PartA:Answereachofthefollowingtwoquestions.Eachanswerisworth
20points.
ThefollowinginfcrmationwasmadeavailablefromtheincomestatementandbalancesheetofMerandaCompany:
Item / 12/31/10 / 12/31/09AccountsReceivable / $ 42,000 / $45,100
AccountsPayable / 27,900 / 24,500
MerchandiseInventory / 68,000 / 63,000
Sales(2010) / 170,000
InterestRevenue(2010) / 3,200
DividendRevenue(2010) / 1,800
TaxExpense(2010) / 11,600
SalariesExpense(2010) / 22,400
COGS(2010) / 57,000
InterestExpense(2010) / 2,200
OperatingExpenes / 19,400
Completethecashflo
usingthe directmetho
fromoperatingactivitiessectionforMeranda CompanyfortheyearendedDecember31,2010.
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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
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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 / $171,309Common 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
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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 CostJanuary 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?
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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 / $28,542Checkbook Balance, July 31, 2011 / 29,344
Bank collection of note receivable / 1,545 + 210
interest
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
for $280, recorded at $28)—maintenance
expense
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 ______
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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.