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ACG 2011 Final Exam




Question;Instructions: You will need a calculator to complete this;test.;1.;Depreciation;a.;Measures the decline in market;value of an asset.;b.;Is the process of allocating to expense the cost of a;plant asset;c.;Is an outflow of cash from the;use of a plant asset;d.;Is applied to land.;2.;Lomax Enterprises purchased a;depreciable asset for $22,000 on March 1, Year 1. The asset will be depreciated using the;straight-line method over its four-year useful life. Assuming the asset?s salvage value is $2,000;Lomax Enterprises should recognize depreciation expense in Year 2 in the amount;of;a. $19,166.67;b.;$5,000.00;c.;$5,500.00;d.;$20,000.00;3.;Saturn Co. purchases a used;machine for $167,000 cash on January 2 and readies it for use the next day at a;$3,420 cost. On January 3 it is installed;on a required operating platform costing $1,080 and it is further readied for;operations. The company predicts the;machine will be used for six years and have a $14,600 salvage value. Depreciation is to be charged on a;straight-line basis. On December 31, at;the end of its fifth year in operation.;It is sold for $13,500 cash.;Prepare the journal entry for the sale;a.;Date General Journal Debit Credit;Dec. 31 Cash 14,600;Gain;on sale of machinery 21,650;Accumulated depreciation ? machinery 130,750;Machinery 167,000;b.;Date General Journal Debit Credit;Dec. 31 Cash 14,600;Loss on sale of;machinery 152,400;Machinery 167,000;c.;Date General Journal Debit Credit;Dec. 31 Cash 13,500;Loss on sale of;machinery 27,250;Machinery 40,750;d.;Date General Journal Debit Credit;Dec. 31 Cash 13,500;Loss on sale of;machinery 27,250;Accumulated depreciation;? machinery 130,750;Machinery 171,500;4.;MRI Company has one employee;that makes $7,200 per month. FICA Social;Security taxes are 6.2% and FICA Medicare taxes are 1.45% of gross pay. Prepare the employer?s April 30 journal;entries to record salary expense and its related payroll liabilities for this;employee. The employee?s federal income;taxes withheld by the employer are $135 for this pay period.;a.;Date General Journal Debit Credit;Sept. 30 Salaries expense 7,200;Cash 7,200;b.;Date General;Journal;Debit Credit;Sept. 30 Cash 7,200;FUTA 56.00;SUTA 101.50;Employee federal income;taxes payable 135.00;Accrued payroll payable 6,907.50;c.;Date General Journal Debit Credit;Sept. 30 Salaries expense 7,200;FICA ? Social security;taxes payable 44.64;FICA ? Medicare taxes;payable 10.44;Employee federal income;taxes payable 135.00;Accrued payroll payable 7,009.92;d.;Date General Journal Debit Credit;Sept. 30 Salaries expense;7,200;FICA ? Social security;taxes payable;446.40;FICA ? Medicare taxes;payable;104.40;Employee federal income;taxes payable;135.00;Accrued payroll payable 6,514.20;5.;On January 8, the end of the;first weekly pay period of the year, Royal Company?s payroll register showed;that its employees earned $11,380 of office salaries and $32,920 of sales;salaries. What are the entries to record;the gross salaries only?;a.;Debit to Salary Expense ?;Office $11,380;Debit to Salary;Expense ? Sales $32,920;b.;Debit to Cash ? Office Salaries $11,380;Debit to Cash ?;Sales Salaries $32,920;c.;Credit to Cash ? Office;Salaries $11,380;Debit to Cash ?;Sales Salaries $32,920;d.;Debit to Cash ? Office Salaries $11,380;Credit to Cash ?;Sales Salaries $32,920;6.;A company;estimates that warranty expense will be 4% of sales. The company's sales for;the current period are $185,000. The current period's entry to record the;warranty expense is;a.;Debit;Warranty Expense $7,400, credit Estimated Warranty Liability $7,400.;b.;Debit;Estimated Warranty Liability $7,400, credit Warranty Expense $7,400.;c.;Debit;Estimated Warranty Liability $7,400, credit Cash $7,400.;d.;No entry;is recorded until the items are returned for warranty repairs.;7.;All of the;following statements regarding uncertainty in liabilities are true except;a.;A company;can create a known amount when issuing a note even though the holder of the;note may not be known until the maturity date.;b.;A company;can have an obligation of a known amount to a known creditor but not know;when it must be paid.;c. A;company only records liabilities when it knows whom to pay, when to pay, and;how much to pay.;d.;A company;can be aware of an obligation but not know how much will be required to;settle it.;8.;Anita Kroll and Aaron Rogers;organize a partnership on January 1. Kroll?s initial investment consists of cash;($14,000), equipment ($66,000), and a note payable reflecting a bank loan for;the new business ($20,000). Roger?s;initial investment is cash of $25,000.;These amounts are the values agreed on by both parties. Prepare journal entries to record Kroll?s;investment.;a.;Date General Journal Debit;Credit;Jan. 1 Cash 14,000;A. Kroll, Capital;14,000;b.;Date General Journal Debit;Credit;Cash 14,000;Other 46,000;A. Kroll, Capital 60,000;c.;Date General Journal Debit;Credit;Jan. 1 Cash 14,000;Equipment less note;payable 46,000;A. Kroll, Capital 60,000;d.;Date General Journal Debit;Credit;Jan. 1 Cash 14,000;Equipment 66,000;Note payable 20,000;A. Kroll, Capital;60,000;9.;Partners? withdrawals of assets are;a.;Credited to their equity;accounts.;b.;Debited to their equity;accounts.;c.;Credited to their retained;earnings.;d.;Debited to their retained;earnings.;10.;A corporation;sold 14,000 shares of its $10 par value common stock at a cash price of $13 per;share. The entry to record this transaction would;include;a. A;debit to Cash for $140,000;b. A;debit to Paid-in Capital in Excess of Par Value, Common Stock for $42,000;c. A;credit to Common Stock for $182,000;d. A;credit to Common Stock for $140,000;11. Shamrock Company had net income of $32,830. The;weighted-average common shares outstanding were 9,800. The company declared a;$4,500 dividend on its noncumulative, nonparticipating preferred stock. There;were no other stock transactions. The company's earnings per share are;a. $3.81;b. $2.89;c. $3.35;d. $3.56;12. A corporation declared and issued a 10% stock;dividend on November 1. The following information was available immediately;prior to the dividend;Retained earnings;$830,000;Shares issued and outstanding;68,000;Market value per share;$23;Par value per share;$5;The amount that equity will decrease;as a result of recording this stock dividend is: (3 choices);a.;$156,400.;b.;$0.;c.;$34,000.;13. The;following data were reported by a corporation;The number of outstanding shares is;Authorized shares;36,000;Issued shares;31,000;Treasury shares;11,500;a.;24,500.;b.;36,000.;c.;31,000.;d.;19,500.;14. The carrying value of bonds at maturityis always equal to the;a.;Amount of cash originally;received in exchange for the bonds.;b.;Par or face value that the;issuer pays the holder.;c.;Amount of discount or premium.;d.;Amount of cash originally;received in exchange for the bonds plus any unamortized discount or less any;premium.;15. Heathrow issues $2,000,000 of 6%, 15-year bonds dated January 1;2011, that pays interest semiannually on June 30 and December 31. The bonds are;issued at a price of $1,728,224. Prepare the January 1, 2011, entry to record;the bonds? issuance (3 choices);a. Date;General Journal;Debit;Credit;Jan. 1;Cash;1,728,224;Discount;on Bond Payable;271,776;Bond;Payable;2,000,000;b. Date;General Journal;Debit;Credit;Jan. 1;Cash;1,728,224;Bond;Payable;1,728,224;c. Date;General Journal;Debit;Credit;Jan. 1;Discount;on Bond Payable;271,776;Interest Expense;120,000;Bonds;Payable;2,000,000;Interest Payable;120,000;16.;Acompany?s motivation for financial investments is all but;a.;Gaining income on from the;investment;b.;Hiding cash;c.;Gaining growth on excess cash;d.;Taking a strategic position in;another company;17. Held-to-Maturity;Debt (HTM) is;a.;Financial instruments measured;at fair value through profit and loss;b.;Financial debt measured at;amortized cost;c.;Financial debt measured at fair;value through OCI;d.;Equity measured by the equity;method;18. Influential;investors own __________% of the company?s ________stock;a.;Under 20%/ Common stock;b.;20-50%/ Common stock;c.;+51%/ Common stock;d.;+51%/ Preferred stock;19. The statement of cash flows report;a.;Assets, liabilities, and equity;b.;Revenues, gains, expenses, and;losses;c.;Cash inflows and cash outflows;for an accounting period.;d.;Equity, net income, and;dividends.;20. Use this;information and the indirect method to find cash provided or used by operations;Net;income;$ 13,400;Depreciation;expense;13,100;Gain on;sale of land;8,600;Increase;in merchandise inventory;3,150;Increase;in accounts payable;7,250;Proceeds;from sale of land;8,550;Payment;on mortgage payable;16,100;a. $14,450;b. $39,200;c. $22,000;d. $30,600;Extra Credit for One Point- Ethics Question: Led Zep Auditing Firm has two branches ? one in NYC and the other;in LA. Both service each others clients;and the clients of their clients. A;junior partner in the LA office learns in confidence from client ZZ-Todd that a;client of the NYC office, Eddie Mercury Inc., is taking bribes from the;police. LA office is responsible to;a.;Tell the police.;b.;Tell the NYC office.;c.;Keep the confidence of the;client.;d.;Keep the confidence of the NYC;client.;Extra Credit for One;Point-Available-for-Sale Accounting: December 31, 2011, Manhattan Co. held the following;short-term available-for-sale securities.;Cost;Fair Value;Nintendo Co. common;stock;$;68,900;$;75,300;Atlantic bonds;payable;24,500;22,800;Kellogg Co. notes;payable;50,000;47,200;McDonald's Corp.;common stock;91,400;86,600;Manhattan had no short-term investments prior;to the current period. Prepare the December 31, 2011, year-end adjusting;entry to record the fair value adjustment for these securities.;Date;General Journal;Debit;Credit;Dec. 31;(Click to select);Gain on sale of short-term investments;Loss on sale of short-term investments;Unrealized gain-equity;Fair value adjustment-AFS (ST);Cash;Interest revenue;Unrealized loss-equity;Short-term investments-AFS(ST);(Click to select);Gain on sale of short-term investments;Interest revenue;Loss on sale of short-term investments;Short-term investments-AFS(ST);Cash;Unrealized gain-equity;Fair value adjustment-AFS (ST);Unrealized loss-equity


Paper#42934 | Written in 18-Jul-2015

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