Solved by verified expert :ACC 422 Final Exam
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Question 1
Kraft
Enterprises owns the following assets at December 31, 2012.
Cash
in bank–savings account 67,
516 Checking account
balance 26,445
Cash
on Hand 9,478 Postdated checks 753
Cash
refund due from IRS 40,324 Certificates of deposit(180 day) 94,754
What
amount should be reported as cash?
Question 2
Presented
below is information related to Rembrandt Inc.’s inventory.
Per
Units Skis Boots Parkas
Historical
Cost $254.22 $141.83 $70.91
Selling
Price 290.35 194.01 98.68
Cost
to distribute 25.42 10.70 3.35
Current
replacement cost 271.61 140.49 68.24
Normal
profit margin 42.82 38.80 28.43
Determine
the following
a).
the two limits to market value (e.g., the ceiling and the floor) that should be
used in the lower of cost or market computation for skis; (Round answers to 2
decimal places, e.g. 20.25.)
b).
the cost amount that should be used in the lower of cost or market comparison
of boots; (Round answer to 2 decimal places, e.g. 20.25.)
c).
the market amount that should be used to value parkas on the basis of the lower
of cost or market. (Round answer to 2 decimal places, e.g. 20.25.)
Question 3
Matlock
Company uses a perpetual inventory system. Its beginning inventory consists of 74
units that cost $44 each. During June, the company purchased 222 units at $44
each, returned 9 units for credit, and sold 185 units at $74 each. Journalize
the June transactions.
Question 4
Amsterdam
Company uses a periodic inventory system. For April, when the company sold 700
units, the following information is available.
Units Unit Cost Total Cost
April
1 inventory 250 $16 $4,000
April
15 purchase 400 19
7,600
April
23 purchase 350 21 7,350
1,000 $18,950
Compute
the April 30 inventory and the April cost of goods sold using the average cost
method. (Round computations for cost per unit to 2 decimal places, e.g. 10.25
and answers to 0 decimal places, e.g. 2,250.)
Question 5
Amsterdam
Company uses a periodic inventory system. For April, when the company sold 600
units, the following information is available.
Units Unit Cost Total Cost
April
1 inventory 250 $13 $3,250
April
15 purchase 400 16 6,400
April
23 purchase 350 17 5,950
1,000 $15,600
Compute
the April 30 inventory and the April cost of goods sold using the FIFO
method.
Question 6
(FIFO,
LIFO, Average Cost Inventory)
Esplanade
Company was formed on December 1, 2011. The following information is available
from Esplanade’s inventory records for Product BAP.
Units Unit Cost
January
1, 2012(beginning inventory)768 $8.00
Purchases:
January
5, 2012 1,536 9.00
January
25, 2012 1,664 10.00
February
16, 2012 1,024 11.00
March
26, 2012 768 12.00
A
physical inventory on March 31, 2012, shows 2,048 units on hand. Prepare
schedules to compute the ending inventory at March 31, 2012, under each of the
following inventory methods. Assume Esplanade Company uses the periodic
inventory method.
Question 7
Floyd
Corporation has the following four items in its ending inventory
Item Cost Replacement Cost (NRV) NRV- Normal Profit Marging
Jokers $2,236 $2,292 $2,348 $1,789
Penguins 5,590 5,702 5,534 4,584
Riddlers 4,919 5,087 4,282 4,137
Scarecrows 3,578 3,343 4,282 3,432
Question 8
Kumar
Inc. uses a perpetual inventory system. At January 1, 2013, inventory was
$241,606 at both cost and market value. At December 31, 2013, the inventory was
$322,894 at cost and $303,701 at market value. Prepare the necessary December
31 entry under:
(a)
the
cost of goods sold method
(b) the loss method
Question 9
Boyne
Inc. had beginning inventory of $15,000 at cost and $25,000 at retail. Net
purchases were $150,000 at cost and $212,500 at retail. Net markups were
$12,500; net markdowns were $8,750; and sales were $196,250. Compute ending
inventory at cost using the conventional retail method. (Round computation for
cost-to-retail ratio percentage and answer to 0 decimal places, e.g. 25,250.)
Question 10
Astaire
Company uses the gross profit method to estimate inventory for monthly
reporting purposes. Presented below is information for the month of May.
Inventory
May 1 $184,000
Purchases
(gross) 736, 000
Freight-in 34, 500
Sales 1,150,000
Sales
returns 80,500
Purchase
discounts 13,800
Compute
the estimated inventory at May 31, assuming that the gross profit is 25% of
sales
Compute
the estimated inventory at May 31, assuming that the gross profit is 25% of
cost
Question 11
Previn
Brothers Inc. purchased land at a price of $27,400. Closing costs were $2,550.
An old building was removed at a cost of $10,530. What amount should be
recorded as the cost of the land?
Question 12
Garcia
Corporation purchased a truck by issuing an $90,400, 4-year,
zero-interest-bearing note to Equinox Inc. The market rate of interest for
obligations of this nature is 10%. Prepare the journal entry to record the
purchase of this truck. (Round answers to 0 decimal places, e.g. 15,510. List
multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.
Hint: Use tables in text.)
Question 13
Mohave
Inc. purchased land, building, and equipment from Laguna Corporation for a cash
payment of $431,550. The estimated fair values of the assets are land $82,200,
building $301,400, and equipment $109,600. At what amounts should each of the
three assets be recorded? (Note: Do not round the computation of the % of
total.)
Question 14
Fielder
Company obtained land by issuing 2,000 shares of its $11 par value common
stock. The land was recently appraised at $91,800. The common stock is actively
traded at $44 per share. Prepare the journal entry to record the acquisition of
the land. (List multiple debit/credit entries from largest to smallest amount,
e.g. 10, 5, 2.)
Question 15
Navajo
Corporation traded a used truck (cost $22,600, accumulated depreciation
$20,340) for a small computer worth $4,181. Navajo also paid $1,130 in the
transaction. Prepare the journal entry to record the exchange. (The exchange
has commercial substance.) (List multiple debit/credit entries from largest to
smallest amount, e.g. 10, 5, 2.)
Question 16
Mehta
Company traded a used welding machine (cost $12,330, accumulated depreciation
$4,110) for office equipment with an estimated fair value of $6,850. Mehta also
paid $4,110 cash in the transaction. Prepare the journal entry to record the
exchange. (The exchange has commercial substance.) (List multiple debit/credit
entries from largest to smallest amount, e.g. 10, 5, 2.)
Question 17
Depreciation
is normally computed on the basis of the nearest
a).
Full month and to the nearest cent.
b).
Full month and to the nearest dollar
c).
Day and to the nearest cent.
d).
Day and to the nearest dollar
Question 18
Fernandez
Corporation purchased a truck at the beginning of 2012 for $43,260. The truck
is estimated to have a salvage value of $2,060 and a useful life of 164,800
miles. It was driven 23,690 miles in 2012 and 31,930 miles in 2013. Compute
depreciation expense for 2012 and 2013.(Round answers to 0 decimal places, i.e.
2,250.)
Question 19
Lockhard
Company purchased machinery on January 1, 2012, for $77,400. The machinery is
estimated to have a salvage value of $7,740 after a useful life of 8
years.
(a).
Compute 2012 depreciation expense using the double-declining balance method
(b).
Compute 2012 depreciation expense using the double-declining balance method
assuming the machinery was purchased on October 1, 2012.(Round answer to 0
decimal places, i.e. 2,250.)
Question 20
Jurassic
Company owns machinery that cost $955,800 and has accumulated depreciation of
$382,320. The expected future net cash flows from the use of the asset are
expected to be $531,000. The fair value of the equipment is $424,800. Prepare
the journal entry, if any, to record the impairment loss.
Question 21
Everly
Corporation acquires a coal mine at a cost of $496,800. Intangible development
costs total $124,200. After extraction has occurred, Everly must restore the
property (estimated fair value of the obligation is $99,360), after which it
can be sold for $198,720. Everly estimates that 4,968 tons of coal can be
extracted. If 869 tons are extracted the first year, prepare the journal entry
to record depletion.
Question 22
Francis
Corporation purchased an asset at a cost of $42,800 on March 1, 2012. The asset
has a useful life of 8 years and a salvage value of $4,280. For tax purposes,
the MACRS class life is 5 years. Compute tax depreciation for each year
2012–2017. (Round answers to 0 decimal places.)
Question 23
Celine
Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for
$54,600. The patent has a remaining legal life of 16 years. Celine Dion feels
the patent will be useful for 10 years. Prepare Celine Dion’s journal entries
to record the purchase of the patent and 2012 amortization.
Question 24
Karen
Austin Corporation has capitalized software costs of $757,100, and sales of
this product the first year totaled $400,710. Karen Austin anticipates earning
$934,990 in additional future revenues from this product, which is estimated to
have an economic life of 4 years. Compute the amount of software cost
amortization for the first year.
(a)
Compute the amount of software cost amortization for the first year using the
percent of revenue approach.
(b)
Compute the amount of software cost amortization for the first year using the
straight-line approach.
Question 25
Jeff
Beck is a farmer who owns land which borders on the right-of-way of the
Northern Railroad. On August 10, 2012, due to the admitted negligence of the
Railroad, hay on the farm was set on fire and burned. Beck had had a dispute
with the Railroad for several years concerning the ownership of a small parcel
of land. The representative of the Railroad has offered to assign any rights
which the Railroad may have in the land to Beck in exchange for a release of
his right to reimbursement for the loss he has sustained from the fire. Beck
appears inclined to accept the Railroad’s offer. The Railroad’s 2012 financial
statements should include the following related to the incident:
a).
Disclosure in note form only
b).
recognition of a loss and creation of a liability for the value of the
land
c).
recognition of a loss only
d).
creation of a liability only
Question 26
Roley
Corporation uses a periodic inventory system and the gross method of accounting
for purchase discounts. On July 1, Roley purchased $73,000 of inventory, terms
2/10, n/30, FOB shipping point. Roley paid freight costs of $1,300. On July 3,
Roley returned damaged goods and received credit of $7,300. On July 10, Roley
paid for the goods. Prepare all necessary journal entries for Roley. (For
multiple debit/credit entries, list amounts from largest to smallest, e.g. 10,
8, 6)
Question 27
Takemoto
Corporation borrowed $105,600 on November 1, 2012, by signing a $107,976,
3-month, zero-interest-bearing note. Prepare Takemoto’s November 1, 2012,
entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013,
entry. (For multiple debit/credit en tries, list amounts from largest to
smallest, e.g. 10, 8, 6. Round all answers to 0 decimal places, e.g.
11,150.)
Question 28
Whiteside
Corporation issues $584,000 of 9% bonds, due in 15 years, with interest payable
semiannually. At the time of issue, the annual market rate for such bonds is
10%. Compute the issue price of the bonds. (Use the present value tables in the
text. Round your answer to zero decimal places, e.g. 2,510.)
Question 29
Indiana
Jones Company enters into a 6-year lease of equipment on January 1, 2012, which
requires 6 annual payments of $36,920 each, beginning January 1, 2012. In
addition, the lessee guarantees a residual value of $20,720 at lease-end. The
equipment has a useful life of 6 years. Assume that for Lost Ark Company, the
lessor, collectibility is reasonably predictable, there are no important
uncertainties concerning costs, and the carrying amount of the machinery is
$180,505. Prepare Lost Ark’s January 1, 2012, journal entries.
Question 30
On
January 1, 2012, Irwin Animation sold a truck to Peete Finance for $25,250 and
immediately leased it back. The truck was carried on Irwin’s books at $20,000.
The term of the lease is 5 years, and title transfers to Irwin at lease-end. The
lease requires five equal rental payments of $6,832 at the end of each year.
The appropriate rate of interest is 11%, and the truck has a useful life of 5
years with no salvage value. Prepare Irwin’s 2012 journal entries. (Round your
answer to the nearest dollar eg 58,591.?For multiple
debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
