Fin 324 Final Exam

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This pack of FIN 324 Final Exam includes answers to the next questions: 1. The primary users of external financial reports are a. Those who direct day to day operations of a business enterprise b. Individuals who have an economic interest in the firm but who are not part of management c. Managers of an enterprise who plan, implement plans, and control costs d. None of the above 2. If a company has $15,000 in assets and $10,000 in equities, then liabilities are a. $25,000 b. $10,000 c. $5,000 d. $0 3. A revenue account is increased with a. Debits b. Credits c. Equities d. None of the above 4. Expense items that have been incurred during a period but not recorded by the end of the period are: a. Prepaid liabilities b. Prepaid expenses c. Deferred expenses d. Unrecorded liabilities 5. A purchase of $900 of supplies on account was journalized and posted as $900 debit to Supplies on Hand and a $900 credit to Accounts Receivable. The entry to correct this error is a. A $900 debit to accounts payable and a $900 credit to accounts receivable b. A $900 debit to supplies on hand and a $900 credit to accounts payable c. A $900 debit to accounts receivable and a $900 credit to accounts payable d. A $900 debit to accounts receivable and a $900 credit to supplies on hand 6. The retained earnings balance of Werner Company was $46,800 on January 1, 2005. Net income for 2005 was $26,480. If retained earnings had a credit balance of $21,000 after closing entries were posted on December 31, 2005 and if additional stock of $13,000 was issued during the year, dividends paid during 2005 were: a. $38,800 b. $52,280 c. $65,280 d. none of the above 7. If net purchases are $200,000 and beginning and ending accounts payable -balances are $25,000 and $20,000, respectively, cash paid for purchases is a. $195,000 b. $200,000 c. $205,000 d. $210,000 8. The tools of financial statement analysis are not

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Business - Finance 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 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 ________ ________ 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.

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You will need to study a lot to keep your grades up, but take one day a week off to relax and regenerate. Approach your learning by immersing yourself in your courses. Talk about the subject to others, look for references to it in the world around you and apply it to your life in general.