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Version B ACCOUNTING 200_24 June




Question;Version B ACCOUNTING;200;Third Hour Exam- Chapters 8,9, & 10 Name;I.;For the year 2006 Kolar Company has the following information available.;Use this information to answer questions A, B, C, & D.;Gross Credit Sales of $90,000;Sales Discounts of $4,000;Debit balance in Allowance for Doubtful;Accounts (before adjusting entries) of $6,000;Balance in Accounts Receivable (before;adjusting entries) of $22,000.;Answer each of the following questions;INDEPENDENT of the other questions. (10 points);A.;IfKolar Company estimates bad debt expense;to be 4% of Net Credit Sales, what amount of bad debt expense should be;reported on the 2006 Income Statement?;B.;If;Kolar Company performs an aging of Accounts Receivable and determines that;$8,000 worth of accounts are uncollectible, make the adjusting journal entry;to record bad debts expense for 2006.;C.;Assume;that on December 31, 2006, Kolar Company makes a journal entry to record $7,500;of Bad Debt Expense. Assume that on;January 1, 2007 (before any more credit sales are made) Kolar Company decides;to write-off as uncollectible a $1,000 account receivable. After making this;journal entry, what will be the net realizable value of accounts receivable?;D.;Assume;that on December 31, 2006, Kolar Company makes a journal entry to record $7,500;of Bad Debt Expense. Assume that on;January 1, 2007 (before any more credit sales are made) Kolar Company decides;to write-off as uncollectible a $1,000 account receivable. If the bookkeeper;forgets to make this Journal entry, what will be the net realizable value of;accounts receivable?;II.;Finley Company had the following transactions in 2006. (9 points);Jan 1;Used cash to purchase a mine for $70 million. The mine is estimated to;have 250,000 tons of ore and a salvage value of $10 million.;July 1;Purchased a patent for $1,500,000 cash. The patent's legal life is 17;years but the company estimates the patent's useful life to be 5 years because;at that time the patent will no longer have any value.;Dec 29 Paid cash for research and;development cost of $400,000 during the previous 12 months.;Make the appropriate general journal;entries for Jan 1, July 1 & Dec 29.;Make the appropriate adjusting entry on;December 31 for the mine (assume 50,000 tons of ore mined and 40,000 tons sold);Ill Journal Entries 12 points;For the following situations, if a journal;entry is required on December 31 to adjust the cash balance per the books make;the appropriate entry. If no entry is required write NONE.;Whilereconciling the bank statement the company discovers;there are $4,000 in outstanding checks.;While reconciling the bank statement the;company discovers the bank has charged the company a service charge of $45;for having some checks printed.;While reconciling the bank statement the;company discovers the bank has made an error related to a company deposit of;cash sales. The bank added $7,800 to;the company's checking account when in fact there was $8,100 in cash;deposited.;While reconciling the bank statement the;company discovers that a note receivable with a face value of $1,200 has been;collected for the company. The total amount collected was $1,280 with $100 of;interest accruing and a $20 bank charge. No interest revenue has been;recorded related to the note.;While reconciling the bank statement the;company discovers that a cash payment to a vendor in the amount of $250 has;accidently been recorded in the cash payments journal for $520.;IV Essay;5 points;The following narrative describes the;business process at Company B. After;reading the narrative, identify and explain WHY each SPECIFIC internal control;weakness at Company B is a violation of good internal control.;Rodney is normally responsible for writing;all checks. When the bank statement;arrives Rodney does the reconciliation of the bank statement and reports any;discrepancies to the owner. In addition;to writing the checks, Rodney is responsible for approving all vendor invoices;for payment before he signs and mails the checks. After writing the payroll checks Rodney;leaves the pay checks in an envelope in the employee break room. In order to save money, Rodney orders;checks that are unnumbered. Because Rodney is sometimes busy with other tasks;two other employees also have permission to sign and mail checks.;Weakness;#1;Weakness #2;Weakness #3;Weakness #4;Weakness #5;V;On January 1 Company B establishes a petty cash fund in the amount of;$200. On February 20 the necessary;balance in the fund is increased to $250.;On February 28th the petty cash fund is replenished when;there is only $82 cash left in the petty cash drawer. The petty cash drawer included petty cash;vouchers as follows. (8 points);postage expense $45;miscellaneous expense $50;freight-out $55;Make the journal entry on February 20.;Make the journal entry to replenish the;fund on February 28.;VI.;On October 12, Brady Storhaug Company owns;a Porsche 911 Turbo that originally cost $40,000 and currently has accumulated;depreciation of $32,000. The fair;market value of the Porsche is $6,000. Storhaug exchanges this Porsche for a;Cavalier with a fair market value of $9,000 and pays $3,000 cash to boot.;MAKE THE JOURNAL ENTRY TO RECORD THE;EXCHANGE OF VEHICLES ON STORHAUG'S BOOKS. (6 points);VII. Use the following information to make;the appropriate journal entries as required.;Sellin'Inc. received a notes receivable from Buyin' Inc on;April 15. The face value of the note;was $3,000 with a maturity date of June 15 and a maturity value of $3,040. On;April 30 Sellin' properly calculated accrued interest to be $10. (6 points);Make;the April 30 entry related to the accrual of interest for Sellin' Inc.;On June 15 Buyin' Inc. informed Sellin;Inc that Buyin' was low on cash and would not be able to pay the maturity value;of the note until July 18. Assume;Sellin' made another journal entry related to the accrual of interest on the;note receivable on May 31 for $20. Also, from June 1 to June 15 assume another;$10 of interest has accrued with no journal entry being made. Make the;appropriate journal entry on Sellin' Inc. books on June 15.;VIII.;Poorly Managed Inc had total net credit;sales of $100,000. At the beginning of;the year, PoorlyManaged;had a balance in accounts receivable of $35,000 and at the end of the year this;balance had;increased to $65,000. The terms for all of Poorly Managed's credit;sales are l/5, N30.There are nofinance charges on overdue balances.;REQUIRED (7 points);Calculate Poorly Managed's accounts;receivable turnover;Calculate Poorly Managed's average;collection period in days;Provide a written evaluation of how Poorly;Managed is handling their accounts receivable.;X.;Calculating depreciation expense.;A building is acquired on January 1, at a;cost of $300,000 has an estimated useful life of 8 years. Thesalvage value is estimated to be $25,000 at the end of;the asset's useful life.;Use the above information to answer the;following INDEPENDENT questions.;A;Calculate accumulated depreciationat the end of year 2 if the straight-line method is;used (3 points).;$____________year 2;B;Calculate depreciation expensefor years 1 & 2 if the;double-declining balance method is used (5 points).;$____________year 1;$____________year 2;C Calculate accumnlated depreciationat;the end of year 2 if the units of activity method is used and the asset is;expected to be used a total of 500,000 hours. The asset will be used 75,000;hours in year one and 90,000 hours in year two (3 points).;$____.year 2;XI.Joyce Company has issued a 4-month, 9%, $6,000 note;receivable to a customer. Calculate the following (9 pts).;Face Value;Total interest to accrue over the 4-month;time period of the note;Maturity value of the note.;On the maturity date, the customer pays;Joyce Company the maturity value of the note.;Make the required journal entry on the maturity date assuming NO;adjusting entries have been made for interestrevenue.;XII.;Rodney Company has a machine that;originally cost $32,000 and has been depreciated a total of $20,000. After five years Rodney sells the machine;for $15,000 (7 points).;Calculate the book value of the machine;Calculate the gain (loss) on the disposal;of the machine.;XIII.;The following information is available for Jones Company for the month;ended April 30;A.;The balance per the bank statement as of April 30 was $6440.55;B.;The cash account balance in the general ledger as of April 30 was;$5,835.55.;C.;A customer's check was returned with the April bank statement marked NSF;for $123. This was the first time Jones Company had been notified the check;bounced.;D.;Jones Company incorrectly recorded a cash payment for $469. The correct;amount of the payment was $649.;E.;Deposits in transit as of April 30 equaled $1,200.25.;F.;The bank statement included a debit memo for $24.75 as a check printing;charge.;G.;A note collected by the bank on April 28 has not yet been recorded in;Jones' Company cash receipts journal. The face amount of the note was $2,000;and the interest was $150. The bank;charged a collection fee of $17.;NOTE: ** Jones Co. has already recorded all of;the interest revenue.** NOTE;Required (10 points);A;Prepare a bank reconciliation for Jones Company for April 30.;Balance per Bank Statement;Balance per Books


Paper#37480 | Written in 18-Jul-2015

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