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41 Cards in this Set
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ACC 422 Complete Class ACC 422 Intermediate Financial Accounting II |
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ACC 422 Final Exam Guide |
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ACC 422 Week 1 DQ 1 Consider how an organization must manage cash, receivables, and inventory. Which of the three variables is the most important to manage? Is one more susceptible to fraud and errors than the others? Explain your answer. How would a misstatement in each affect the organization? |
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ACC 422 Week 1 DQ 2 What is the perpetual method of tracking inventory? How does it differ from the periodic method of tracking inventory? Why would a company choose one method over the other method? Which is the best method? Why? |
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ACC 422 Week 1 DQ 3 What are the different ways to estimate bad debt? How does this affect net income? What does Generally Accepted Accounting Principles (GAAP) require? Why? Should all companies have bad debt? Explain your answer. |
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ACC 422 Week 1 DQ 4 Why is it important to have effective control of cash? |
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ACC 422 Week 1 DQ 5 What are the basic issues involved with the valuation of receivables? |
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ACC 422 Week 1 DQ 6 Which cost flow assumption gives you the highest ending inventory? Why? |
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ACC 422 Week 1 Individual Disclosure Analysis Paper Select a publicly held company to use as the basis for this assignment. Research your selected company and acquire the company’s most recent financial statements using the Internet. Prepare a 700- to 1,050-word paper analyzing the disclosures contained within the notes to the financial statements related to cash and cash equivalents, receivables, and inventories. Include a list identifying the components of the organization’s cash and cash equivalents. Format your paper consistent with APA guidelines |
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ACC 422 Week 1 Summary |
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ACC 422 Week 2 DQ 1 Under what circumstances would a company need to estimate its inventory? What are the differences between using the gross profit method and retail inventory method for estimating inventory? Which method of estimation, gross profit or retail inventory, is best? Explain your answer. |
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ACC 422 Week 2 DQ 2 What are the criteria for capitalization of fixed assets? What items are included in the cost of a fixed asset? Should interest be included in the cost of a fixed asset? Explain why or why not. |
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ACC 422 Week 2 DQ 3 How do we account for the disposition of fixed assets? What are the differences in how the exchanges of assets are handled, pending on whether they are similar or dissimilar? What is the rationale for these differences? What is the impact to the companies’ financial statements? |
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ACC 422 Week 2 DQ 4 Why is it necessary to value inventories using the lower of cost or market concept? |
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ACC 422 Week 2 Individual Assignments From the Text Resource: Intermediate Accounting Prepare written responses to the following assignments from the text: Ch. 7: Exercises E7-2 & E7-8 Ch. 8: Question 13 and Exercises E8-5 & E8-14 |
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ACC 422 Week 2 Learning Team Assignments From the Text Resource: Intermediate Accounting • Ch. 7: Problem P7-10 |
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ACC 422 Week 2 Summary |
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ACC 422 Week 2 WileyPLUS Assignment
Exercise 7-2 Presented below are a number of independent situations. 2. Checking account balance $503,630; an overdraft in special checking account at same bank as normal checking account of $20,900; cash held in a bond sinking fund $235,120; petty cash fund $332; coins and currency on hand $1,460. 3. Checking account balance $606,360; postdated check from a customer $11,450; cash restricted due to maintaining compensating balance requirement of $119,770; certified check from customer $9,610; postage stamps on hand $642. 4. Checking account balance at bank $46,660; money market balance at mutual fund (has checking privileges) $49,520; NSF check received from customer $845. 5. Checking account balance $703,110; cash restricted for future plant expansion $516,120; short-term Treasury bills $187,700; cash advance received from customer $986 (not included in checking account balance); cash advance of $7,540 to company executive, payable on demand; refundable deposit of $29,900 paid to federal government to guarantee performance on construction contract.
Exercise 7-8 At the end of 2012, Sorter Company has accounts receivable of $854,470 and an allowance for doubtful accounts of $47,360. On January 16, 2013, Sorter Company determined that its receivable from Ordonez Company of $6,240 will not be collected, and management authorized its write-off. (b) What is the net realizable value of Sorter Company’s accounts receivable before the write-off of the Ordonez receivable? (c) What is the net realizable value of Sorter Company’s accounts receivable after the write-off of the Ordonez receivable?
Exercise 8-5
Werth Company asks you to review its December 31, 2012, inventory values and prepare the necessary adjustments to the books. The following information is given to you. 1.
Werth uses the periodic method of recording inventory. A physical count reveals $348,107 of inventory on hand at December 31, 2012. 2.
Not included in the physical count of inventory is $15,442 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31. 3.
Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $18,970 on December 31. The merchandise cost $10,893, and Bubbey received it on January 3. 4.
Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $23,164. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded. 5.
Not included in inventory is $12,656 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30. 6.
Included in inventory was $15,469 of inventory held by Werth on consignment from Jackel Industries. 7.
Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $28,010 on December 31. The cost of this merchandise was $17,073, and Sims received the merchandise on January 5. 8.
Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $2,223 which had been sold to a customer for $3,853. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged.
(b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2012. Assume the books have not been closed. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Exercise 8-14
Calculate average cost per unit. (Round average cost per unit to 2 decimal places, e.g. $2.76.)
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ACC 422 Week 3 DQ 1 What is the purpose of depreciation? Does the book value of a fixed asset (cost minus accumulated depreciation) communicate to a user what the asset is worth? Explain why or why not. Should the financial statements reflect the value of fixed assets? Explain why or why not. |
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ACC 422 Week 3 DQ 2 What are the different methods used to calculate depreciation? How does a company decide which method it should utilize? How does its choice affect the financial statements? Should companies standardize the method of depreciation to enhance comparability? Explain your answer.
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ACC 422 Week 3 DQ 3 What is an intangible asset? Should all intangible assets be subject to amortization? Explain why or why not. Why are some intangible assets not amortized? What is the implication to the financial statements? |
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ACC 422 Week 3 DQ 4 Why are research and development costs expensed? Is this consistent with how other similar costs are handled? Explain why or why not. Should research and development costs be expensed? Explain why or why not. |
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ACC 422 Week 3 Individual Assignments From the Text Resource: Intermediate Accounting • Ch. 9: Exorcices E9-1, E9-12, & E9-19
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ACC 422 Week 3 Learning Team Assignments From the Text Resource: Intermediate Accounting • Ch. 9: Problem P9-9 |
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ACC 422 Week 3 Summary |
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ACC 422 Week 3 WileyPLUS Assignment Exercise 9-1
The inventory of Oheto Company on December 31, 2013, consists of the following items. Part No.
Quantity
Cost per Unit
Cost to Replace per Unit 110
620
$126
$133 111
1,140
80
69 112
580
106
101 113
230
226
239 120
450
273
277 121
1,650
21
19 122
330
319
313
(b) Determine the inventory by the lower-of-cost-or-market method, applying the method to the total of the inventory.
Exercise 9-12
Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Inventory, May 1
$ 171,000 Purchases (gross)
655,400 Freight-in
31,400 Sales
1,057,500 Sales returns
82,500 Purchase discounts
12,990
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.
Exercise 10-5 Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment. Abstract company’s fee for title search
$1,752 Architect’s fees
10,683 Cash paid for land and dilapidated building thereon
310,040 Removal of old building
$67,400
Less: Salvage
18,535
48,865 Interest on short-term loans during construction
24,938 Excavation before construction for basement
64,030 Machinery purchased (subject to 2% cash discount, which was not taken)
219,050 Freight on machinery purchased
4,516 Storage charges on machinery, necessitated by noncompletion of
building when machinery was delivered
7,347 New building constructed (building construction took 6 months from
date of purchase of land and old building)
1,634,450 Assessment by city for drainage project
5,392 Hauling charges for delivery of machinery from storage to new building
2,089 Installation of machinery
6,740 Trees, shrubs, and other landscaping after completion of building
(permanent in nature)
18,198
Exercise 10-12 Below are transactions related to Impala Company. (a)
The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $90,900. (b)
14,000 shares of common stock with a par value of $52 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $909,000, of which $186,500 has been allocated to land and $722,500 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $68 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $60 per share. (c)
No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.
Materials used
$12,880 Factory supplies used
970 Direct labor incurred
17,030 Additional overhead (over regular) caused by construction of
2,570 Fixed overhead rate applied to regular manufacturing operations
60% of direct labor cost Cost of similar machinery if it had been purchased from
45,020
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ACC 422 Week 4 DQ 1 What are the criteria for classifying an item as a current liability? What are some examples of current liabilities? Why is it important to classify a portion of long-term debt on a yearly basis as a current liability? What is the implication of misclassifying a liability as current or long-term? |
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ACC 422 Week 4 DQ 2 What is a contingency? Why are contingencies important to users of financial statements? What are the criteria for recording contingencies? Should companies record a liability for threatened litigation? Explain why or why not. |
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ACC 422 Week 4 DQ 3 What is a bond? What are some features of a bond? How do you value bonds? What factors can affect that value? |
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ACC 422 Week 4 Individual Assignments From the Text Resource: Intermediate Accounting • Ch. 11: Exercises E11-4 & E11-11 Prepare a response to the following questions: • What are at least four depreciation methods that are available to a company? |
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ACC 422 Week 4 Learning Team Assignments From the Text Resource: Intermediate Accounting • Ch. 11: Exercise E11-18 & Problem P11-10 |
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ACC 422 Week 4 Summary |
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ACC 422 Week 4 WileyPLUS Assignment Exercise 11-4 From the information given, compute the depreciation charge for 2013 under each of the following methods. (Round answers to 0 decimal places, e.g. $45,892.)
Problem 11-6
At the time of the eruption, O’Brien had logged 20% of the estimated 550,000 board feet of timber. Prior to the eruption, O’Brien estimated the land to have a value of $260 per acre after the timber was harvested. O’Brien includes the logging roads in the depletion base. O’Brien estimates it will take 3 years to salvage the downed timber at a cost of $707,400. The timber can be sold for pulp wood at an estimated price of $3 per board foot. The value of the land is unknown, but must be considered nominal due to future uncertainties. (a) Determine the depletion cost per board foot for the timber harvested prior to the eruption of Mount Leno. (Round per unit answer to 2 decimal places, e.g. 0.45.) (b) Prepare the journal entry to record the depletion prior to the eruption. (Round per unit answer to 2 decimal places, e.g. 0.45 for computational purpose and final answer to 0 decimal places, e.g. $45,892. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (c) If this tract represents approximately half of the timber holdings of O’Brien, determine the amount of the extraordinary loss due to the eruption of Mount Leno for the year ended December 31, 2012.
Exercise 12-16 Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2011, the company expends $339,820 on a research project, but by the end of 2011 it is impossible to determine whether any benefit will be derived from it. (a) The project is completed in 2012, and a successful patent is obtained. The R&D costs to complete the project are $132,070. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2012 total $35,000. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (b) In 2013, the company successfully defends the patent in extended litigation at a cost of $52,000, thereby extending the patent life to December 31, 2020. What is the proper way to account for this cost? Also, record patent amortization (full year) in 2013. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Problem 12-1 Reichenbach Co., organized in 2011, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2012 and 2013. Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2013, recording any necessary amortization and reflecting all balances accurately as of that date. (Ignore income tax effects.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round all answers to 0 decimal places, e.g. 8,564.)
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ACC 422 Week 5 DQ 1 What are the differences between a direct-financing and a sales-type lease for a lessor? Why would a lessor provide direct-financing to a lessee? What types of organizations provide direct-financing leases? |
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ACC 422 Week 5 DQ 2 What are the criteria for classifying a lease as operating or capital? Why is there a difference between the two? What are the implications of an operating lease versus a capital lease on an entity’s financial statements? |
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ACC 422 Week 5 DQ 3 What is residual value? What is the implication to the lessee if the residual value is guaranteed or unguaranteed? What is the implication to the lessor? |
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ACC 422 Week 5 DQ 4 What are the advantages of operating and capital leases? What are the disadvantages? Why would a company pick one over the other? |
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ACC 422 Week 5 Individual Assignments From the Text Resource: Intermediate Accounting • Ch. 13: Exorcices E13-1, E13-7, E13-11, & E13-13 Information |
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ACC 422 Week 5 Learning Team Assignments From the Text Resource: Intermediate Accounting • Ch. 13: Problem P13-4 |
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ACC 422 Week 5 Learning Team Problem Presentation P13 - 4 Prepare a 5- to 10-minute oral presentation accompanied by a 7- to 9-slide Microsoft® PowerPoint® presentation illustrating your team’s solution to the assigned problem. |
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ACC 422 Week 5 WileyPLUS Assignment Problem 13-9 Sycamore Candy Company offers a CD single as a premium for every 5 candy bar wrappers presented by customers together with $3.35. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each CD to the company is $3.10; in addition, it costs 50 cents to mail each CD. The results of the premium plan for the years 2012 and 2013 are as follows. (All purchases and sales are for cash.) 2012 2013 (a) Prepare the journal entries that should be made in 2012 and 2013 to record the transactions related to the premium plan of the Sycamore Candy Company. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (b) Indicate the amounts for each accounts, and classifications of the items related to the premium plan that would appear on the balance sheet and the income statement at the end of 2012 and 2013.
Exercise 13-13 (Essay) 1. During 2012, Maverick Inc. became involved in a tax dispute with the IRS. Maverick’s attorneys have indicated that they believe it is probable that Maverick will lose this dispute. They also believe that Maverick will have to pay the IRS between $800,000 and $1,400,000. After the 2012 financial statements were issued, the case was settled with the IRS for $1,200,000. What amount, if any, should be reported as a liability for this contingency as of December 31, 2012? 2. On October 1, 2012, Holmgren Chemical was identified as a potentially responsible party by the Environmental Protection Agency. Holmgren’s management along with its counsel have concluded that it is probable that Holmgren will be responsible for damages, and a reasonable estimate of these damages is $6,000,000. Holmgren’s insurance policy of $9,000,000 has a deductible clause of $500,000. How should Holmgren Chemical report this information in its financial statements at December 31, 2012? 3. Shinobi Inc. had a manufacturing plant in Darfur, which was destroyed in the civil war. It is not certain who will compensate Shinobi for this destruction, but Shinobi has been assured by governmental officials that it will receive a definite amount for this plant. The amount of the compensation will be less than the fair value of the plant but more than its book value. How should the contingency be reported in the financial statements of Shinobi Inc.?
Exercise 14-22 On December 31, 2012, the American Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 14%, issued at par, $3,167,000 note receivable by the following modifications: Barkley pays interest at the end of each year. On January 1, 2016, Barkley Company pays $2,533,600 in cash to Firstar Bank. (a) Will the gain recorded by Barkley be equal to the loss recorded by American Bank under the debt restructuring? (b) Can Barkley Company record a gain under the term modification mentioned above? (c) Assuming that the interest rate Barkley should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Barkley Company after the debt restructuring. (Round answers to 0 decimal places, e.g. $38,548.) (d) Prepare the interest payment entry for Barkley Company on December 31, 2014. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (e) What entry should Barkley make on January 1, 2016? (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Exercise 21-7 (Both the lessor and the lessee’s accounting period ends on December 31.)
C.) Prepare all the necessary journal entries for Woods for 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.) D.) Prepare all the necessary journal entries for Palmer for 2012. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971.)
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