on the loan have not been made when due. d. the loan has been sold. e. the loan has been paid. 7) Suzie bought a new pickup for $40,000 for use in her gymnastics business. She estimates the truck will be useful to her for 5 years and then will be worth $4,000.During its useful life, she estimates it will travel 200,000 for business. Ifshe uses the activity based depreciation method, and she drove 50,000 miles in the first year and 40,000 miles in the second year, how much would her accumulated depreciation account have in it at the end of the Second year? COO - L1, 000 A. $ 7,200 W0; - 2 .l e 1 $0,000: @000 C. $ 14,400 1 mm | 8100 D. $ 7,200 B. Some other number 8) According to the Article “Why Johnny Can’t Invest” losing feels Twice as bad as winning feels good B. Three times as bad wirming feels good C. We feel about the same level of intensity psychology when we win as when we lose. D. The article didn’t really talk about the level of feelings between winning and losing 9) Leon’s Paving Company issuing 5 year, $100,000 face, 10% coupon rate bonds to yield 12%. The journal entry to record the issuance of the bonds would include: rm» ; \QQ 3&9 x “36,; , ‘ C 0013 @A debit to bond discount of $7,212 ‘ B) A debit to cash of$100,000 ‘Oiooo “ 3‘00 W 0 Show C) A credit to premium on bonds payable of$ 7,574.60 ‘05 “303 K ’ S c" ‘7 4 > sit €740 D) A credit to bonds payable of $ 92,788 Cr 2. ‘1? Q E) some other answer (1 ago, q 3‘ 7 gg figs“ “7, c1} 8L $94 1: 00.86.11 10,000 11.13%.gb (:ltfiagcifiéggfigg 1: :3: .33): 10) For Leon’s bonds, if they were issued the first day of 20x1 (10% face priced to yield 12%) and the first years interest was paid on Dec 31 of 20x1, the entry to record that interest would include: A) A credit to cash of$11,134.56 Q; mg? ,e .9. 67,, e 11.13 1.5 7, . B) A debit to interest expense of $10,000 I C) A credit to discount of$ 7,574.60 Mr me \ m 3¢6<o @A credit to cash for $10,000 Q ,5“. , \ 3 4 5%, E) none of these. (1 it set \ 0.000 “9 11) Still on Leion’s bond. The journal entry to record the interest expense for the second year would include A) A credit to interest payable of$ 11,270.71 or 2, *1 $9 + 1154,59 = Q3, q 2% 35, B) A debit to interest expense of $10,000 1 1 1% CIA credit to bond discount of $1,270.71 , V f u (an o. ‘1 1 A credit to cash for $ 11,270.71 1 W “4" “1 V7" C: rarer ‘ 3'70. ‘7: E) none of these. a 9&1”, , c. m 12) The Brock Company prepares annual financial statements at December 31 of each year. On April 1, 20x2 they borrowed $100,000 from the bank. The Brock Company must pay interest of 12% plus $10,000 on April 1 each year. The journal entry on December 31, 20x2 is: her .1 0010 DO 1: 1167 e 11.000 Interest Expense $9,000 ,5 01/“; Interest Payable $9,000 M Q, 000 B. Interest Expense $12,000 7 Cash $12,000 C . Interest Expense $12,000 . Note Payable $10,000 Cash $22,000 D. Interest Expense $12,000 Interest Payable $12,000 E. Interest Payable $9,000 Interest Expense $9,000 PM im W31 ‘* 512,712? 10,000 ll, 13¢<Q<H qfi¢£2$® 132 13) Still Brock, The journal entry on April 1, 20x3 is: A. Interest Expense $9,000 Interest Payable $3,000 . Note Payable $10,000 Cash $22,000 B.‘ Interest Expense $3,000 ' Interest Payable $9,000 Note Payable $10,000 Cash $22,000 C. Interest Expense $12,000 Note Payable $ 10,000 Cash $22,000 ~ D. Interest Payable $12,000 Cash $12,000 F. Interest Expense $3,000 Note Payable $10,000 Cash $13,000 14) You plan to sell books for $50 each. The books cost $10 each, your rent is $1,500 and all other fixed expenses are $500. How many books do you need to sell to make $2,000 each month? A) 40 3:41.53 60 1% 000500 43130130 . B) 50 00' .352. “mm " ‘00 Q 100 ’ em do 45 ) 160 E) Need more information 15) Devlon Corp has a beginning balance (1/ l/xl) )in Accounts Receivable of $50,000 and beginning credit balance in the Allowance for Doubtful Accounts of $1,000. During 20x1 they sold $900,000 of goods on credit and collected $750,000. If Devlon estimates that 2% of its ending accounting receivable will eventually not be collected, its adjusting journal entry for the bad debt expense will include a credit to allowance for doubtful accounts of: A0 Ft . A. $4,000 5 Me a woo 3““ 23%? Ere? $500 B. $3,900 eggmo ‘7 01009 awe 3:500 9k $4>100 100,000 42000 3 3,000 X gg \J 16) IfDevlon had written off $500 of accounts receivable during 20x1, the debit to bad debt expense would have b : A» Q ,2, 9 , can @043 $681 A. $4,000 535:, $3,490 am, new, 32060 . $3,500 . D. $3,990 $620,505; 17) Still Devlon- the average collection period is: 3&5 a A. 7.2 times a (a "ram 000,000 .~ 0,. ll :73 v ‘50: (p R B. 6.00 times gaiooo 4. “:3th {£0 50.69 days a, 60.83 days C; 30+ 183: 18) Slick Bob will sell you a Thingie for $10,000. The deal is you pay for the Thingie in five equal annual payments that include interest at 2%. You called the bank and they said that they would charge you 10% for a similar loan. How much are the payments if you take Slick Bob’s deal? A $ 2,374.17 t O ,ooo _ 332,637.97 “mamas = Qtatfi’l c.$2,000.00 \ @sz,121.57 (a%,6 / E. None of these 19) How much, to the nearest dollar, are you really paying for the Thingie under Slick Bob’s deal? C? i 3335 ems" . ’ C: $11,191 “3'7463 (“3555) D. $ 7,238 Sontag E. None of these 20) If ou amortize the Slick Bob deal properly, the interest for the first year would be s 804.20 (20 .4, B. s 237.42 D; C. $ 723.80 .. a D. s 900.00 godmaél E. 3 none of these 21) Susie Company has a balance in the treasury stock account of $6,000 representing 1,000 shares of stock she bought back last year. If she sells 200 shares of the stock for $ 7 per shares, her balance in treasury stock will b : ’ I " _. 6 Al $4300 8% “‘7‘; we“: and; W00 l $ 5,800 “09G “Woo ‘ 34"? (100 ‘3‘») “TE 1900 c. s 4:600 ’1‘“, 9‘ ’09 _. Pt 6 arr/3 atoo - to :rls . D. None of these : 0 ~ A , 22) Samantha had a flood. Her ending inventory last year was $10,000. To the day of the flood she had purchased $800,000 in goods. Her sales to the date of the flood were $1,000,000. She keystones all her merchandise when determining the sales price. How much did Samantha lose in the flood? éAct$ A. 3 1,000,000 y, 000‘ & $ 810,000 EM ,0‘000 039 C ' $ 310,000 Duacu gags D. 3 190,000 (8 fl 7 # E. Some other number latUW 5 a t 4 ‘W $0523, at}? (kowpackgf‘g 134 23) Chris’s Company had net income’for 20x2 before tax and depreciation of $500,000. The corporate tax rate is 30%. Chris’s has $1,000,000 in fixed assets. Assume that the fixed assets are depreciated using the straight line method for reporting purposes over 10 years with no salvage value. All of the property is 5 year property. for tax (MACRS) purposes. The five year percentages are 20.00, 32.00, 19.20, 11.52, 11.52, 5.76. Fig eguigment was all purchased at the beginning of 20x1. Assume this is the company’s second year of operation and no assets, other than the $1,000,000 which the company purchased on the day it opened, have been bought or sold since the company opened. pa i e" BOOK #ngx. M How much is the debit to tax expense for 20x2? 5 00‘ DOC, 500’ 005, l ,OOOpoO A. S 300,000 \ {000 000 A, 1 5 2: 32% B. 3 160,000 Mfg-W WK 2 001000 m 39,0le c. 3 54,000 Lt00000 t e o . ooe Q) $ 120,000 wg x 306; E. 5 Some other number 1 2,0.OOOW 5 4,‘ 500 . . . . . L9 I i 24) Stdl Chns’s Compan —- How much 13 the credtt to deferred taxes 1n the 2L0X§>j€19m1 entry to record taxes? A. 5 300,000 @ $ 66,000 \ C. $ 54,000 D. $ 120,000 E. $ Some other number 25) Still Chn's’S- What is the balance in the deferred tax account after the 20x2 journal entry for taxes? (Assume 3% the company had the same net income before tax and depreciation for 20x1 as it did for 20x2) 3 A. 3 66,000 . ‘ . ii . s 128,000 $0“ - an“ I m 1 $ 96,000 E’s 00.000 500,003 ‘SQ?”§* {:23 E, D. $ 120,000 \ oo, 003 {gm §QQ E. 3 Some other number 4 D 0' DD Eafi‘ mg 0035; QUE) it, i x: §§ 2 ilfiflxmfi QO‘OQQ ‘ a a 3 a UN...- “a, 30, 000 Answer the next six questions using the below data Beg End . Balance Balance Cash 10,000 25,000 Accts Rec 40,000 35,000 Inventory 50,000 60,000 Equipment 200,000 220,000 00.000 Accum Deprec 20,000 30,000 Land 100,000 "90,900 Accts Pay - I 50,000 60,000? $9,335 Wage pay 10,000 5,000 Long~term debt 100,000 20,00 (20.0603 Common Stock 50,000 @119 75,000 are 1000’ mg Retained Earnings 70,000 3 250,000 00 lee“? "“ Sales 1,000,000 Cost of goods sold 500,000 Other expenses 300,000 Last year the company had sales of $1,000,000, and earned $200,000 after taxes. The land was purchased for cash, the equipment was, acquired by exchanging common stock worth $20,000. The company did not sell any equipment during the year. The retained earnings balance for both years is after all closing entries have been made. . 25) What was the cash Flow from Operations for the Year? :4, I: A. $ ‘ 139 i: @$ 210,000 , C. 3 240,000 _ , C, 1 w, D. $ 15,000 415% 27) What was The cash Flow from Investing for the year? _ 5:, ‘ A. ($120,000) 1 @ ($100,000) C. (S 80,000) D. Some other number 28) What was The cash Flow fiom Financing for the year? (Be careful! l) 5 3:43:93 A. $0 B. ($80,000) C. ($ 75,000) @ ($ 95,000) 29) How much in dividends did the company pay during the year? A. S -0- E. $ 10,000 $ 20,000 . D. $ 200,000 E. Unable to determine from information given I36 30) What was the debt to equity ratio at the end of the year? A; .2073 (gs C35“; .1 W 0 5692 88+ 395 ‘- . 2, 0‘13 D. 4.823 a E. None of these CM 0) 31) What was the inventory turn? B. 40.15 = 41 .09 C. 8.33 5W D. 43.82 $“ E. Some other number 551000 For the next four questions, use the following data: On January 1, 20X1 John F’s Company had 8 Thingies which cost you $10 each in your inventory. During the year, the following transactions occurred (6 0 Jan 1 Sold 3 Thingies for $20 each Feb 1 bot 8 Thingies @ $11 each <41 ‘2 Mar 1 sold 4 Thmgxes @ $22 each Q M O t 1 0 Jun 1 sold 5 Thmgres for $22 each 3 I r *2 Septlbot3@$12 each se in M Dec 1 sold 2 @ $24 each $1 3cm 3@ 3t 32) Cost of Goods Sold Under FIFO would be: @sms fl $152 C) $160 D) $154 E) none of these 33) Cost of Goods Sold Under LIFO would be A) $146 @3152 $160 93:» D) $154 ' E) none of these @5311 34) Gross Margin using FIFO 3&i13 312? 0:13: ~ i , C $160 D) $154 “’0 13) none of these 35) Ending Inventory using LIFO A) s 47 "EN 52 E) none of these 137 Brutus wants to buy from Debbie a Lucky Company 10%, $100,000 bond that was issued 5 years ago, The bond pays interest annually. The bonds currently have exactly five years to maturity. Figure out the price Brutus . should pay Debbie under each ofthe following scenarios. (Answer to the nearest $5) 5:} 36) (3113‘: interest rates are 8% {’9’ " i SQ: 0‘30 K 553‘ $0 i Q«QOQ ) 107987 A $100,000 tClear; a 5.0007 .- geeky C) $ 74,730 tag‘m x; (Loggia Q‘siobo D) 8 92,818 r a E r E) s 62,090 magi"; 37) Current interest rates are 10% A) $ 107,787 $ 100,000 C)’ $ 74,730 D) $ 68,060 E) $ 62,090 38) Current Interest rates are 12% A) S 107,787 l0,000 )4 3.190454? ‘ 502004—21 B) 3 100,000 g 3; 74,730 ‘OOaOOO *5 08074; ‘ 50>1¢c> D‘ $ 92,788 931,. E) $ 62,090 . a ’92 39) Freeland Company had wages payable at the beginning of the year of $4,000 During the year her company paid cash wages of $80,000 and at the end of the year she owed wages of $10,000. Her income statement for the year will show wage expense of: A) $ 80,000 W LOAécLS‘ 0,0 0,669 a t 2733:: arr“ w a» W cm a r C, ‘30. o D) $ 90,000 m QC) 3 86,000 wkbfi gm ‘0‘ 000 . wees, fiat; ‘ 10.000 _ 40) Stillpn Freeland Company, her wages payable on the balance sheet at the end of the year Will be : @113 10,000 E) $ 14,000 C) 3 84,000 D) S 94,000 E) $ 86,000 41) If Susie Co issues 2,000 shares of $1 par value stock for $60,000, the credit to “paid in capital in excess of par” would be A. $60,000 (last; as, see a 58,000 a a a tease; iv ‘1}. . C. S 2000 ~ ‘ f a : > x D D. None of these A: see a, <3 5 DC) ...
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158_849_final - 129 The Final Exam ANSWERS ARE AT 5.29 ....

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