Part A: Answer each of the following two questions. Each answer is worth 20 points.
1. The following information was made available from the income statement and balance sheet of Miranda Company.
Item 12/31/10 12/31/09
Accounts Receivable $ 42,000 $ 45,100
Accounts Payable 27,900 24,500
Merchandise Inventory 68,000 63000
Sales 2010 170,000
Interest Revenue 2010 3,200
Dividends Revenue 2010 1,800
Tax expense 2010 11,600
Salaries Expenses 2010 22,400
COGS 2010 57,000
Interest Expenses 2010 2,200
Operating Expenses 19,400
Complete the cash flow from operating activities section for Meranda Company using the direct method for the year ended December 31, 2010.
2. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.
Jessica jewel store comparative Balance sheet for year ended December 31, 2011 and 2010
In thousands 2011 2010 Difference Percentage
Assets
Current Assets
Cash Equivalents $319 $288
Accounts Receivable, net 166 173
Inventory 437 400
Total Current Asset 922 861
Property, Plant and equipment 377 412
Total Assets $1,299 $1273
Liabilities
Current liabilities
Accounts Payables 132 144
Accrued Liabilities 90 84
Total current liabilities 222 228
Long Term Liabilities 84 96
Total Liabilities 306 324
Stockholder Equity
Common Stock 288 255
Retained Earnings 705 694
Total Stockholder Equity 993 949
Total Liabilities and Stockholder Equity $1,299 1,273
Part B: Answer each of the following 15 questions. Each answer is worth
4 points.
1. Given the following information, show the increase or decrease in the accounting equation:
A. Deanne invests $45,000 and $10,000 of office equipment into the business.
B. Furniture is purchased for $8,000 cash.
C. Supplies are purchased on credit for $2,300.
D. The month s electric bill of $775 was paid.
E. The month s cash sales were $5,000.
2. Journalize the following transactions and include the explanations.
A. Tammy invested $40,000 into her corporation on June 11.
B. Tammy purchased inventory for $95,000, of which $70,000 was on account on June 14.
C. Tammy paid one month s rent of $2,400 on June 16.
D. Tammy had sales of $15,000 on account on June 19.
E. Tammy had paid $2,500 on her payables account on June 21.
3. Prepare a trial balance from the following information for Computer
Systems, Inc. for December 31, 2012:
Accounts payable $4,298
Common stock $4,073
Sales $8,302
Cash $1,902
Notes payable $888
Wages expense $777
Supplies expense $1,028
Equipment $5,183
Accounts receivable $1,733
Inventory $6,938
4. Compute the missing information from this post-closing trial balance:
Cash $38,502
Accounts Receivable 14,372
Prepaid Rent 18,229
Prepaid Insurance 4,583
Supplies (A)
Accounts Payable (B)
Wages Payable 29,428
Common Stock 30,049
Retained Earnings 18,423
_______ _______
Total $80,436 $80,436
5. Journalize the following transactions using the perpetual inventory method:
Nov. 1 Purchased $3,600 of merchandise from Hilltop, terms 2/10, n/30.
Nov. 5 Purchased $1,750 of merchandise for cash from Owen s Supply.
Nov. 7 Purchased $3,400 of merchandise from Seaside, terms 1/15, n/30.
Nov. 10 Returned $500 of merchandise to Seaside. Credit Memo #131.
Nov. 11 Paid the invoice from Hilltop.
6. Given the following information, prepare a balance sheet for Brandon s
Campstore for the year ending December 31, 2012:
|
Cash |
$38,745 |
Retained Earnings |
$171,309 |
|
Common Stock |
$43,500 |
Equipment |
$37,200 |
|
Accounts Receivable |
$14,109 |
Accounts Payable |
$26,351 |
|
Land |
$35,000 |
Inventory |
$81,311 |
|
Prepaid Supplies |
$9,003 |
Income Taxes Payable |
$5,284 |
|
Office Computers |
$16,399 |
Other PPE |
$26,550 |
|
Accum. Depr. (all) |
$21,013 |
Prepaid Insurance |
$9,140 |
7. Rick Company s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note:The company uses a perpetual system of inventory.)
|
Units |
Unit Price |
Total Cost |
|
|
January 1 Beginning |
18 |
$24 |
432 |
|
inventory |
|||
|
March 12 Sold |
13 |
||
|
April 11 Purchase |
45 |
$29 |
$1,305 |
|
June 20 Sold |
33 |
||
|
Aug 16 Purchase |
35 |
$27 |
$945 |
|
Sept 11 Sold |
29 |
||
|
Total Cost of Inventory |
|||
|
Ending inventory is 23 units. |
$2,682 |
What is the ending inventory of Rick Company for 2012 using FIFO?
8. Assume that in Year 1, the ending merchandise inventory is overstated by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for
Years 1 and 2.
Item Year 1 Year 2
Gross Profit _____________ ______________
Net Income _____________ ______________
Ending Retained Earnings _____________ ______________
9. Below is a list of treatments of accounting topics. Place GAAP on the line if the treatment is GAAP-based and place IFRS on the line if the treatment is
IFRS-based.
A. The use of LIFO is allowed. ___________________
B. Both research and development costs are expensed as incurred.
___________________
C. Market is defined as current replacement cost. ___________________
10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:
|
Bank Balance, July 31, 2011 |
$28,542 |
|
Checkbook Balance, July 31, 2011 |
29,344 |
|
Bank collection of note receivable |
1,545 + 210 |
|
Bank service charge |
75 |
|
Deposits in transit |
3,145 |
|
Outstanding checks |
2,685 |
|
NSF check from customer |
770 |
|
Correction of book error (check #456 written |
|
11. Journalize the following transactions for Ryan Company:
July 1 Sold $5,300 of merchandise to Rick on account.
Nov. 1 Exchanged Rick s account receivable for an eight-month, 6% note for $5,300.
Dec. 31 Recorded accrued interest on Jim s note (round to nearest dollar).
July 1 Rick paid off his note with interest (round to nearest dollar).
12. A computer system was purchased on July 1 at a cost of $125,000. It s expected to be used for four years and to have a residual value of $5,000 after 8,000 hours of service. The system was used for 1,750 hours the first year and 2,100 hours the second year. Calculate the depreciation expense to the nearest dollar for the first and second years.
Method
Year 1 Year 2
Straight-line ________ ________
Double-declining-balance ________ ________
Units-of-production ________ ________
13. Prepare journal entries for the following transactions for Ryan Company in the general journal:
Feb. 28 Machinery that cost $57,000 and had accumulated depreciation of $46,000 was sold for $2,500.
April 10 A van that cost $23,700 and had accumulated depreciation of $21,000 was sold for $1,250.
July 16 Equipment that cost $120,000 and had accumulated depreciation of $112,000 was traded in for new equipment with a fair-market value of $140,000. The old equipment and $135,000 in cash were given for the new equipment.
14. Journalize the following treasury stock transactions:
May 1 Reacquired 800 shares of $15 par common stock for $13 per share.
May 7 Sold 400 shares at $11 per share.
May 9 Sold 250 shares at $17 per share
15. The following information was taken from the financial statements of
Brandon Company for 12/31/10 and12/31/09:
Net income for 2010: $313,000
Depreciation expense for 2010: $28,400
Loss on sale of equipment: $7,300
Balance Sheet 12/31/10 12/31/09
Accounts Receivable $46,000 $50,000
Merchandise Inventory 35,000 28,000
Accounts Payable 27,000 24,000
Interest Payable 6,000 8,000
Prepare the operating activities section of the statement of cash flows under the indirect method for the year ended December 31, 2010.