ACCT 212 Week 8 Final Exam (Version 2 – Summer 2018)

1. Question: At the end of the period it is necessary to close all temporary accounts. (1) Explain why this process is required (15 points) and (2) provide an example of the closing of an expense account, Salary Expense in the form of a journal entry. (10 points)(Points : 25)
2. Question: (TCO 2) In accounting it is necessary to understand which accounts have a debit balance and which accounts have a credit balance. (1) Name 2 accounts that have a normal debit balance (10 points). (2) Name 2 accounts that have a normal credit balance (10 points). (3) Give an example of a journal entry when a company purchases land for $5000 by paying cash using the debit/credit rules. (5 points)(Points : 25)
3. Question: (TCO 4) Inventory valuation methods determine the cost of goods sold and the inventory balance. (1) Describe the difference between the LIFO, FIFO and average cost methods of accounting for inventory (15 points). (2) Give an example of the application of each method – LIFO, FIFO and Average Cost (10 points).  (Points : 25)
4. Question: (TCO 4) Inventory valuation methods determine the cost of goods sold and the inventory balance. (1) Explain how the Last in First out (LIFO) method is applied (15 points) and (2) provide an example of the impact that this method of inventory valuation will have on Gross Profit. (10 points)(Points : 25)
5. Question: (TCO 1) The Balance Sheet is sometimes referred to as a snap-shot of the financial position of the business on a particular date. Name the three major components of the Balance Sheet (15 points) and provide an example of an account that would be found in each major component (10 points). (Points : 25)

Play Video

Name: Jennifer Lucas
Status: Online ⬤
Classes Taken: 3878
Ratings: ⭐⭐⭐⭐⭐

Hire Me

STATUS

Page 2

1. Question: (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.(Points : 25)
2. Question: (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. Question: (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 points each with 2 points for listing and 3 points for a description)(Points : 25)
4. Question: (TCO 2) 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)

5. Question: (TCO 4) 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

• Using Average Cost
• Prepare the following statement
  Using

FIFO    LIFO        Average Cost

• Sales
• Cost of Sales
• Gross Profit  (Points : 25)