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Intermediate Accounting I Final Exam Booklet




////for complete question check the attachment///;Intermediate Accounting I;Final Exam Booklet;Replacement;Part A;20 Point Questions (3 questions x 20 points = 60 total points);Show all work.;1. The following information is provided in the 2011 annual report to shareholders of The;BizStore;Required: Compute U-Z in the table above.;2. Shown below is the activity for one of the products of Random Creations;January 1 balance, 80 units @ $50 $4,000;2a. Compute the ending inventory and cost of goods sold assuming Random Creations;uses FIFO.;2b. Compute the ending inventory and cost of goods sold assuming Random Creations;uses LIFO and perpetual inventory system.;2c. Compute the ending inventory and cost of goods sold assuming Random Creations;uses LIFO and a periodic inventory system.;2d. Compute the ending inventory and cost of goods sold assuming Random Creations;uses average cost and a periodic inventory system.;2e. Compute the ending inventory and cost of goods sold assuming Random Creations;uses average cost and a perpetual inventory system.;3. On January 3, 2011, Michelson & Sons acquired a tract of land just outside the city;limits. The land and existing building were purchased for $2.4 million. Michelson paid;$400,000 and signed a noninterest-bearing note requiring the company to pay the;remaining $2,000,000 on December 31, 2012. An interest rate of 7% properly reflects the;time value of money for this type of loan agreement. Transfer taxes, title insurance and;other costs totaling $24,000 were paid at closing.;During February, the old building was demolished at a cost of $120,000, and an;additional $100,000 was paid to clear and grade the land. Construction of a new building;began on March 1 and was completed on October 30. Construction expenditures were as;follows;Michelson did not borrow specifically for the construction project, but did have the;following debt outstanding throughout 2011;$6,000,000, 8% long-term note payable;$2,000,000, 5% long-term note payable;In December, the company purchased equipment and office furniture and fixtures for a;lump-sum price of $800,000. The fair values of the equipment and the furniture and;fixtures were $540,000 and $360,000, respectively. In December, Michelson paid;$340,000 for the construction of parking lots and landscaping.;Required;3a. Determine the initial values of the various assets that Michelson acquired or;constructed during 2011.;3b. How much interest expense will Michelson report in its 2011 income statement?;Part B;4 Point Questions (10 questions x 4 points = 40 total points);Show all work.;1. Tri Fecta, a partnership, had revenues of $360,000 in its first year of operations. The;partnership has not collected on $35,000 of its sales, and still owes $40,000 on $150,000;of merchandise they purchased. There was no inventory on hand at the end of the year.;The partnership paid $25,000 in salaries. The partners invested $40,000 in the business;and $25,000 was borrowed on a five-year note. The partnership paid $3,000 in interest;that was the amount owed for the year and paid $8,000 for a two-year insurance policy on;the first day of business.;Required;1a. Compute net income for the first year for Tri Fecta.;1b. Compute the cash balance at the end of the first year for Tri Fecta. 2. Presented below is a partial trial balance for the Messenger Corporation at December;31, 2011.;Additional information;1. The note receivable, along with any accrued interest, is due on November 1, 2012.;2. The note payable is due in 2016. Interest is payable annually.;3. The marketable securities consist of equity securities of other corporations.;Management does not intend to sell any of the securities in the next year.;4. Unearned revenue will be earned equally over the next eighteen months.;Required: Determine the company's working capital (current assets minus current;liabilities) at December 31, 2011. 3. Paris Company reported the following items in its December 31, 2011, year-end;adjusted trial balance;Required: Prepare the December 31, 2011, income statement for Paris Company starting;with income from continuing operations before income taxes.;4. Beck Construction Company began work on a new building project on January 1, 2010.;The project is to be completed by December 31, 2012, for a fixed price of $108 million.;The following are the actual costs incurred and estimates of remaining costs to complete;the project that were made by Beck's accounting staff;Required:What amount of gross profit (or loss) would Beck record on this project in;each year under the percentage-of-completion method? Place answers in the spaces;provided below and show supporting computations.5. White & Decker Corporation's 2011 financial statements included the following;information in the long-term debt disclosure note;The disclosure note stated that the debenture bonds were issued late in 2006 and have a;maturity value of $500 million. The maturity value indicates the amount that White;Decker will pay bondholders in 2026. Each individual bond has a maturity value (face;amount) of $1,000. Zero-coupon bonds pay no cash interest during the term to maturity.;The company is "accreting" (gradually increasing) the issue price to maturity value using;the bonds' effective interest rate computed on an annual basis.;Required;5a.. Determine the effective interest rate on the bonds.;5b.. Determine the issue price in late 2006 of a single, $1,000 maturity-value bond.;6. During Bricker Company's first year of operations, credit sales totaled $200,000 and;collections on credit sales totaled $145,000. Bricker estimates that $1,000 of its ending;accounts receivable balance will not be collected. By year-end, Bricker had written off;$330 of specific accounts as uncollectible.;Required;6a. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt;expense.;6b. Show the year-end balance sheet presentation for accounts receivable.;7. Chavez Inc adopted dollar-value LIFO on January 1, 2011, when the inventory value;was $850,000. The December 31, 2011, ending inventory at year-end cost was $950,000;and the cost index for the year is 1.08.;Required;Compute the dollar-value LIFO inventory valuation (rounded) for the December 31, 2011;inventory.;8. Penfold's Paints uses the average cost retail method to estimate its ending inventories.;The following data has been summarized for the year 2011;Required: Compute the cost-to-retail percentage used by Penfold's Paints.;9. Calegari Mining paid $2 million to obtain the rights to operate a coal mine in;Tennessee. Costs of exploring for the coal deposit totaled $1,500,000 and development;costs of $5 million were incurred in preparing the mine for extraction, which began on;January 2, 2011. After the coal is extracted in approximately five years, Calegari is;obligated to restore the land to its original condition. The company's controller has;provided the following three cash flow possibilities for the restoration costs;The company's credit-adjusted, risk-free rate of interest is 7%, and its fiscal year ends on;December 31.;Required;9a.. What is the initial cost of the coal mine? (Round computations to nearest whole;dollar.);9b.. How much accretion expense will Calegari report in its 2011 and 2012 income;statements?;9c.. What is the carrying value (book value) of the asset retirement obligation that;Calegari will report in its 2011 and 2012 balance sheets?;9d.. Assume that actual restoration costs incurred in 2016 totaled $1,370,000. What;amount of gain or loss will Calegari recognize on retirement of the liability? 10. On June 30, 2009, Mobley Corporation acquired a patent for $4 million. The patent;was estimated to have an eight-year life and no residual value. Mobley uses the straightline;method of amortization for intangible assets. At the beginning of January 2011;Mobley successfully defended its patent against infringement. Litigation costs totaled;$650,000.;Required;10a.. Calculate patent amortization for 2009 and 2010.;10b. Prepare the journal entry to record the 2011 litigation costs.;10c. Calculate amortization for 2011.;10d. Repeat requirements 2 and 3 assuming that Mobley prepares its financial statements;according to International Financial Reporting Standards.


Paper#73633 | Written in 18-Jul-2015

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