ACCT+2101+Quiz+5+Spr07

ACCT+2101+Quiz+5+Spr07 - ACCT 2101 Quiz #5 Spring Semester,...

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Unformatted text preview: ACCT 2101 Quiz #5 Spring Semester, 2007 Name (please print clearly) Pledge: On my honor, I have neither given nor received any unauthorized help on this quiz. (signed) QUICK RETURN OPTION: If you would like to have your quiz graded and returned by this Friday and are willing to have your quiz graded without consideration for partial credit, please sign here: Instructions: 1. You must write legibly or your answers will not be graded. 2. Show and label all work for possible partial credit. 3. Do NOT pull this quiz apart under any circumstances. 4. Make sure you have 5 numbered pages including the cover sheet. 5. You must use one of the authorized calculators — you may not use your own. 6. Good luck! Point Allocation: Problem 1 2 5 Problem 2 2.5 Problem 3 2.5 Problem 4 2 5 Extra Credit Question Q; TOTAL AVAILABLE POINTS 1 .2 Extra Credit Question: What are your plans for Spring Break? ACCTZIOI Quiz5 1 0f5 PROBLEM 1: The following purchases and sales for Noble Company are for April. There was no inventory on April 1. The sales price was $50 per unit for the entire month. PURCHASES SALES Unit Units Cost Units AprilB 3,200 @ $33.00 Aprilé 1,500 April 10 1,600 @ $34.00 April 12 1,400 April 22 2,000 @ $35.00 April 25 2,300 April 28 1,800 @ $36.00 REQUIRED: Compute the ending inventory as of April 30 using periodic inventory procedure, under each of the following methods: (1) FIFO (2) LIFO (3) Weighted—Average ACCT 2101 Quiz 5 2 0f5 PROBLEM 2. o The sales and cost of goods sold for Phelps Company for the past five years were as follows: Year Sales (net) Cost of Goods sold Gross Margin GM 0/o 2001 $ 9,984,960 $ 6,240,600 $ 3,744,360 2002 10,794,240 6,746,400 4,047,840 2003 12,346,560 7,716,600 4,629,960 2004 11,926,080 7,272,000 4,654,080 2005 12,747,840 7,920,000 4,827,840 0 The following information is for the seven months ended July 31, 2006: Sales 35 7,748,000 Sales returns 173,760 Purchases 4,588,800 Purchase returns 28,800 Merchandise inventory, 1 / 1 / 06 948,000 0 To secure a loan, Phelps Company has been asked to present current financial statements. However, the company does not wish to take a complete physical inventory as of July 31, 2006. REQUIRED: From the data given, compute the estimated inventory as of July 31, 2006. ACCTZIOI Quiz5 30f5 PROBLEM 3. Carl Company acquired and placed into use equipment on January 2, 2002, at a cash cost of $1,870,000. Transportation charges amounted to $15,000, and installation and testing costs totaled $110,000. The equipment was estimated to have a useful life of 8 years and a residual value of $75,000 at the end of its life. It was further estimated that the equipment would be used in the production of 1,920,000 units of product during its life. During 2002, 426,000 units of product were produced. In 2003, 320,000 units of product were produced. REQUIRED: Compute the depreciation to the nearest dollar for 2002 and 2003 using each of the following methods: (a) Straight—line method. (b) Unitsvof-production method, (c) Double~declining—balance method. 4 0f5 ACCT2101Quiz 5 PROBLEM 4. Equipment costing $165,000, on which $117,500 of up-to—date accumulated depreciation has been recorded, was disposed of on January 2 of the current year. What journal entries are required to record the equipment/5 disposal under each of the following unrelated assumptions? (1) The equipment was sold for $70,000 cash. (2) The equipment was sold for $33,500 cash. (3) The equipment was retired from service and hauled to the junkyard. No material was salvaged. (4) The equipment was completely destroyed in a fire. Cash of $75,000 is expected to be recovered from the insurance company. ACCTZJOJ Quiz5 50f5 ACCT 2101 Quiz #5 Solution Spring Semester, 2007 PROBLEM 1: The following purchases and sales for Noble Company are for April. There was no inventory on April 1. The sales price was $50 per unit for the entire month. PURCHASES Unit Units Cost April3 3,200 @ $33.00: $105,600 April 10 1,600 @ $34.00: 54,400 April 22 2,000 @ $35.00: 70,000 April 28 1&0 @ $36.00: 64800 Goods Available 8,600 $294,800 Ending Inventory = 8,600 —— 5,200 = 3,400 units (1) FIFO — Ending Inventory: 1,800 units @ $36 = $ 64,800 1,600 units @ $35 = 56 000 ,, a a 3,400 units $120,800 ” (2) LIFO — Ending Inventory: 3,200 units @ $33 = $ 105,600 200 units @ $34 = 6,800 g 3,400 units $112,400 t (3) Weighted~Average — Ending Inventory: April 6 April 12 April 25 Sales Goods Available 2 $294,800 / 8,600 units 2 $34279 per unit Ending Inventory = $34279 per unit * 3,400 units = 11 ACCT 2101 Quiz 5 Solution 49 1 of4 Units 1,500 1,400 21.3% 5,200 PROBLEM 2. (1) Compute the five-year average gross margin rate: 5251 (37.5% + 37.5% + 37.5% + 39.0% + 37.9%) / 5 = 37.88% a (2) Using the five-year average gross margin rate of 37.88%, the ending inventory can be estimated as follows: Merchandise Inventory, 1 / 1 / 06 $ 948,000 Purchases $ 4,588,800 2/ Less: Purchase Returns 28,800 if Net purchases 4,560,000 t 1““ Cost of goods available for sale $ 5,508,000 “:9” “ Less: Cost of goods sold (estimated): Net sales ($7,748,000 - $173,760) $ 7,574,240 Less: Estimated gross margin ta ($7,574,240 x 0.3788) 2,869,122 Estimated cost of goods sold 4,705,118 Estimated inventory, 7/31 / 06 § 802 ,882 ACCT 2101 Quiz 5 Solution 2 of4 PROBLEM 3. Cost of Asset = $1,870,000 + $15,000 + $110,000 = $1,995,000 (3) (b) (c) ACCT 2101 Quiz 5 Solution Straight-line method: 2002: ($1,995,000 - $75,000) / 8 years = $ 240,000 , 2003: ($1,995,000 — $75,000) / 8 years = $ 240,000 W ’5 Units—of—production method: Depreciation per unit: ($1,995,000 - $75,000) / 1,920,000 units 2 $1 per unit 426,000 units * $1 per unit = $426,000 1 320,000 units * $1 per unit = $320,000 4&2” 2002: 2003: Double—declining—balance method: DDB Rate: Straight-line rate = 1/8 = 12.5 % * 2 = 25% 2002: $1,995,000 * 25% = $498,750 ‘ 2003: ($1,995,000 - $498,750) * 25% = $374,063 30f4 PROBLEM 4. Equipment costing $165,000, on which $117,500 of up-to-date accumulated depreciation has been recorded, was disposed of on January 2 of the current year. What journal entries are required to record the equipment’s disposal under each of the following unrelated 165,000 22,500 165,000 165,000 assumptions? (1) The equipment was sold for $70,000 cash. (2) The equipment was sold for $33,500 cash. (3) The equipment was retired from service and hauled to the junkyard. No material was salvaged. (4) The equipment was completely destroyed in a fire. Cash of $75,000 is expected to be recovered from the insurance company. (1) Cash 70,000 Accumulated Depreciation — Equipment 117,500 Equipment Gain on Sale (Disposal) of Equipment (2) Cash 33,500 Accumulated Depreciation — Equipment 117,500 Loss on Sale (Disposal) of Equipment 14,000 Equipment (3) Accumulated Depreciation ~— Equipment 117,500 Loss on Retirement (Disposal) of Equipment 47,500 Equipment (4) Insurance Receivable 75,000 Accumulated Depreciation — Equipment 117 ,500 Equipment Gain on Destruction (Disposal) of Equipment ACCT 2101 Quiz 5 Solution 165,000 27,500 i ,1 ,1 5i“ i 5‘ g! 5" l ,5 E i l i a $3 )3, e E: {4?} 329‘ f" new 3‘ t if I rem/‘1, E 3 i i i i l i 5 t f i F i i l i} i if g f '5! 4 0 f 4 ...
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ACCT+2101+Quiz+5+Spr07 - ACCT 2101 Quiz #5 Spring Semester,...

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