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Exam 2 B (2) - Pagez AC6 3 F112006Em11 Fm a 100 one cost of...

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Unformatted text preview: Pagez AC6 3% F112006Em11 Fm a. 100 one cost of ~ p::. -f .-$4S0,000.~1 . -".-"$4"10000 .. 3.5430 000 ..--T”"$420000 _ ' "_--,None oftheg ' Page 3, ACC 311, Fall 2006, Exam 11. Form B R 6. Sheffield Company had the following information taken from its 2006 adjusted trial baiance: Sales, $400, 000; Sales Discounts, $12, 000; Beginning Inventory, $20, 000; and Purchases, $200, 000 A physical count of the merchandise on hand at the end of the year showed $25,000. Compute the gross margin (gross WWW income statement. . €4,005 Pet/(41,515,, 400, EDD 9E 220 000 A) $162,000. I - . 55:» 55.555 01005;)? 9 100,505 B) -9$180,'00‘0. ' ‘ ” ' i510 020105 500000) [5555 22,0005) Cg) - $193,000. - «E0 15’ '3am ) - $205,000. 555 ' 1.55 _. 5 5 7. The records of Bartley Company showed the following about a machine on January 1, 2006: , Purchased 1/1/2003 for $50, 000 Accumulated depreciation at January 1, 2006, $32, 2600? g c On July I, 2006, the machine was sold for $12,000. 5preciation for the first six months of 2006 was $2,400. The gain or loss on disposal would be A) $3,000 gain. Wm WOO - 13 $5,400 gain. , mp 7:650 0 $3,000 loss. £033 '$00 0 ) $5,400 loss. 5 .3, 5,»: {We 55% E) None of the above is correct; Maw 55:) 0" ”if”! M 4% 8. When a credit sale is made with teens of 2/10,- net 30 on May 10 and the customer' s 1 check is received on May 19, which of the following IS true about the May 19 journal 05 enn'y" / ,2 ,0 5w £5? The debit to cash wilt equal the credit to accounts receivable because the discount _ a was recorded on May 10. 51;.“ I I , There will be a debit to sales discounts 0 May X0 .. i- f ‘ . The debit to cash will be less than the credit to accounts receivable on May 19/ ,0)" There will be a Gift to sales discounts on May 19 r“ aw i: /E‘)’ None of the abov are true , 5.2:”. W ' 9. five. There was no change in the estimated residual vaiue. What IS the amount of do epreciation that Augie should record for year 3 under the straightulinc method?“ A) $15, 500. L90 ODD-e- 55%wa .... w B) $8,250. 5: .5 “DOD WW :7 j if .. $11,000. J, E. i; W $16,500. Nth (7.55} _ 55,, E) $19,000. 28,00 0 2.... WE I III 2.2, 00:0 M155 fiffi if testified??? @Wmflaw 10. 11. 12. 13. i Page 4 ACC 311 Fall 2006 Exam II Form B E #5:?" {133 Alexander Company reported net mcome in 2006 of $250, 000 and in 2007 of $285, 000. ,L. ‘ Later it was discovered that the ending inventory for_2006 was overstated by $15, 000, but " ending inventory was correctly reported for 2007. Disregard income taxes.- The correct mounts 0f net income for 2006 and 2007 were “we. ceases gal 5%. W2 .LQLQQ 2007 P35 ‘ 43 {53W LL; LL $265 000 $270 000 . . . V as $235, coo $300, 0110. was scenes 51; ' ° ~ - 4‘ a LLLLLL 51 ' L. ‘1 U955 °5°°°° 1 W" ‘" tiff: 4‘ a? :5»LoLL w b? we M mooseewo WM faggout‘} LLL LL As of December 31, Chief Company has a balance of $10, 000 111 accounts receivable of which $1, 000 15 overdue Chief has a credit balance of $1 00 in the allowance for doubtful accounts. Chief estimates its-had debts losses at 1% of accounts not yet due and 10% of accounts pverdne. What adjnsnnent should Chief make to the allowance for don " amms? LavalQ 1003 " ‘ ' '90 515 Q ELL-L: A). $120(czeda)wtrfYBT””°‘® °Lm 5 510 am. was B . $105 (credit) M LLLLL LLLL» s 90 (credit). I 01 0 LL 1)) $100 (credit). E) None, the current balance is correct. A company reports its cost of goods sold as $15.0 billion in 2006. It has $2.9 billion in Mm inventory and reports accounts payable at $1.2 billion at the end of 2006. The 2005 ending mventory was reported at $3.1 billion and ending accounts payable was $1.4 billion. Assume all inventory was purchased on account, and accounts payable anse only from purchases of inventory. How Inuch cash was paid to suppliers for 2006? A) $14. 8 billion @ $15.0 billion ) $15.2 billion 1)) $15.7 bfllion . -- E) {_ Noni? of the above I , ’2, Which of the following statements is ttu__e? all. . 75 15W . 1. Depreciation expense is added to net income in the oEerating activation section of the statement of cash flows under the indirect method because it had no cash efi‘ect on net income. Depreciation 1s a non«eash expense that reduces net income but involves no outflow of cash; The only cash effect for depreciation is the tax savings provided by its deduction to derive taxable' income . All of the above are true. None of the above is true. Page 5, ACC 311, Fall 2006, Exam II, Form B 14. On January 1, 2009, Woodstock, Inc. ,purchased a machine witha cash Brice of $40,000 WoodstOck also paid $1,000 for transportation and installation. The expected useful life of the machine 13 6 gears an e residual value is $5, 000. Assuming Straight-line - depreciation, the annual depreciation expense would be ' A. $6,100. __ 0 G? $6,000. 43000 500 w " $5,950. m D) $5,750. E) None of the above is correct. l5. The Walt Disney Company reported revenue of 8%1111111011 for 3004, all of which represent credit sales. Their accounts receivable balance was $5, 330 million at the end of 2004 and $4, 912 million at the end of 2003 Assuming no accounts were written-off cash collected from customers edhals PPR % W, ,0 X .,. $3335 A) $25,013 million ' ' ' ‘ W35 04. ,3: 32,019 - ‘B ' - $28,926 million M _ WM”. $30,334 million “We 43? 0 9’35- None of the above Use the followin to answer uestions 16 and 17: A company had net credit sales of $5 0 million for the year and estimates its bad debts to be 1% . of net credit sales. The accountant for the company is thinking about switching to the wof accounts receivable method and after preparing the aging schedule, the estimate equals 848, 000. ‘2500 00 Accounts receivable has a $450, 000 balance and the allowance for doubtful accounts has a credit balance of $3, 000 prior to adjustment 16. What will be the endm_ bal e m the allowance for doubtful accounts fiel- erthe accounts- ' have been adjusted when theifnet credit sales method was used? ' ,- . $53, 000. .. ., . 13) $47, 000. Fab .-_« 1; C) $48,000. Cgfimo 1500 V40) D) $50,000. 17. What is the net realizable value of accounts receivable after adjustment when the aging of accounts receivable method IS used? ~ ’ ‘ $402,000. . ,_ Q ‘ ,. 400307033 $403,000. 4901999 03/ 43- 000 C) $397,000. ,9, 00 if“? 13) $400,000. 17, 3-0 M E) $450,000. Page 6.ACC311,F0112006 Exam HfimB 18. The repair was accounted for correctly. Pl]? % Q/ The error increased assets and net income in 2007. NV? In the years following 2007, net income will be too high. ‘ The error decreased net income in 2007. Qi'l‘ - Net income was correctly stated for 2007. ' 19. Which of the following is the most likely cause of a decrease in a company’s gross profit percentage? r . .. bPP: W @ The company discounted its selling prices. Nd gm 3) The company reduced its product cost as a percentage of sales. if : % The company reduced its operating costs. Nil” WSW 4,9” Both B and C caused the change in gross profit percentage. i 3 p137. None of the above would have caused the change 21? $53-$50 20. Depletion is recorded for natural resources M to recognize increases in rnairket value with the passage of time. @ to recognize the cost of resources extracted and depletion of the remaining resources M and for buildings and equipment used in extracting the resource. («Bf by a method similar to dcclining balance depreciation. E) - None of the above is correct. 21. Which of the following statements is fal_____s_._e? Sales returns and allowances are always treated as a contra- revenue. Sales returns and allowances, sales discounts and credit card discounts are always treated as selling expenses. ’3'), Credit card discounts and sales discounts cause cash coilected from sales to be less than sales revenues - ,4?” Sales discounts are used to encourage early payment by customers. 22. Which of the following statements is true? f ' [6 All intangible assets are amortized over their useful lives boofiwfifi M The research and development costs connected to developing a product, which is later patented are capitalized to the patent account. @ If an intangible asset-has an indefinite life, it is not amortized but istested annually to determine any impairment. )3)” All of the aboveare trust-f ‘ * ’EX None of the above is true. ”)t Page 7. ACC 311. 152211 2006, Exam 11. Form B . 2.25% we 23. Under the LIFO cost flow assumption during a period of in tin which of the following is flag? 2 5 J i Q MA Cost of goods sold will be Iowa-than under FIFO. m M «33 L F0 Gross margin 2251 be lower than under 51:50. LOb§ ’1“ Income tax expense will be lower than under FIFO. E1 \V m Ending inventory will be lower than under FIFO. R All of the above are true. Ni \i’ 45%? Use the following to answer questions 24 and 25: cyclone Co. uses. the pen enodic inventory system. The following information about their inventory of Model XX Mountain Bicycles 1s available: we Transaction Number of Units Cost per Unit ‘ lll- " "Beginning Inventory 50 _ $800 :51“ 40 £399 24/12 Purchase 2255:. 80 2 $820 .2 @6000 7/8 Purchase 75 ’ $84.0 : [0%5300 9/22 Purchase . 90 2 $850 ; “105% 053‘ 0 During the year 23 b 33:32 Jareas ’13? $1 500 each. Other opmngigiggunw $80,000 and their tax rate is 30%. Rmmd final answers to the nearest dollar. C. .~ 5235530022- 22 . 2;, 222 5,52 25: “2 c.5552 5— 55222252525 24. How much 1s gross margin @2053 profit) under the FIF_Q_ method for the year ended ”’31" Long :50 @500 40000 71375 00535552 A) $155,600 3250 @ 5550: 22521250 . 6WD B $157,251 (é $158,400 7 6 (2.5;? 05,0523 5:555 222525 . '''' D) Noneoftheabove. $0 ‘- “ .. 22%651 2-2. 2 2225.2. 205W: 3:057 1‘35 H47! 00"“ 7,120,000 25. How much is income tax expense under the LIFO method as of 12/31? ..—-., fl) $22,680 a 523,520 C) 523,175 D) None of the above. 8 909 2 95.255555 2 (/0 0% (9? 0€ 0! D 25 5552 27225222 {0 @375 =55: (0084 1 6 @3934} awgtlofl %[email protected] :fi: ' 7 025555 97400 4‘ ‘5' "2.55 72:75 \ C1 @475 00 C, 05—5, ._ _ Page 8,_ ACC 311, Fall 2006, Exam 11, Form B Problem 1_ (15 points) On December 31, 2006, Colonial. Corporation had the following account balaiaces related to credit sales and receivables prior to recording adjusting entries: if; 1 fing Accounts receivable " $ 25,000 Allowance for doubtful accounts 200 (credit) Mfiiw _ Sales revenue (all credit sales) 400,000 .- EM %ngfi _ ‘ Regain-.0: .w , enema . i Present'the neces'SarY'year-enf’j sting em .l‘ lated to uncollectible accounts for each ‘ ..-*I"~*“‘_“"“‘““"L .M' w " M £3 ‘Alf “Aq‘gthAflhe following independent ‘IW‘W -. one: W fiflpg 531547?” A. fflf accounts receivable is completed. It is estirmted that $2,150 of the r ' es outstanding at ycmmd will be unooilectible. B. It is estiinated that WM: for the year will prove to be ’ e. .0040an ~ - ' C. Assume the same information presented in (A) above except that prior to adjustment, 1; ‘_ ‘ .3; 2M" 5U the AllowanCe for Doubtful Accounts actually had a debit balance of $200 rather M if ' W than a credit balance of $200. ‘ ‘ ' at) ”3‘50 Page 9, ACC 311. Fall 2006, Exam II, Form B 1.5g Problem 2 (18 points) ' " The inventory records of Marin Corporation reflected the following information for the month of August: E?! 400 Q) 6 1.: W0 Date Transaction Units Unit Cost W W @T’ 5%; 7‘ "LOGO 2;: Begmmng Inventory 400 $5 -' Pi #3635 Q Y .-. 7 000 fig 2 M two 25:03 “ 10m 8/17 bob 1% 4m 7/8800 8/19 8/21 8/28 8/29 The selling price for ail units sold was $21. M _ w 00 @ M “ ’L $19 $0 agafla get/mete Reg nil-ed: (Y on Must Show Your Computahons to Receive Credit)- Determine the amount of the endmg inventory, cost of goods sold and gt;oss profit under each of , the following methods assfiming the periodic inventory system: ,W Method Invento Cost of Goods Sold Gross Profit Weighted—Average E 0031? [8:110 Elm/O FIFO [LLQQ “meg iLOQD LIFO M WW?” it‘d ; . ”Koo m 48%- W "1 foot” I o “ g “‘2 : t 409;”? 1’ 0" fl 4 73% 2 ”’90 Q “the? 1000 - W “D e“ : eta/Jo We 171/00 - Page 10, ACC 311, Fall 2006, Exam II, Form B Problem 3 (1'7 points) Covey Company purchased a machine on January 2, 2007, by paying cash of $250, 000. The machine has an estimated use e of five years (or the production of 500, 000 units) anti an estimated residual value 9 f“ i - Reguir (Y on Must Show Your Computations and Box Your Answers to Receive Credit) A. Determine depreciation expense (to the nearest dollar) for each year of the machine' s useful life under (a). sh‘aight—line depreciation and the (b). the double declining balance method. a) 7,60 Dm 26060 ., ' W” fix” ’Loo‘l ... A” (190 00m) _. 10000:; up???“ (ea in em [05600 {50000 meme 6-0 we 4079-.4‘CUu/fi e053 :- ' mew 6+eeo @@W?MC+ L‘té’léom’f‘iww‘)“ Nmme @‘is’ to“ =4fiawa+e¢ate003= WY _ 1,6000 empgag B. What IS the book value of the machine - " .gjg p )1}th pg declininga balance method? C. What IS the book value of the machinery after three years with straight-line depreciation? mm %©©D a $5} {jg “. D. If the machine was used toproduce and sell 120,000 units in 2007, what wank! the depreciation expense be under the units of production method? )( 161)er “ 160% 9.300 GQO ...
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