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Acct220: Principles of Accounting I 2014

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Question;For this exam;omit all general journal entry explanations. Question 1: Suggested;time 20 minutes: 15% points:The account balances appearing on the trial balance (below);were taken from the general ledger of Flip's Copy Shop at June 30, 2012.Additional information for the month of June which has;not yet been recorded in the accounts is as follows:(a) A physical count of supplies indicates $300 on hand at June 30.(b) The amount of insurance that expired in the month of June was $200.(c) Depreciation on equipment for June was $400.(d) Rent owed on the copy shop for the month of June was $600 but;will not be paid until July.;Flip?s;Copy Shop;Trial Balance;For the Month Ended June 30, 2012;Account Titles;Debit;Credit;Cash;$1,000;Supplies;1,100;Prepaid Insurance;2,200;Equipment;24,000;Accum. Depreciation? Equipment;$4,500;Accounts Payable;2,400;Notes Payable;4,000;Flip?s Capital;15,300;Flip?s Drawings;2,400;Service Revenue;4,900;Utilities Expense;400;Totals;$31,100;$31,100;Instructions:Prepare in journal form, without explanations, the end of month adjusting;entries & closing entries for Flip's Copy;Shop for the month of June. Acct220a Page;1 of 9;Question 2: Suggested;time 15 minutes: 15% points:The following items were taken;from the post adjusted trial balance of Flip Company. (All balances are;normal.) Mortgage;payable $ 1,443 Accumulated;depreciation 3,655 Prepaid;expenses 880 Accounts payable 1,444 Equipment;11,000 Notes payable after 2015 1,200 Long-term;investments 1,100 Flip?s capital 13,480 Short-term;investments 3,690 Accounts receivable 1,696 Notes;payable in 2014 1,000 Inventories 1,756 Cash 2,100Instructions:Prepare a classified balance;sheet in good form as of December 31, 2013.Question 3: Suggested;time 15 minutes: 15% points:The following information is available for Flip Company:Beginning inventory 600 units at $4First purchase 900 units at $6Second purchase 500 units at $7.20Assume that Flip uses a periodic inventory;system and that there are 700 units left at the end of the month.Instructions;Compute;the cost of ending inventory and Cost of Good Sold under the(a) LIFO method.(b) FIFO method.(c) Average-cost methodAcct220a Page;2 of 9;Question 4: Suggested time 15 minutes: 10%;points:Joe's Supply Co. has the;following transactions related to notes receivable during the last 2 months of;2014.Nov. 1 Loaned;$20,000 cash to Sara Rondelli on a 1-year, 12% note.Dec.;11 Sold goods to Phair, Inc.;receiving a $11,700, 90-day, 8% note. 16 Received an;$12,000, 6-month, 9% note in exchange for Grace Tanner's outstanding accounts;receivable. 31 Accrued interest revenue on all notes receivable.Instructions(a) Journalize the transactions for Joe's;Supply Co.(b) Record the collection of the Rondelli note;at its maturity in 2015.Question 5: Suggested;time 20 minutes: 10% points:South Airlines purchased a 747;aircraft on January 1, 2013, at a cost of $35,000,000. The estimated useful;life of the aircraft is 20 years, with an estimated salvage value of;$5,000,000. On January 1, 2016 the airline revises the total estimated useful;life to 15 years with a revised salvage value of $3,500,000.Instructions(a) Compute the depreciation;and book value at December 31, 2015 using the straight-line method and the;double-declining-balance method.(b) Assuming the straight-line method is used;compute the depreciation expense for the year ended December 31, 2016.Acct220a Page;3 of 9;Question 6: Suggested;time 10 minutes: 10% points:Flip earns a salary of $7,500 per month during the year. FICA taxes are;8% on the first $100,000 of gross earnings. Federal unemployment insurance;taxes are 6.2% of the first $7,000, however, a credit is allowed equal to the;state unemployment insurance taxes of 5.4% on the $7,000. During the year, $25,600;was withheld for federal income taxes and $5,700 was withheld for state income;taxes.Instructions(a) Prepare;a journal entry summarizing the payment of Flip?s total salary during the year.(b) Prepare;a journal entry summarizing the employer payroll tax expense on Flip?s salary;for the year.(c) Determine;the cost of employing Flip for the year.Multiple choice;questions allocated 1% point each. Make your selection by recording the;letter in the answer box provided. Suggested time is 60 minutes.Question 7:Which of the following are the same under both GAAP;and IFRS?a. The journal.b. The ledger.c. The chart of accounts.d. All of the above.e. Only a & c.Question 8:Which of the following is true?a. Transaction analysis is completely different under IFRS and GAAP.b. Most transactions are recorded differently under IFRS and GAAP.c. Transaction analysis is the same under IFRS and GAAP, but some;transactions are recorded differently.d. All transactions are recorded the same under IFRS and GAAP.Question 9:Revenue;recognition under IFRS isa. substantially different from revenue;recognition under GAAP.b. generally the same as revenue recognition;under GAAP, but with more detailed guidance.c. generally the same as revenue recognition;under GAAP, but with less detailed guidance.d. exactly the same as revenue recognition under;GAAP.Acct220a Page;4 of 9;Question 10: Both;IFRS and GAAP require disclosure abouta. accounting policies followed.b. judgements that management has made in the process of applying the;entity's accounting policies.c. the key assumptions and estimation uncertainty.d. all of the above.e. only b & c.Question 11:The;use of fair value to report assetsa. is not allowed under GAAP or IFRS.b. is required by GAAP and IFRS.c. is increasing under GAAP and IFRS, but GAAP has adopted it more;broadly.d. is increasing under GAAP and IFRS, but IFRS has adopted it more;broadly.Question;12: Closing entries are madea. in order to terminate the business as an;operating entity.b. so that all assets, liabilities, and owner's;capital accounts will have zero balances when the next accounting period;starts.c. in order to transfer net income (or loss) and;owner's drawings to the owner's capital account.d. so that financial statements can be prepared.Question;13:Flip Company purchased merchandise;from Flop Company with freight terms of FOB shipping point. The freight costs;will be paid by thea. seller.b. buyer.c. transportation;company.d. buyer and the;seller.Question;14:A Sales Returns and Allowances;account is not debited if a customera. returns defective;merchandise.b. receives a credit;for merchandise of inferior quality.c. utilizes a prompt;payment incentive.d. returns goods that;are not in accordance with specifications.Question 15:Which of the following;statements is incorrect?a. A major consideration in developing an;accounting system is cost effectiveness.b. When an accounting system is designed, no;consideration needs to be given to the needs and knowledge of the various;users.c. The accounting system should be able to;accommodate a variety of users and changing information needs.d. To be useful, information must be;understandable, relevant, reliable, timely, and accurate.Acct220a Page;5 of 9;Question 16:Flip is warehouse custodian and also maintains;the accounting record of the inventory held at the warehouse. An assessment of;this situation indicatesa. documentation procedures are violated.b. independent internal verification is;violated.c. segregation of duties is violated.d. establishment of responsibility is violated.Question;17:Cash equivalents include each of the following excepta. bank certificates of deposit.b. money market funds.c. petty cash.d. U.S. Treasury bills.Question;18:Flip Company is building a new plant that will take three years to;construct. The construction will be financed in part by funds borrowed during;the construction period. There are significant architect fees, excavation fees;and building permit fees. Which of the following statements is true?a. Excavation fees are capitalized but building;permit fees are not.b. Architect fees are capitalized but building;permit fees are not.c. Interest is capitalized during the;construction as part of the cost of the building.d. The capitalized cost is equal to the contract;price to build the plant less any interest on borrowed funds.Question;19:Depreciation is the process of allocating the cost of a plant asset;over its service life ina. an equal and equitable manner.b. an accelerated and accurate manner.c. a systematic and rational manner.d. a conservative market-based manner.Question;20:Sales taxes collected by a retailer;are expensesa. of the;retailer.b. of the;customers.c. of the;government.d. that are not;recognized by the retailer until they are submitted to the government.Acct220a Page;6 of 9;Question 21:Flip?s Market recorded the following events;involving a recent purchase of merchandise:Received goods for $50,000, terms 2/10, n/30.Returned $1,000 of the shipment for credit.Paid $250 freight on the shipment.Paid the invoice within the discount period.As a result of;these events, the company?s inventory increased bya. $48,020.b. $48,265.c. $48,270.d. $49,250.Question 22:A;$100 petty cash fund has cash of $16 and receipts of $81. The journal entry to;replenish the account would include aa. debit to Cash for $81.b. credit to Petty Cash for $84.c. debit to Cash Over and Short for $3.d. credit to Cash for $81.Question;23:In preparing its bank reconciliation;for the month of April 2013, Flip, Inc. has available the following;information.Balance per bank statement, 4/30/13 $39,300NSF check returned with 4/30/13 bank statement 470Deposits in transit, 4/30/13 5,000Outstanding checks, 4/30/13 5,200Bank service charges for April 30What should be the;adjusted cash balance at April 30, 2013?a. $38,630.b. $38,800.c. $39,010.d. $39,100.Question 24:If;a check correctly written and paid by the bank for $591 is incorrectly recorded;on the company?s books for $519, the appropriate treatment on the bank;reconciliation would be toa. deduct $72 from the book?s balance.b. add $72 to the book?s balance.c. deduct $72 from the bank?s balance.d. deduct $591 from the book?s balance.Acct220a Page;7 of 9;Question 25:Flip;Company had net credit sales during the year of $1,200,000 and cost of goods;sold of $720,000. The balance in accounts receivable at the beginning of the;year was $180,000, and the end of the year it was $120,000. What was the;accounts receivable turnover ratio?a. 5.0b. 6.7c. 8.0d. 10.0Question;26:The financial statements of Flip;Manufacturing Company report net sales of $400,000 and accounts receivable of;$80,000 and $40,000 at the beginning and end of the year, respectively. What is;the average collection period for accounts receivable in days?a. 40 daysb. 50 daysc. 54.7 daysd. 80 daysQuestion;27:Flip Company purchases a new delivery truck for $60,000. The sales;taxes are $4,000. The logo of the company is painted on the side of the truck;for $1,600. The truck license is $160. The truck undergoes safety testing for;$290. What does Flip record as the cost of the new truck?a. $66,050b. $65,890c. $64,000d. $65,600Question;28:A company purchased factory equipment on April 1, 2012 for $80,000. It;is estimated that the equipment will have an $10,000 salvage value at the end;of its 10-year useful life. Using the straight-line method of depreciation, the;amount to be recorded as depreciation expense at December 31, 2012 isa. $8,000.b. $7,000.c. $5,250.d. $6,000.Question;29:Flip's Boutique has total receipts;for the month of $30,660 including sales taxes. If the sales tax rate is 5%;what are Flip's sales for the month?a. $29,127b. $29,200c. $32,193d. It cannot be;determined.Acct220a Page;8 of 9;Question 30:Flip Electric began operations in 2012 and;provides a one year warranty on the products it sells. They estimate that;10,000 of the 200,000 units sold in 2012 will be returned for repairs and that;these repairs will cost $8 per unit. The cost of repairing 8,000 units;presented for service in 2012 was $64,000. Flip should reporta. warranty expense of $16,000 for 2012.b. warranty expense of $80,000 for 2012.c. warranty liability of $80,000 on December 31;2012.d. no warranty obligation on December 31, 2012;since this is only a contingent liability.Question 31:Partners Flip and Flop;have capital balances in a partnership of $80,000 and $120,000, respectively.;They agree to share profits and losses as follows: Flip FlopAs;salaries $20,000 $24,000As;interest on capital at the beginning of the year 10% 10%Remaining;profits or losses 50% 50%If income for;the year was $60,000, what will be the distribution of income to Flip?a. $26,000b. $34,000c. $20,000d. $28,000Acct220a Page;9 of 9;="msonormal">

 

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