Mgmt 200 Spring 2011 final sample review question solution

Mgmt 200 Spring 2011 final sample review question solution...

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Management 200 – Introductory Financial Accounting– Spring 2011 Krannert School of Management - Purdue University Practice Question on Aggressive/Conservative Accounting – Solution Accounting Choices: Maximus Minimus Corporation (MMC) commences operations on January 1, 2010. The owners contributed cash in return for 32,000 shares. The company imports redthings from Syria and runs them through a gamma machine that converts the redthings into bluethings which are then sold to American consumers. During 2010 MMC imported 3 shipments of redthings at increasing cost from Syria as follows: January 12, 2010 8,000 at $10 per unit $ 80,000 April 23, 2010 5,000 at $15 per unit 75,000 September 4, 2010 7,000 at $18 per unit 126,000 $281,000 During 2010 16,000 redthings were processed into bluethings and sold for $30 each. All sales were on credit. As at December 31, 2010 $400,000 cash had been collected from customers, the remaining $80,000 was still owed by customers. The gamma machine was purchased on January 2, 2010 at a cost of $240,000. The estimated economic life of the machine is between 12 to 15 years. The estimated residual value of the gamma machine at the end of its useful life is $0. Operating expenses except for cost of goods sold, depreciation expense, bad debt
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Mgmt 200 Spring 2011 final sample review question solution...

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