Solved by verified expert :ACCT
212 Final Exam
1. (TCO
3) At the end of the period it is necessary to close all temporary accounts.
(1) Explain why this process is required (10 points) and (2) provide an example
of the closing of an expense account, Salary Expense in the form of a journal
entry.
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 the
debit/credit rules are used when developing journal entries (10 points) and (2)
provide an example of the application of the debit/credit rules in the form of
a journal entry.
3. (TCO
5) Internal Control Procedures are required to safeguard company assets and to
ensure ethical operation of the business. (1) Explain how limited access can
satisfy the purpose of internal control (10 points) and (2) provide an example
of how this control could be implemented.
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 (10 points) and (2) provide an example of the impact that this method
of inventory valuation will have on Gross Profit.
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.
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.
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)
3. (TCO
5) Fraud is an intentional misrepresentation of facts, made for the purpose of
persuading another party to act in a way that causes injury or damage to that
party. In our readings and discussions we have seen several examples of
fraud in business. Using that experience (1) provide an example of a
common fraudulent practice in business with an explanation of how the practice
works and (2) name and describe each of the elements of the Fraud
Triangle.
4. (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. (TCO2)
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)
6.
(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
1.
Depreciation is a process to allocate the cost of long-life assets to each
period’s income statement and adjusts the value of the asset on the balance
sheet. (1) Explain how the Units-of-Production method is computed (10 points)
and (2) provide an example of how this method could be used on a new delivery
truck purchased for $25,000 to be used for 100,000 miles with a salvage value
of $5,000 for year one only (25,000 miles driven in year one)
