MBA800X14

# MBA800X14 - LastName |_|_|_|_|_|_|_|_|_|_|_|_| FirstName...

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Last Name | _ | _ | _ | _ | _ | _ | _ | _ | _ | _ | _ | _ | First Name | _ | _ | _ | _ | _ | _ | _ | _ | _ | _ | _ | _ | MBA 800 Exam I Summer 2007 Instructions: 1. Read each question carefully and answer fully.     All firms use a  calendar year. 2. Problems (other than multiple choice) not supported by relevant and  readable computations are subject to point loss.  Where appropriate,  terms like   A net income, @   A net loss, @   etc. must be included with  number answers. 3. Budget your time carefully.  It is generally better to finish half of each  problem than to complete all of half the problems.   Students who  continue to work on exams after instructed to stop will receive a zero  on this exam. 4. It is the student's responsibility to verify that all the listed problems  and   pages   are   contained   is   this   booklet.     Unanswered   questions  receive zero points regardless of reason. Problem Pages Approximate Points Approximate Time I 2-4 35 23 – 27 minutes II 5-6 25 16 – 19 minutes III 7 20 13 – 16 minutes IV 8-11 60 39 – 46 minutes Total 140 91 - 108 minutes

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Problem I The Marsden Company had the following balance sheet on 31 December 2006: Assets Liabilities Cash 5,000 \$ Wages Payable 1,000 \$ Accounts Receivable 8,000 Prepaid Insurance 2,000 Equities Equipment 20,000 Common Stock 9,000 Accumulated Depreciation (5,000) Retained Earnings 20,000 30,000 \$ 30,000 \$ Part A. Prepaid Insurance for a two-year policy purchased 31 Dec 2006. The following transactions occurred during 2007. REQUIRED: Record them in journal form 1 Jan. Sold all the Equipment for \$16,000. 1 Jan. Obtained new Equipment worth \$30,000 in exchange for a 3-year, \$30,000 note which requires the payment of interest at 8% p.a. with the first interest payment on 1 Jan 2008. The Equipment has a 10-year useful life and no salvage value. 11 Jan. Purchased inventory for \$10,000 on account. 21 Feb. Sold inventory originally costing \$6,000 for \$20,000 in cash. 23 March. Sold stock for \$4,000. 14 April. Paid \$8,000 on account. 2
21 May. Paid wages of \$4,000. 18 September. Paid \$1,000 cash dividend. 31 Dec. ADJUSTMENTS: Make all necessary adjustments given the facts above and those that follow. The only amount not yet paid in wages is \$800 for the latter part of the year. j. Make all closing entries. 3

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Part B. REQUIRED: Provide an income statement. Part C. REQUIRED: Provide a Cash Flow Statement using the indirect method. 4
The Wentworth Corporation has the following information regarding the balance sheets as shown on the following page. They paid dividends of \$4,500 in 2008. They also sold a piece of equipment for \$4,500 that originally cost \$8,000 and had accumulated depreciation of \$5,000 at the time of sale.

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MBA800X14 - LastName |_|_|_|_|_|_|_|_|_|_|_|_| FirstName...

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