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ACCT 212 Final Exam

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Question;ACCT;212 Final Exam;1. (TCO;3) At the end of the period it is necessary to close all temporary accounts.;(1) Explain why this process is required (10 points) and (2) provide an example;of the closing of an expense account, Salary Expense in the form of a journal;entry.;2. (TCO;2) As required to complete Course Project 1, one must follow the cycle that;includes 10 steps to complete the accounting cycle. (1) Explain how the;debit/credit rules are used when developing journal entries (10 points) and (2);provide an example of the application of the debit/credit rules in the form of;a journal entry.;3. (TCO;5) Internal Control Procedures are required to safeguard company assets and to;ensure ethical operation of the business. (1) Explain how limited access can;satisfy the purpose of internal control (10 points) and (2) provide an example;of how this control could be implemented.;4. (TCO;4) Inventory valuation methods determine the cost of goods sold and the;inventory balance. (1) Explain how the First in First out (FIFO) method is;applied (10 points) and (2) provide an example of the impact that this method;of inventory valuation will have on Gross Profit.;5. (TCO;1) To evaluate the financial operation and health of a business ratio analysis;is used. (1) Provide the formula for the Current Ratio and explain how it is;computed (10 points) and (2) provide an example of how this ratio can be used;in decision-making in business.;1. (TCO;6) BagODonuts Company bought a used delivery truck on January 1, 2010, for $19,200.;The van was expected to remain in service 4 years (30,000 miles).;BagODonuts? accountant estimated that the truck?s residual value would be;$2,400 at the end of its useful life. The truck traveled 8,000 miles the;first year, 8,500 miles the second year, 5,500 miles the third year, and 8,000;miles in the fourth year.;1. Calculate;depreciation expense for the truck for each year (2010-2013) using the;a. Straight-line method.;b. Double-declining balance;method.;c. Units of Production method.;(For units-of-production and double-declining balance, round to the nearest two;decimals after each step of the calculation.);2. Which;method best tracks the wear and tear on the van?;3. Which;method would BagODonuts prefer to use for income tax purposes? Explain in;detail why BagODonuts prefers this method.;2. (TCO;7) ABC Inc. was incorporated on 1/15/12. Their corporate charter authorized the;following capital stock: Preferred Stock: 7%, par value $100 per share;100,000 shares. Common Stock: $1 par value, 500,000 shares.;The following transactions occurred;during the year;1/19/12 ? Issued 100,000 shares of;common stock for $17 cash per share.;1/31/12 ? Issued 3,000 shares of;preferred stock for $115 cash per share.;11/1/12 ? Repurchased 30,000 shares of;common stock for $22 cash per share.;12/1/12 ? Declared and paid a total;dividend of $95,000.;Required;1. Prepare the journal entry for each;transaction listed above.;2. In your own words, explain the main;differences between common and preferred stock.;(Points: 25);3. (TCO;5) Fraud is an intentional misrepresentation of facts, made for the purpose of;persuading another party to act in a way that causes injury or damage to that;party. In our readings and discussions we have seen several examples of;fraud in business. Using that experience (1) provide an example of a;common fraudulent practice in business with an explanation of how the practice;works and (2) name and describe each of the elements of the Fraud;Triangle.;4. (TCO 5);Internal Control Procedures are in place to protect the assets of every;business as mentioned in the textbook and our discussions. Of the seven;internal control procedures, list five of these controls and describe how each;procedure is implemented;5. (TCO2);Below are the accounts of Super Pool Service, Inc. The accounts have normal;balances on June 30, 2012. The accounts are listed in no particular order.;Account;Balance;Common;stock;$5,100;Accounts payable;$4,400;Service;revenue;$17,100;Land $28,800;Note;payable;$9,500;Cash $5,200;Dividends;$6,100;Utilities;expense;$2,100;Accounts;receivable;$10,600;Delivery;expense;$700;Retained;earnings;$25,600;Salary;expense;$8,200;Prepare;the company?s trial balance as of June 30, 2012, listing accounts in proper;sequence, as illustrated in the chapter. For example, Accounts Receivable comes;before Land. List the expense with the largest balance first, the expense with;the next largest balance second, and so on.;(Points;25);6.;(TCO4) Linda?s;Lampshades started business on Jan. 1, 2001. They had the following inventory;transactions;Journals -;Jan. 2001;Purchases;Supplier;Date;Received Quantity;Unit Cost Amount;Donna;01/10/01 110;12.00 1320.00;Thomas;01/15/01 160;14.00;2240.00;Cindy;01/18/01 150;15.00 2250.00;Sales;Customer;Date shipped Quantity Sel. Price;Amount;Norilene;01/16/01;200;25.00 5000.00;1. Calculate the ending inventory, using the perpetual;inventory method;A. Using FIFO;B. Using LIFO;C.;Using Average Cost;2. Prepare;the following statement;1.;Depreciation is a process to allocate the cost of long-life assets to each;period's income statement and adjusts the value of the asset on the balance;sheet. (1) Explain how the Units-of-Production method is computed (10 points);and (2) provide an example of how this method could be used on a new delivery;truck purchased for $25,000 to be used for 100,000 miles with a salvage value;of $5,000 for year one only (25,000 miles driven in year one)

 

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