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Devry ACCT 212 Week 8 Final Exam

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Devry ACCT 212 Week 8 Final Exam

Question 1 25 pts
(TCO 3) Closing temporary accounts is necessary at the end of the accounting period. (1) Explain the closing process, include each set of entries required (15 points) and (2) provide an example of closing the Dividend account in the form of a journal entry. (10 points)

Question 2 25 pts
(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)

Question 3 25 pts
(TCO 4) The accountant of Bulsara Co. is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. Internal Control Procedures are required to safeguard company assets and to ensure ethical operation of the business. (1) Explain which internal control procedure has been violated in the Bulsara Co. case (10 points) and (2) what would you recommend for improvement. (15 points)

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Question 4 25 pts
(TCO 4) Linda’s Lampshades started business on Jan. 1, 2001. They had the following inventory transactions:

Journals – Jan. 2001

Purchases

[table id=1 /]

Sales

[table id=2 /]

Calculate the ending inventory, using the perpetual inventory method:

Using FIFO
Using LIFO
Using Average Cost
Prepare the following statement

Using
FIFO
LIFO
Average Cost
Sales
Cost of Sales
Gross Profit

Question 5 25 pts
(TCO 1) To evaluate the financial operations and health of a business, ratio anaylysis is used. 1) What do profitability ratios indicate about the company? (10 points) 2) Please provide 2 examples of profitability ratios and the related formula and indicate how they can be used in the decision making process. (15 points)

Question 6 25 pts
On January 2, Year 1, Logan Co. purchased a manufacturing machine for $864,000.
The machine has an 8¬year estimated life and a $144,000 estimated salvage value.
Logan expects to manufacture 1,800,000 units over the life of the machine.
During Year 2, Logan manufactured 300,000 units.

Compute the second year depreciation expense and prepare a proper journal entry using:

  1. Double-declining balance
  2. Straight-line
  3. Units of Production

Question 7 25 pts
In its initial public offering during 2012, Fresh Produce issued 360,000 shares of its $5.00 par common stock for $5.50 per share.
Over the next year, Fresh Produce’s stock price increased, and the company issued 400,000 more shares at an average price of $9.50.
During 2014, the price of Fresh Produce’s common stock dropped to $7.50, and Fresh Produce purchased 59,000 shares of its common stock for the treasury.
After the market price of the common stock rose in 2015, Fresh Produce sold 45,000 shares of the treasury stock for $10.00 per share.
During the five years 2012 to 2017, Fresh Produce earned net income of $940,000 and declared and paid cash dividends of $245,000.
Stock dividends of $441,630 were distributed to the stockholders in 2013, with $315,450 credited to common stock and $126,180 credited to additional paid-in capital.
At December 31, 2017, total assets of the company are $14,500,000, and liabilities add up to $8,017,500.
Show the computation of Fresh Produce’s total stockholders’ equity at December 31, 2017. Present a detailed computation of each element of stockholders’ equity.

Question 8 25 pts
Team Sports Ltd. is authorized to issue $5,000,000 of 5%, 10-year bonds payable.
On December 31, 2012, when the market interest rate is 6%, the company issues $4,000,000 of the bonds and receives cash of $3,702,450.
Team Sports Ltd. amortizes bond discount by the effective-interest method. The semiannual interest dates are June 30 and December 31.

  1. Prepare a bond amortization table for the first four semiannual interest periods.
  2. Record issuance of the bonds payable on December 31, 2012; the first semiannual interest payment on June 30, 2013; and the second payment on December 31, 2013.