Midterm-Spring-2002 - '-.m-—.—_., gem-mums BNIVERSIT...

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Unformatted text preview: '-.m-—.—_., gem-mums BNIVERSIT LIBRARY UF HEIRUT American University of Beirut School of Business ACCT 210 _,_*_wm Midterm Exam will {Jul}: 1% Y . Spring 2001-2002 mm April 24, 2002 d...— Namah ID eke— Section: I instructor: . Time: 2 Hours The exam contains 5 questions, make sure you answer them all, Show all supporting computations! Good Buck! mfl-imns‘rxweasn _/ . .7 l L I n R A R Y \ , --n-' mamm f I t/j ii "" ’1 l. i . ‘ f .1 Question 1: gZSpoints, 25 min; f“ y" l/l/t Circle the correct answer for'each of the following: q 1.Mike Rodgers, owner of Mike’s Taco Barn, also owns a personal residence that cost $130,000, but has a market value of $250,000. During preparation of the financial statements for Mike’s Taco Earn, the accounting principle most relevant to the presentation of Mike‘s home is: , The concept of the business entity. The cost principle. c The going-concern assumption. d The objectivity principle. 2.Rolling Acres Development Corporation recently sold a parcel of land for $50,000 more than its cost. This transaction: a Increased assets and liabilities. , (1)9 Increased stockholder‘s equity and assets. / c Reduced assets and stockholder’s equity. (1 increased assets and left liabilities and stockholder’s equity 3.MicroDevices sold and delivered modems to Dale Computers for $360,000 to be paid by Dale in three equal installments over the next three months. The journal entry l‘nndc by Nlicro Devices to record this transaction will inr‘lllde: at A debit to Sales Revenue for $360,000. / Cb; A debit to Accounts Receivable for $360,000. V’ c A debit to Accounts Receivable for $120,000. (1 A debit to Cash Due for $360,000. 4.Video Connection offered books of video rental coupons to its patrons at $30 per book. Each book contained a certain number of coupons for video rentals. During the current period 1,000 books were sold for $30,000, and this amount was credited to Unearned Rental Revenue. At the end of the period it was determined that $10,000 worth of book coupons had been used by customers to rent videos. The appropriate adjusting entry at the end of the period would be: a Debit Rental Revenue $20,000 and credit Unearned Rental Revenue $20,000. ‘ 1) Debit Rental Revenue $10,000 and credit Unearned Rental / Revenue $10,000. c Debit Unearned Rental Revenue $20,000 and credit Rental Revenue $20,000. (51) Debit Unearned Rental Revenue $10,000 and credit Rental Revenue $10,000. Use the following data for questions 5 through 7. Towne Electronics Co. uses a perpetual inventory system. The company’s beginning inventory of a particular style of large screen televisions and its purchases during the month of January were as follows: Quantity Unit Cost Total Beginning inventory (Jan. 1) ............. .. 40 $200 $8,000 Purchase (Jan. ‘12) ........................... .. 20 221 4,420 Purchase (Jan. 28) ........................... .. E 158 1,580 Total ...................................... .. E M On January 15, Towne Electronics Co. held its annual Super Bowl Large Screen TV Sale Day. On this day 55 of these televisions were sold. The remaining 15 units above remain in inventory at January 31. a _ gottui £5 E ¥ a :3 5.Refer to the above data. Assuming that Towne Electronics uses the LIFO flow assumption, the cost of goods sold to be recorded at January 15 is: 6!) $11,420. ’F' b $11,000. L// c $11,315. d Some other amount. 6.Refer to the above data. Assuming that Towne Electronics uses the average cost flow assumption, the cost of goods sold to be recorded at January 15 is: ./ $11,385. L/’ 0 $11,000. c $1 1,315. (1 Some other amount. 7.Refer to the above data. Assuming that Towne Electronics uses the periodic inventory system and the LIFO flow assumption, the value of its ending inventory of this television set will be: a $2,580. b $2,685. 0‘ $3,000. O\ Some other amount. Use the following data for question 8. At year-end, the perpetual inventory records of Ward Products indicate 105 units of a particular product Wow, acquired at the following dates and unit costs: Acquisition Date Quantity Unit Cost Total May 3 ................................................................. .. 45 $22 $ 990 Sept. 9 ............................................................... .. fig 36 2,160 Total on hand .................................................... .. 1& $3,159 However, a complete physical inventory taken at year—end indicates only 95 units of this product actually are on hand. 8.Determine the dollar amount of the shrinkage loss assuming that Ward uses A LIFO flow assumption. 1 $360 - ,3“; $220 / ' c. $630 1/ d. $210 9.The entry to record depreciation expense is an example of: a“ A closing entry. Q3; An adjusting entry. c Cash basis accounting. d A reduction in ow'ner’s equity that does not affect the ‘/ computation of net income for the period. l0. In which of the following situations would an adjusting entry be made at the end of January to accrue an unpaid expense? in Ali’s Daycare purchased playground equipment on January I with an estimated useful life of six years. \0 in On January 25, Ali’s Daycare hired a college student to drive the minibus;'the new employee is to begin work in February. / © January 3] falls on a Tuesday; salaries are paid on Friday of ./ ‘ .‘ each week. 0 2 «1/1 on January 31, Ali’s Daycare paid the interest OWed on a note 3: payable for January. i i ‘3 71' / Question 2: g ZDQoints, 30 min! it On May 15, Garth Taylor began a new business, called Studio Uno—a recording studio to be rented out to artists on an hourly or daily basis. The following six transactions were completed by the business during May: 11 issued to Taylor 8,000 shares of capital stock in exchange for his investment of $40,000 cash. b Purchased land and a building for $135,000, paying $20,000 cash and signing a note payable for the balance. The land was considered to be worth $90,000 and the building $45,000. c Installed special insulation and soundproofing throughout most of the building at a cost of $20,000. Paid $5,000 cash and agreed to pay the balance in 60 days. Taylor considers these items to be additional costs of the building. (I Purchased office furnishings costing $5,400 and recording equipment costing $23,100 from Total Warehouse. Paid $8,000 cash, with the balance due in 30 days. e Borrowed $35,000 from a bank by signing a note payable. f Paid the full amount of the liability to Total Warehouse arising from the purchases in (1 above. Instructions 1. Post the above transactions directly in the T accounts below. Identify each entry in a T account with the letter shown for the transaction. This exercise does not call for the use of ajournal. Cash Office Furnishings Notes Payable B_DDOOO d-S‘JOO {coo C-YoQo d-%ooo S— Dogma F) lJoo Accounts Payable Question 3 : 130 points 30min1 Yankee Company uses amnventory system an_c_ifl§Q_for the valuation of its inventory, and the net cost d . Beginning Inventory on Oct 1, 2002 consisted of two layers: the earliest layer of 235 units at $35/unit and second layer of 250 units at $37/unit. Yankee Company engaged in the following transactions in October: Round all numbers to the nearest dollar. (No Decimals). Oct 7 8 Sold 245 units at a price of $40/unit on credit to Boris Land X: Purchased 300 units at a cost otiS39/unit on credit from Hilton Company, terms; 2/10, n/30. ‘ Purchased 200 units for $7,800 cash from Main Company Sold 300 units to Sue Martin on credit at a price of $45/unit. Returned 100 units of damaged merchandise received from Hilton Company on Oct 8 for credit. Received check from Boris Land for his purchase of Oct 7. Sold 225 units for $1 1,250 cash Paid Hilton Company the balance from transactions of Oct 8 and Oct 14 Instructions: 1. Prepare journal entries to record the above transactions£ omit explanations). General Journal Date Dscritions Debit Credit 2. Post [0 the inventory subsidiary ledger below: (\xjo 8 3am. {LL f...— 1 ._ —m \ \ \ . \ i, _ . . h ’t Question 4:;2090mts,30mm1 / J I .,../ Forum Consulting adjusts its'books each month and closes its books at the end of the year. The trial balance at January 31, 2001, before adjustments is as follows: Debit Credit Cash .................................................................................... .. $ 44,050 Accounts Receivable ........................................................... .. 30,000 Supplies .............................................................................. 3,750 Prepaid Advertising ............................................................. .. 8,400 Equipment ........................................................................... .. 72,000 Accumulated Depreciation: Equipment ............................... .. Unearned Consulting Fees ................................................. .. Income Taxes Payable ........................................................ .. Capital Stock ....................................................................... .. Retained Earnings ............................................................... .. Consulting Fees Earned ...................................................... .. Salaries Expense ................................................................ .. 32,000 Utilities Expense .................................................................. .. 1,200 Rent Expense ...................................................................... .. 4,500 MW The following information reiates to month-end adjustments: a According to contracts, consulting fees received in advancc that were earned in January total $ 1 21,000. On November 1. 2000, the company paid in advance for 6 months’ advertising in professionaljournals. ' ' At January'3 l, supplies on hand amount to $1 ,250. The equipment has an original estimated useful life of 6 years. The corporation is subject to income taxes of 40% of taxable income. (Assume taxable income is the same as “income before taxes”) Instructions: 1 Prepare adjusting entries for the above a through c. General Journal 2 After the proper adjusting entry is made, determine the balance in theUnearned Consuiting Fees account at January 31? $ S Q Q / r t f b m ' \3‘ t I 1 3300 "14303) 3 Compute the amount to be reported in the January income sta tement for th " \ .‘ following: Advertising Expense ) SuppliesExpcnse S 3. “So 3 i 14 What is the book value of the equipment at Janu .- .r.) i 3' L k my 31 after the proper adjusting entry is recorded I» ,7 .\ , v F " n, - I it I '\ ’ Fm- UW‘ ' \Booo e afloat-3 -‘9—00 Question5:lSQoints,5min) The trial balance of little Ray Company at Dec 31, 2002 is listed below in alphabetical order. The Corn an uses a eriodic Inventor s stem and closes its accounts once at the end of the ear. The little Ra Com an Trial Balance Dec 31 2002 Accounts Payable ., Accounts Receivable S Accumulated Depreciation: i\ l_ ertising ERpense ‘ 1,500 - _, '\ Capital Sm V) cash 7’ 29,000 Dividends; _ $7,000 Equipment _.: _Jr_ 162,000 Invento $ 24,500 33,000 urchases W Liietained Earnings L 46,000 laries Expense 12,000 sales ‘ ‘ 78,000 Supplies ’ _4 5,000 J [T_otal _ $ 279,500 $279,500 Assume that a physical count at Dec 31 showed that the ending inventory was $3,000. ‘/"\ ...
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Midterm-Spring-2002 - '-.m-—.—_., gem-mums BNIVERSIT...

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