The first part of the exam features 6 questions with short answers and calculations. For these, omit all general journal entry ...

Final Exam

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Directions: 

The first part of the exam features 6 questions with short answers and calculations. For these, omit all general journal entry explanations. Be sure to include correct dollar signs, commas, underlines, and double-underlines where required.  This first portion of the Final Exam is worth 75 points.

The second part of the exam consists of 25 multiple-choice questions each worth 1 point each (25 points in total).

The grading of your final exam will not be complete until your instructor manually grades the short-answer questions and calculations and your answers to the multiple choice questions. Your instructor may grant partial credit on short-answer questions and calculations for less than complete answers.

You can take the final exam only once. Your instructor will take the combined score of the short answer questions and calculations and MC questions in entering your Final Exam grade into the Leo gradebook.

Section 1: Problems including Short Answers Calculations

Question 1 (40 points)

 XYZ Company's December 31, 2015 trial balance is as follows:

XYZ Company

Trial Balance

December 31, 2015

Account

Debit

Credit

Cash

$   43,500

Accounts Receivable

53,500

Allowance for Doubtful Accounts

1,500

Notes Receivable

30,000

Merchandise Inventory

55,000

Land

20,000

Building

150,000

Accumulated Depreciation, Building

$   15,000

Equipment

50,000

Accumulated Depreciation, Equipment

21,000

Goodwill

26,000

Accounts Payable

25,000

Long-Term Notes Payable

75,000

Common Stock, $10 par, 2,000 shares authorized and outstanding

20,000

Retained Earnings

147,000

Sales Revenue

700,000

Salaries Expense

150,000

Utilities Expense

3,500

Cost of Goods Sold

350,000

Administrative Expenses

55,000

Sales Expenses

    15,000

_______

   Totals

$1,003,000

$1,003,000

XYZ is a small company and records adjusting entries and closing entries only at fiscal (calendar) year end. Correcting and adjusting entries have not been recorded.

Additional Information:

1. Notes Receivable is a 3-month, 6% note accepted on November 1, 2015.
2. Long-Term Notes Payable is a 5-year, 5% note that was signed on July 1, 2015. Interest is payable annually.
3. Building is depreciated at 3% per year. There is no salvage value.
4. Equipment is depreciated at 15% per year. There is no salvage value.
5. XYZ discovered, on December 30, that the inexperienced bookkeeper recorded in the general journal and general ledger that day's $1,500 cash sales as a debit to Accounts Receivable and a credit to Sales Revenue.
6. The year-end physical count for Merchandise Inventory reflected a value of $51,500. Any difference in value will not be considered theft or loss.
7. Salaries for the last half of December, payable in January, amount to $5,500.
8. XYZ estimates that of the Accounts Receivable, 5% will not be collectable.

Required:

1. Prepare in journal form, any required correcting entries.
2. Prepare in journal form, all end-of-the-period adjusting entries.
3. Prepare a December adjusted trial balance.
4. Prepare a classified balance sheet for the year ended December 31, 2015.
5. Prepare in journal form the closing entries for the year ended December 31, 2015.

Question 2 (8 points)

XYZ Company uses the periodic inventory method and had the following inventory events during January:

Date

Units Purchased

Unit Cost

Date

Units Sold

Unit Sales Price

Jan. 1

150

$7.00

Jan. 2

100

$10.00

Jan. 5

225

7.20

Jan. 7

125

10.00

Jan. 10

100

7.50

Jan. 12

75

12.00

Jan. 15

150

7.80

Jan. 17

200

12.50

Jan. 20

200

7.95

Jan. 24

150

15.00

Jan. 25

150

8.00

Jan. 30

75

8.20

Note: The January 1 amounts were the beginning inventory and unit value.

(Round all total dollar values to the nearest dollar. Round all unit values to the nearest penny.)

Required:

1. Calculate the cost of goods available for sale.
2. Calculate the dollar value of sales.
3. Calculate the value of Ending Inventory and Cost of Goods Sold under the following independent assumptions:(1) LIFO method(2) FIFO method(3) Average-cost method

Question 3 (7 points)

 Required: Prepare Acme Supply Company's general journal entries for the following transactions:

Jan. 1

Accepted RunTimeCo's 120-day, 10% note as settlement of an outstanding $15,000 account receivable for goods sold last year.

Jan. 15

Purchased $10,000 Equipment from XYZ, signing a 9-month, 12% note.

Jan. 15

Loaned Warner Co. $30,000 cash, accepting a 90-day, 10% note.

Jan. 31

Prepared accrual adjusting entry for any interest revenue.

Apr. 15

Received payment in full from Warner Co. for outstanding note and interest.

May 1

Received payment in full from RunTimeCo for the outstanding note and interest.

Oct. 15

Paid XYZ in full.

Question 4 (9 points)

 XYZ Company purchased a refrigerated delivery truck for $65,000 on January 1, 2015. The plan is to use the truck for 5 years and then replace it. At the end of its useful life, the truck is expected to have a salvage value of $10,000. The fiscal year ends December 31.

1. Prepare the depreciation table for XYZ's truck, assuming that the company uses the straight--=]
2. line method for depreciation.
3. Prepare the depreciation table for XYZ's truck, assuming that the company uses the double-declining-balance depreciation method.
4. Compute the depreciation expense for 2015 for XYZ's truck, assuming the truck has an expected life of 200,000 miles and during 2015 the truck was driven 24,540 miles. Round your depreciation expense per mile to three decimal places.

Question 5 (7 points)

 Acme Company has a January 15 mid-month gross salaries expense of $25,000. All salaries are subject to FICA Social Security (6.2%), FICA Medicare (1.45%), state income tax (5%) and federal income tax (15%) withholdings. Additionally, all salaries are subject to employer taxes to include FUTA (0.8%) and SUTA (5.4%) taxes. (Round all calculations to the nearest penny.)

Required:

1. Prepare the general journal entry to record the employer's payroll liability.
2. Prepare the general journal entry to record the employer's payroll-tax liability.
3. Prepare the general journal entry to liquidate (pay) the liabilities accrued in parts (a) and (b) on January 22.

Question 6 (4 points)

At the end of the fiscal 2015 year, Acme Company has the following information: Credit Sales, $2,500,000; Sales Returns and Allowances, $25,000; Accounts Receivable, $200,000; and Allowance for Doubtful Accounts with a Debit, $1,500.

Required:

1. Prepare the general journal entry to record the end-of-the-year adjusting entry if Acme uses 0.5% of Net Credit Sales as the basis for determining Bad-Debt Expense.
2. Prepare the general journal entry to record the end-of-the-year adjusting entry if Acme uses 5% of Accounts Receivable as the basis for determining Bad-Debt Expense.

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Final Exam Answer Sheet 

ACCT 220 Final Exam Answer Sheet

Question 1(40points)

1. General Journal Entries:

Date

Account

Debit

Credit

b. Adjusting Entries:

Date

Account

Debit

Credit

c. Adjusted Trial Balance:

Adjusted Trial Balance

Account Titles

Debit

Credit

d. Classified Balance Sheet:

e. Closing Entries:

Date

Account

Debit

Credit

Question 2(8points)

1. Cost of Goods Available for Sale

1. Sales

1. Value of:

Ending Inventory

COGS

1. LIFO method

1. FIFO method

1. Average-cost method

Question 3 (7points)

Date

Account

Debit

Credit

Question 4: (9points)

a.Answer:

Year

Depreciation Expense

Total Accumulated Depreciation

End-of-YearBook Value

b.Answer:

Year

Depreciation Expense

Total Accumulated Depreciation

End-of-YearBook Value

c.

Answer

Question 5(7points)

Date

Account

Debit

Credit

Question 6(4points)

Date

Account

Debit

Credit

Questions 7-31 (1point each)-Note your Multiple Choice answer choice (a, b, c, d, or e) next to each Multiple Choice question below.

7. ______                                                                  21. ______

8. ______                                                                  22. ______

9. ______                                                                  23. ______

10.______                                                                 24. ______

11. ______                                                                25. ______

12. ______                                                                26. ______

13. ______                                                                27. ______

14. ______                                                                28._______

15. ______                                                                29. _______

16. ______                                                                30. _______

17. ______                                                                31. _______

18. ______

19. ______

20. ______

MC Questions Final Exam ACCT 220 Spring 2017

Question 7 (1 point)

After the bank reconciliation is prepared, the entry to record bank service charges would have a credit to _______________.

Bank Service Charge Expense

Cash

Petty Cash

Cash Short and Over

None of the above

Question 8 (1 point)

Malloy Company estimates uncollectible accounts using the percentage-of-receivables method and expects that 5 percent of outstanding receivables will be uncollectible for 2015. The balance in Accounts Receivable is $200,000, and the allowance account has a $3,000 credit balance before adjustment at year end. The uncollectible accounts expense for 2015 will be _______________.

$7,000

$10,000

$13,000

$9,850

None of the above

Question 9 (1 point)

Malloy Company issued its own $10,000, 90-day, non-interest-bearing note to a bank. The only payment Malloy will ever make to the bank will be for $10,000 at the maturity date of the loan as the bank discounts the note at 10 percent. The proceeds to Malloy are _______________.

$10,000

$9,000

$9,750

$10,250

None of the above

Question 10 (1 point)

On 2015 July 1, Malloy Company purchased equipment for $400,000, and installation and testing costs totaled $40,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $40,000. If Malloy uses the double-declining-depreciation method, the depreciation expense for 2015 is _______________.

$88,000

$72,000

$36,000

$44,000

$40,000

Question 11 (1 point)

The result of recording a capital expenditure as a revenue expenditure is an _______________.

overstatement of current year's expense

understatement of current year's expense

understatement of subsequent year's net income

overstatement of current year's net income

None of the above

Question 12 (1 point)

Cole Inc., a new company, purchases a two-year insurance policy for $12,000. Six months later, the correct balance in the prepaid insurance account would be _______________.

$12,000

$6,000

$9,000

None of the above

Question 13 (1 point)

Which of the following is not an advantage of the corporate form of organization?

continuous existence of the entity

limited liability of stockholders

government regulation

easy transfer of ownership

Question 14 (1 point)

Treasury stock should be shown on the balance sheet as a(n) _______________.

reduction of the corporation's stockholders' equity

current asset

current liability

investment asset

Question 15 (1 point)

When the stockholders invest cash in the business, what is the effect on the accounting equation?

Liabilities increase and stockholders' equity increases.

Both assets and liabilities increase.

Both assets and stockholders' equity increase.

None of the above

Question 16 (1 point)

The ending balance in retained earnings is shown in the _______________.

income statement

statement of retained earnings

balance sheet

both (b) and (c)

both (a) and (c)

(a), (b), and (c)

Question 17 (1 point)

A cash dividend of $500 was declared and paid to stockholders simultaneously. The correct journal entry to record the declaration and payment simultaneously is _______________.

debit Capital Stock 500 and credit Cash 500

debit Cash 500 and credit Dividends 500

debit Dividends 500 and credit Cash 500

debit Cash 500 and credit Capital Stock 500

Question 18 (1 point)

If $3,000 has been earned but not yet paid to a company's workers since the last payday within an accounting period, the necessary adjusting entry at the end of that accounting period would be _______________.

debit an expense and credit a liability

debit an expense and credit an asset

debit a liability and credit an asset

debit a liability and credit an expense

Question 19 (1 point)

The accrual basis of accounting _______________.

recognizes revenues only when cash is received

is used by almost all companies

recognizes expenses only when cash is paid out

recognizes revenues when sales are made or services are performed, and recognizes expenses only when cash is paid out

Question 20 (1 point)

The need for adjusting entries is based on _______________.

the matching principle

source documents

the cash basis of accounting

activity that has already been recorded in the proper accounts

Question 21 (1 point)

Which of the following statements is false regarding the closing process?

The Dividends account is closed to Income Summary.

The closing of expense accounts results in a debit to Income Summary.

The closing of revenues results in a credit to Income Summary.

The Income Summary account is closed to the Retained Earnings account.

Question 22 (1 point)

Which of the following statements is true regarding the classified balance sheet?

Current assets include cash, accounts receivable, and equipment.

Plant, property, and equipment is one category of long-term assets.

Current liabilities include accounts payable, salaries payable, and notes receivable.

Stockholders' equity is subdivided into current and long-term categories.

Question 23 (1 point)

The underlying assumptions of accounting include all the following except _______________.

business entity

going concern

matching

money measurement and periodicity

Question 24 (1 point)

Malloy Company began the accounting period with $60,000 of merchandise, and the net cost of purchases was $240,000. A physical inventory showed $72,000 of merchandise unsold at the end of the period. The cost of goods sold of Malloy Company for the period is _______________.

$300,000

$228,000

$252,000

$168,000

None of the above

Question 25 (1 point)

A classified income statement consists of all of the following major sections except _______________.

Operating revenues

Cost of goods sold

Operating expenses

Non-operating revenues and expenses

Current assets

Question 26 (1 point)

A business purchased merchandise for $12,000 on account; terms are 2/10, n/30. If $2,000 of the merchandise was returned and the remaining amount due was paid within the discount period, the purchase discount would be _______________.

$240

$200

$1,200

$1,000

$3,600

Question 27 (1 point)

Malloy Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of ending inventory using weighted-average is _______________.

$114,750

$157,600

$122,400

$109,650

None of the above

Question 28 (1 point)

Malloy Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic inventory procedure. The cost of goods sold using weighted-average is _______________.

$147,200

$160,350

$155,250

$114,000

None of the above

Question 29 (1 point)

During a period of rising prices, which inventory method might be expected to give the highest net income?

Weighted-average

FIFO

LIFO

Specific identification

Cannot determine

Question 30 (1 point)

The following information is related to the bank reconciliation of the Acme Company:

Balance per bank statement

$1,951.20

Balance per ledger

1,869.60

Deposits in transit

271.20

Outstanding checks

427.80

NSF check

61.20

Service charges

13.80

The adjusted/correct cash balance is _______________.

Question 30 options:

$1,794.60

$1,719.60

$1,638.00

$1,713.00

$1,876.20

Question 31 (1 point)

In a bank reconciliation, deposits in transit should be _______________.

Question 31 options:

deducted from the balance per books

deducted from the balance per bank statement

added to the balance per ledger

added to the balance per bank statement

disregarded in the bank reconciliation