Exam #1 B - Exam #: Fundamentals of Financial Accounting...

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Unformatted text preview: Exam #: Fundamentals of Financial Accounting ACC 311 F all 2008 2/ 7 Exam I, Form B Instructor gamers Section Meeting Time . “KAM UV ' ————————————————————————————————————— "i l w no NOT OPEN : until given instructions to do so. i r r .- Instructions 1. Assume that the accrual basis of accounting applies to all questions, unless a question specifically instructs otherwise. 2. Confirm that you have 13 numbered pages. There are also two blank sheets of paper at the end of the exam that you may use for scratch paper. 3. On your Scantron answer sheet, write and bubble in your name, section number, and the Test Form letter noted above. 4. Use a #2 pencil only to mark your responses on your scantron answer sheet. Mark clearly and erase completely as needed. You should also mark your answers on your exam. However, oniy multiple choice answers marked on your Scantron answer sheet will be graded. 5. Multipie choice questions are 2 points each; all other questions have their point value noted with the probiern. 6. Cell phones, PDA's and calculators capable of storing text are NOT allowed at your desk during the exam. Please silence all cell phones and do not access them during the exam. 7. Bring your entire exam, Scantron answer sheet and student 11) to the front of the room when you have finished. 8. You are reminded of the University’s honor policy which requires you do your own work and . not give or receive assistance on this exam. Acc 31 l — Exam I Form B — Page 2 Fall 2008 6. Which of the following statements about stockholders' equity is not correct? A. Stockhoiders’ equity is the shareholders’ residual interest in the company resulting from the difference in assets and liabilities. T B. Stockholders’ equity accounts are increased with credits. F© Stockholders’ equity results only from contributions of the owners. ’1" D. The purchase of land for cash has no effect on stockholders’ equity. 7. Grand Corporation had a'beginning balance in its Prepaid Rent account of $100,000. The ending balance in the account was zero. During the year, the company paid $400,000 in cash to it’s landlord for rent. At the end of the year, the balance in its Rent Payable account was $100,000 (the beginning balance had been zero). How much shouid the company recognize as Rent 9e44- Pagan ixpltjgofggghe Year. a, V4,”? 4% gym-a} my a too'om ‘ ’ Q L M \gggachw Crank. “its-throne «me C, $550,000 _ 8' p 71d“ w a. a. _. y pianos.» “333) amt} ' I I I r r. .7 V r i It \" W :4 ‘t F ‘ “is. $700,000 0 a, an. 8. On January 1, 2007, the ledger of Globai Corporation correctly showed suppiies inventory of $1,000. During 2007, supplies purchases amounted to $5,000. A physical count of inventory on hand at December 31, 2007, showed $1,200. The 2007 income statement should report supplies expense amounting to xflwm A. $ 6,000. nga $ 5,200. H‘s‘cma -j 33 4,800. " s 1,000. M" The revenue principle requires four Conditions to be met. Which of the following is one of the four I conditions? WWW «as; .W /e(: The customer has paid for the goods or services. M ,q :3 - Delivery of goods or performance of servrce has occurred or is sphedtlgdrto/oce r. " The price is fixed or determinable. W W The customer has signed a contract. emulated depreggation account at the end of the to. Both the _a_i ioxsount and the . first year of operations ' " "' " are ciosed. @ have balances in an adjusted trial balance prepared after the adjusting entries but before the closing entries. ,3 are not closed at the end of the accounting period. D. have balances in a trial balance prepared prior to the adjusting and closing entries. Acc 3| 1 v Exam I Form B — Page 4 Fail 2008 rate 16. Which of the following effects on the accounting equation is not possible in ajournal entry? Increase a liability and decrease an asset. Win—ma fingered... sea. Increase stockholders' equity and increase an asset. ‘ .3th I’M“ W” e . Increase an asset and decrease an asset. ' \ fl Decrease stockholders’ equity and decrease an asset. 17. Shari started a computer software firm by investing 35 16,000 of her own money. She spent 3/4 of it on fumitnre, fixtures, and operating supplies for the business. After borrowing $12,000 from First National Bank, she spent T/"fitmé'srznoe on computer hardware. At this point, what balances should be recorded in her accounting system for total assets and total expenses? , Total Assets Total Expenses A A. $28,000 . $16,000 TE}, s w B. $12,000 $ 16,000 i at.» n a» $16,000 -0" .. _ . . Memes“ $28,000 -0.- 999mb!” ‘10 19* flaw-es m A 18. Which of the following would most likely lead to a deferral adjustment? ‘ E. None of the above is correct A. Wages payabie B. income taxes payable e“ Unearned revenue D. Interest expense l9. Adjusting entries always include the cash account . usualiy are recorded as of the first day of the accounting period a usually change at least one income statement account balance and one balance sheet account balance ,fi. are prepared after closing entries M 20. A calendar year reporting company preparing its annual financial statements should use the phrase "At December 3 i, 2009" in the heading of X all of the required financial statements it prepares. - . none of the required financial statements it prepares. the income statement and balance sheet, but not the statement of cash fiows. the balance sheet 0813/» if»; . ,. 21. A company receives a $50,000 cash deposit fromacustgmmer on October 15 but will not deliver mM_W-mww. . the goods untii November 20; Which of the following statements is true? fl Cash will be reported on the statement of cash flows for the month of November Revenue wili be recorded and reported on the income statement for October @ A liability will be reported on the balance sheet at the end of October XE”? A prepaid asset will be reported on the balance sheet at the end of October, Ace 3| 1 ~ Exam 1 Form B - Page 6 Fall 2008 SECTION Ii (50 points) You MUST show your work to receive credit for your answers and to receive partial credit. Please try to' be as neat and organized as possible. PROBLEM l (19 points) Campus T-Shirt Corporation is a company that designs, manufactures, and retails a collection of t-shirts centered around campus life and sports. They sell to individuals (accepting cash only) and to department stores that are allowed to pay on account (with accounts receivable). Below is their December 31, 2007, balance sheet. Campus T—Shirt Corporation Balance Sheet As of December 31, 2007 Liabilities and Edit : Cash $ 25,000 Accounts a able 3% 9,000 Accounts receivable 15,000 Waes a able 5,000 Inventor 27,000 Unearned Revenue 15,000 Su lies 8,000 Total current liabilities 29,000 Total Current Assets 75,000 Bank loan 20,000 Total liabilities 49,000 ' - 28,000 Retained eamin 5 Total stockholders’ euit 98,000 Total assets 35 147,000 Total liabilities and euit , $147,000 Write journal entries (in good form) for the foliowing transactions and facts applying to Ianuary 2008: 1. Qn January 2”, 2008 Campus T—Shirt collected $5,000 in cash from a large department store for a purchase mane“ 5y that department store back in December of 2007. “W4 ACCOUNTS DEB IT CREDIT awake ! Ammkfi Wits! new Ace 3! i - Exam I Form B - Page 7 Fail 2008 2. Campus T—Shirt purchased x‘Smtfgpwpfliges_or) Januar 7‘”. 2008. The suppiies will be used over the next few months. Campus paid $4,000. in cash aud promised to pay the remainder in 30 days. 3. On January 13‘“, Campus T-Shirt sold 10 shirts for $10 each to an individual who paid cash. The cost of the shirts to Campus T~Shirt was $5.00 per shirt. ACCOUNTS DEBIT CREDIT {gnaw ' 7 was ' i eta 4. On January 15‘", Campus T-Shirt paid its employees the wages payable from the beginning of the year and $1_5fi,9_9,0mipnagiditioaai wages for work performed during J ahuary 2008. . CREDIT 5. On January 20“, Campus TuShirt received a deposit of $10,000 from the Internet T-Shirt Wt-nwm-nmuwm Corporation for 1,000 T-shirts that wili be manufactured and deiivered duiififii’imnd week w‘t'i‘mmy i.- o e rung Thebost of the shirts to Campus T-Shirt was $5.00 per‘shirt. ACCOUNTS DEB 1T CREDIT ’5 he” ease Ace 31 i ~ Exam I Form B ~ Page 8 Fall 2008 6. On January 23"}. Campus T~Shirt paid State Farm insurance $3.000. This cash payment represented auto insurance coverage for the period from February 1““. 2008 to April 30'“. 2008 (three months). ' 7. On January 30'“, Campus T-Shirt purchased $1Wmflzsnmflfigory and will pay for the inventory in 60 days. The company hopes to sell this entire stock of new inventory in February. ACCOUNTS DEB IT CREDIT Amumw 9a. «5% Ace 31 I « Exam I Form B n Page 9 Fail 2008 PROBLEM 2 {14 points) Texas Catering Company is at its accounting month—end. June 30'“. 2008. Ail of the June 2008 entries have been completed except the necessary adjusting entries. in good form prepare the adjusting iournal entries that wouid be required on June 30"I 2008 for the activities listed. If an adjusting entry is not required, please state “NO ENTRY NEEDED”. Do not prepare closing entries. CONSIDER ON LY THE FACTS AND INFORMATION GIVEN IN THIS PROBLEM. June 30, 2008 Unadjusted Triak Baiance Account Titles m- $ 22,250 —; Accounts receivable _ ' Preaid Rent 8,000 _ Su ties 3,250 -_ Euiment H 59 [Q {)1 C 1. On January 1’“, 2007, the Texas Catering Company had purchased $200,000 worth of catering equipment to start their business. Record $2000 of depreciation for June. - DEB IT CREDIT Ace 3| I — Exam I Form B - Page 10 Fat! 2008 2. At the end of fame 2008 there was $1,100 worth of Supplies on hand. 4. In May of 2008, Texas Catering received $19000 to cater a iarge event on June 25th and made the appropriate entry at that time. Texas Catering Company catered that event and fulfilled all their ebiigations to the company that hired them. ACCOUNTS 5. On June 29‘”, 2008 Texas Catering Company catered an evening wedding for a locai ceIebrity. The $17,500 bill was payable in 60 days. No cash was coltected and no ja . w a. e '1'“ A ‘2 ..1 ' DEBIT CREDIT Ace 3! l » Exam I Form B ~ Page 3 I Fall 2008 6. Several months ago Texas Catering borrowed $10,000 from a local bank. Interest is payable «Mammwww—uwmmmflw ' monthly. On June 30‘“. 2008 Texas Catering had not received a Statement from the bank but estimated they owed $75 for interest. 7. On June 28‘“, 2008 Texas Catering hired a new employee at $60,000 a gear to manage catering events. Her official start date is Julx 5m, 2008. the)? 35% am, 1996! Ne? M Pajmtt W : DEBIT l CREDIT Ace 31 l - Exam I Form B ~ Page 12 Fall 2008 PROBLEM 3 (17 points) Below are the balance sheets of Hercules Company as of December 31, 2008 and 2009. On the following page are Hercules Company’s income statement for 2009 and it’s partially~c0mpleted statement of cash flows. [Assumptions and requirements follow the balance sheets.) Assets I 2008 2009 Current: Assets: ; s 0%,, Cash $27,000 $39,000 “Mam-l é; Accounts Receivable 59,250 59,700 $3ng Q m Merchandise Inventory 112,050 101,250 {39655093 } Q it” Total current assets 198,300 199,950 '3 Nonwcurrent assets: M, Buildings and equipment 199,500 287,250 Fflljmrffllgé'a 1 «h ) W Accumulated depreciation (9,750) (14,700) {$62000 g £3 ‘0” Land 33, 000 108, 000 3;.» a W” Total Assets $421,050 $580,500 Liabilities and Stockholders’ Equity WWW 5 Current liabilities: Accounts Payable $18,300 $4,650 (lgfimmghl Q i w Wages and Salaries Payable 23,400 11,850 a w Income taxes payable 2,550 3,000 “fligfi Q3 0‘ Total current liabilities 44,250 19,500 Noncurrent: liabilities: W Notes payable - noncurrent 0 105,000 gvfiéwfifl l'w‘ J?" Total liabilities m Stockholders' Equity M Common Stock 300,000 375,000 00,009 $0- ll“ Retained Earnings 76,800 81,000 Total stockholders' equity W Total liabilities and stockholders’ equity "WW {'5 Asmmptmm‘ Tassels s 02.0% e No buildings and equipment or land were disposed of during 2009. No common stock was bought back from shareholders. Requirements: 1. Complete the statement of cash flows on the following page. 2. Explain why there is an adjustment for accounts receivable in the operations section of the cash" {fig flow statement. Be specific about what happened to Hercules‘ cash flows in 2009. (1:7) “Sense. ans-Lambs moeivesws Increase-Ix 5m. 7/000, ass is use ease; Wmfi messes»... ts. ii» is $04M, 0% as immmfi. __ “l- Miss...» 00,. as am esteem Ls, ssmmae ‘ mg, Mg, «half was sols Fatal» g9", Am3H—Emml meB—Pfiew RMZWB Sales xevenue ' 7 -$37 .300. Cost of goods sold 102,000 Gross profit $69,300 Expenses: Wages and Salaries expense 15,150 Depreciation expense 4,950 Interest expense 2,550 Income taxes expense 15,500 Insurance expense 4,200 Total expenses (42,350) Net Income $26,950 i“? “Wu #6113“? Wsemdme :13: Wflfi . Akfi%£Mem%§ Phflhh%k%; ‘ my, em.) eff ’- ewe» mleee December 31, 2008 cash balance ““Efiffififlh December 31, 2009 cash balance “$98, ...
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This note was uploaded on 03/03/2011 for the course ACC 311 taught by Professor Charrier during the Spring '08 term at University of Texas at Austin.

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Exam #1 B - Exam #: Fundamentals of Financial Accounting...

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