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Devry ACCT212 final exam (spring 2014)




Question;Devry ACCT212 final exam;Question 1.1.(TCO;3) At the end of the period it is necessary to close all temporary;accounts. (1) Explain why this process is required (15 points) and (2);provide an example of the closing of an expense account, Rent Expense in;the form of a journal entry. (10 points) (Points: 25);Question 2.2.(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 to;construct an Unadjusted Trial Balance (15 points) and (2) provide an;example of the application of the debit/credit rules in the development of;the trial balance. (10 points)(Points: 25);Question 3.3.(TCO;5) Internal Control Procedures are required to safeguard company assets and;to ensure ethical operation of the business. (1) Explain how separation of;duties can satisfy the purpose of internal control (15 points) and (2);provide an example of how this control could be implemented. (10 points) (Points: 25);Question 4.4.(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 (15 points) and (2) provide an example of the impact that this;method of inventory valuation will have on Gross Profit. (10 points) (Points: 25);Question 5.5.(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. (15 points) (Points: 25);Page 2;Question 1.1.(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. (Points: 25);Question 2.2.(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);Question 3.3.(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 points each with 2 points for listing;and 3 points for a description)(Points;25);Question 4.4.(TCO;2) 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);Question 5.5.;(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;Using;FIFO LIFO Average;Cost;Sales;Cost of;Sales;Gross Profit;(Points: 25)


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