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Name_Talethia Wallace ACC121 Comprehensive Final Multiple choice 5 points each 325 points

1. Which financial statement would you utilize to determine whether a company will be able to pay liabilities which are due in 30 days? A. Income statement B. Balance sheet C. Statement of retained earnings D. Statement of cash flows 2. Which of the following is an objective of the external audit of a company's financial statements? A. To provide a forecast of the company's future earnings. B. To assure no fraud has been committed by the company's management. C. To provide credibility and assurance that the financial statement information conforms with generally accepted accounting principles in all material respects. D. To detect all accounting errors made by the accounting system and employees. 3. Huron has provided the following year-end balances: Cash, $25,000 Patents, $7,900 Accounts receivable, $9,300 Property, plant, and equipment, $98,700 Prepaid insurance, $3,600 Accumulated depreciation, $10,000 Inventory, $37,000 Trademarks, $12,600 How much are Huron's current assets? A. $85,900. B. $71,300. C. $74,900. D. $102,100. 4. Which group requires CPAs to follow a professional code of ethics and standards? A. American Institute of Certified Public Accountants B. Internal Revenue Service C. Securities & Exchange Commission D. Local taxing agency

5. Match each career with the related definition by entering the appropriate letter in the space provided. 8 points Careers _ _B__(1) financial analyst Definitions a. Chief executive officer who has primary responsibility for the financial information presented in the financial statements. b. Advisor who analyzes financial and other economic information to form forecasts and stock recommendations. c. CPA who examines financial statements and attests to their fairness. d. Individual who provides tax planning and tax services.

___C__(2) Independent auditor

__A___(3) CEO

__D___(4) Tax practitioner

6. Phipps Company borrowed $25,000 cash on October 1, 2010, and signed a six-month, 8% interestbearing note payable with interest payable at maturity. Assuming that no adjusting entries have been made during the year, what is the amount of accrued interest payable to be reported on the December 31, 2010 balance sheet? Must show work 6 points 25 x .08 = 2,000/2 = 1000(6 mos.) /2 =500 of interest earned for 3 months

7. On January 1, 2011 Miller Corporation had retained earnings of $18,000. During 2011, Miller reported net income of $25,000, declared and paid dividends of $20,000, and issued stock for $10,000. What were Miller's retained earnings on December 31, 2011? Must show work 6 points

25,000 + 18,000 = 43,000 20,000 = 23,000 in retained earnings (issued stock is not part of retained earnings)

8. A corporation has $80,000 in total assets, $36,000 in total liabilities, and a $10,000 credit balance in retained earnings. What is the balance in the contributed capital account? Must show work 6 points

80,000 = 36,000 + 10,000 =34,000

9. During 2010, Sigma Company earned service revenues amounting to $900,000, of which $700,000 was collected in cash; the balance will be collected in January 2011. What amount should the 2010 income statement report for service revenues? 6 points

900,000 will be reported on the income statement because the money was made during 2010.
10. A company receives a $55,000 cash deposit from a customer on December 15 but will not deliver the goods until January 20. What month will revenue be recorded? 6 points

January

11. On January 1, 2011, the general ledger of Global Corporation included supplies inventory of $2,000. During 2011, supplies purchases amounted to $6,000. A physical count of inventory on hand at December 31, 2011 determined that the supplies inventory was $1,300. How much is the 2011 supplies expense? Must show work 6 points

2,000 + 6,000 = 8000 1300 = 6,700 in expenses

12. A company reported the following information for its most recent year of operation: purchases, $300,000; beginning inventory, $20,000; and cost of goods sold, $10,000. How much was the company's ending inventory? Must show work 6 points

20,000 + 300,000 10,000 =310,000 in ending inventory

13. Lauer Corporation uses the periodic inventory system and has provided the following information about one of their laptop computers: Date 1/1 5/5 8/10 10/15 Transaction Beginning inventory Purchase Purchase Purchase Number of Units 100 200 300 200 Cost per Unit $800 $900 $1,000 $1,050 Must show work 6 points

During the year, 150 laptop computers were sold.

What was cost of goods sold using the FIFO cost flow assumption? 100 x 800 = 80,000 50 x 900 = 45,000

Cost of Goods Sold = 125,000

14. Lauer Corporation uses the periodic inventory system and has provided the following information about one of their laptop computers: Date 1/1 5/5 8/10 10/15 Transaction Beginning inventory Purchase Purchase Purchase Number of Units 100 200 300 200 Cost per Unit $800 $900 $1,000 $1,050 Must show work 6 points

During the year, 150 laptop computers were sold.

What was cost of goods sold using the LIFO cost flow assumption? _________________

150 x 1050 = 157,500 in Cost of goods sold

15. On January 1, 2010, Woodstock, Inc. purchased a machine costing $40,000. Woodstock also paid $2,000 for transportation and installation. The expected useful life of the machine is 9 years and the residual value is $6,000. How much is the annual depreciation expense assuming use of the straight-line depreciation method? Must show work 6 points Cost residual value x 1/useful life

42,000 6,000 x 1/9 = 4,000 in depreciation

16. A company purchased an oil well for $50,000. It is estimated that 100,000 barrels can be extracted from the well. What is the depletion expense assuming 30,000 barrels are extracted and sold? Must show work 6 points

50,000 / 100,000 = .50 x30,000 =15,000 in depletion expense

17. The following data were provided by the detailed payroll records of Mountain Corporation for the month of March 2011: 3 points each entry, 21 points total Wages Income Taxes Withheld Union dues $35,000 7,350 175

FICA taxes at a 7.65% rate (no employee has reached the maximum) Requirements: a) Prepare the journal entry to record the payroll and the related employee deductions. b) Prepare the journal entry to record the employers FICA payroll tax expense.

A (Debit) Wages Expense 35,000 ( Credit) Income Taxes Withheld 7,350 (Credit) FICA Taxes Payable 2,677.50 (35,000 x 7.65%) (Credit) Union Dues Payable 175 (Credit) Wages Payable 24,797.50 B (Debit) FICA Tax Expense 2,677.50 (Credit) Payroll Taxes Payable (or Cash) 2,677.50

18. For each of the transactions listed below, indicate whether it is an operating (O), investing (I) or financing (F) activity on the statement of cash flows. Also, indicate if the transaction increases (+) or decreases (-) cash. 1 point each, 12 points total

Transaction

Type of Activity

Effect on Cash

A)

Sold stock for cash

B)

Collected cash from customers on account

C)

Purchased equipment

D)

Paid operating expenses

E)

Repaid the bank loan

F)

Paid dividends to stockholders

19. Record the following transactions indicating the account affected and whether the account increased (+) or decreased (-) 3 points each, 42 points total

Transaction

Assets

Liabilities

Stockholders Equity

A) B) C) D) E) F) G) H) I) J) K) L) M) N) O)

Paid accounts payable of $15,000 Purchased $1,000 of supplies on account Borrowed $20,000 cash from the bank Purchased equipment for $18,000 and paid cash Sold stock and received $50,000 cash Earned $90,000 of revenue on account Collected $70,000 accounts receivable Paid dividends of $13,000 Paid operating expenses of $12,000 Depreciation expense for the year, $23,000 Accrued year end wages of $4,000 Received cash for services provided, $75,000 Paid $12,000 for a 2 year insurance policy Insurance expired for the year $6,000 Accrued interest expense on note, $1,000

-15,000

-15,000 + 1,000 -1,000

+20,000 +/- 18,000 +50,000 +90,000 +/- 70,000 -13,000 -12,000 -23,000

+20,000

+50,000 +90,000

-13,000 -12,000 -23,000 + 4,000 -4,000 +75,000

+75,000 +/- 12,000 -12,000 +1,000

-12,000 -1,000

20 .

Letter A B C D E F

Account Title Cash Accounts receivable Supplies Prepaid Insurance Equipment Accounts payable

Letter G H I J K

Account Title Notes payable Contributed capital Retained earning Revenue Operating expenses

During 2010, the company completed the transactions given below. Indicate the appropriate journal entry for each transaction by giving the account letter and amount. 2 point each, 44 points total

1) 2) 3)

4) 5) 6) 7) 8) 9) 10) 11)

Transaction Paid $500 in operating expenses Paid $12,000 for a two year insurance policy Purchased equipment for $40,000. Paid $10,000 cash and signed a $30,000 note Issued capital stock and received $8,000 cash Received cash for services provided $7,500 Received $2,100 on accounts receivable Insurance expired for the year, $23,000 Accrued year end expenses of $4,000 Paid accounts payable of $1,2,00 Earned $9,000 of revenue on account Paid dividends to stockholders, $3,000

Letter K D G

Debit 500 12,000 30,000

Letter A A A

Credit 500 12,000 10,000

A A A K K F B I

8,000 7,500 2,100 23,000 4,000 1,200 9,000 3,000

H J B D F A J A

8,000 7,500 2100 23,000 4,000 1,200 9,000 3,000

21. National Shops, Inc. reported the following amounts on its balance sheet as of December 31, 2010: Inventory Notes payable Cash Contributed capital Equipment Accumulated depreciation Accounts receivable Accounts payable Retained earnings $325,000 A 100,000 L 150,000 A 250,000 SE 700,000 A 600,000 30,000 A 45,000 L 210,000 SE

Requirements:

5 points each, 15 points total

1. What is the amount of National's total assets? 2. What is the amount of Nationals total liabilities? 3. What is the amount of Nationals stockholders equity

605,000 145,000 460,000

22. For each of the accounts listed below, indicate whether the normal balance is a debit (DR) or credit (CR) 1 points each, 12 points

___DR__ Inventory __CR____ Notes payable __CR____ Retained earnings ___DR___ Equipment ___DR___ Accounts receivable __CR___Revenue

_DR_____ Prepaid insurance ___CR___Accounts payable DR Cost of Goods Sold

__DR___Cash ___DR___ Wage Expense __CR___Contributed capital

23. Indicate whether the following items would be added (+) or subtracted (-) from the companys books or the bank statement during the preparation of a bank reconciliation. 20 points

Reconciling item Outstanding checks Bank service charge Interest earned on the account Deposits in transit A check written for $59 but was incorrectly recorded in the check register for $95

Companys Books

Bank Statement ___

___ + + + 36

24. The following data were taken from the records of Lilo Corporation for the year ended December 31, 2010: Sales Sales returns and allowances Selling and administrative expenses Cost of goods sold The income tax rate is 35%. Based on the above data, prepare a multiple-step income statement using good form. Include gross profit and pretax income. Use the form below. 21 points 900,000 10,000 170,000 510,000

LILO CORPORATION INCOME STATEMENT DECEMBER 31,2010

Sales Sales returns and allowances Net Sales Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses Pretax Income Income Tax Rate 35% Net Income

$900,000 (10,000) 890,000 (510,000) 380,000 (170,000) 210,000 (73,500) 136,500

25. For each of the accounts listed below, indicate whether they would be classified as an ASSET (A) , LIABILITY (L), STOCKHOLDERS EQUITY (SE), REVENUE (R), EXPENSE (E) 1 point each, 12 points total

__A____ Inventory ___L___ Notes payable ___SE___ Retained earnings __A____ Equipment ___A___ Accounts receivable __R____Revenue

__A_ Prepaid insurance __L___Accounts payable ____E__Cost of Goods Sold ___A___Cash ____E__ Wage Expense __SE____Contributed capital

26. For each of the accounts listed below, indicate which financial statement they would be included on Balance Sheet (BS) or Income Statement (IS) 1 point each, 12 points total

__BS__ Inventory _ BS____ Notes payable __BS___ Retained earnings ___BS___ Equipment __BS____ Accounts receivable ____IS Revenue

_BS__ Prepaid insurance ___BS Accounts payable __ IS _Cost of Goods Sold ___ BS_Cash __ IS __Wage Expense _BS _Contributed capital

27. Compute the missing amounts for each independent case.

12 points

Total Revenues A) B) C) 231,820 205,700 36,590

Total Expenses 196,700 175,780 26,750

Net Income (Loss) 35,120 29,920 9,840

Total Assets 294,300 590,000 287,200

Total Liabilities 75,000 241,600 189,675

Stockholders Equity 219,300 348,400 97,525

28. Compute the missing amounts for each independent case. Sales Revenue A) B) 650 1,000 Beginning Inventory 100 200 Purchases Total Available 800 1,100 Ending Inventory 500 600

8 Points Cost of Goods Sold 300 500 Gross Profit 350 500

700 900