University of Maryland University College Final Examinatio

University of Maryland University College Final Examination Acct220: Principles of Accounting I Section 1 of 2 Do not forget this is only Section 1 of your Final Exam. Section 2 consists of the 25 multiple choice questions located in the Final Exam location. Section 2 is worth 25% (1 point per question). USE THE SEPARATE DOCUMENT Final Exam Answer Sheet to complete and submit your answers. For this exam omit all general journal entry explanations. Ensure to include correct dollar signs and commas. : 40% points: Flip Company’s December 31 2014 trial balance is as follows: Flip Corporation Trial Balance December 31 2014 Account Debit Credit Cash $43500 Accounts Receivable 54500 Allowance for Doubtful Accounts 500 Notes Receivable 30000 Merchandise Inventory 55000 Land 20500 Building 150000 Accumulated Depreciation Building $15000 Equipment 50000 Accumulated Depreciation Equipment 21000 Goodwill 26000 Accounts Payable 24500 Long Term Notes Payable 75000 Common Stock $10 par 2000 shares authorized & outstanding 20000 Retained Earnings 147000 Sales Revenue 700000 Salaries Expense 150000 Utilities Expense 3500 Cost of Goods Sold 350000 Administrative Expenses 55000 Sales Expenses 15000 _______ Totals $1003000 $1003000 Flip is a small company and records adjusting entries & closing entries only at fiscal (calendar) year end. Correcting and adjusting entries have not been recorded. Additional Information: a. Notes Receivable is a 3-months 6% note accepted on December 1 2014. b. Long Term Notes Payable is a 5-year 5% note that was signed on July 1 2014. Interest is payable annually. c. Building is depreciated at 3% per year. There is no salvage value. d. Equipment is depreciated at 15% year. There is no salvage value. e. Flip discovered on December 30th that the inexperienced bookkeeper recorded in the general journal and general ledger that day’s $1500 cash sales as a debit to Accounts Receivable and a credit to Sales Revenue. f. The year-end physical count for Merchandise Inventory reflected a value of $52500. Any difference in value is treated as shrinkage and is included as part of Cost of Goods Sold. g. Salaries for the last half of December payable in January amount to $6500. h. Flip determined that the balance in the Allowance for Doubtful Accounts should be $2650 after an aging of A/R schedule was completed. Required: 1a. Prepare in journal form any required correcting entries for Flip Corporation (There is only one) (2 points) 1b. Prepare in journal form all end-of-the period adjusting entries for Flip Corporation (There are 7) (14 points) 1c. Prepare a December adjusted trial balance for Flip Corporation (9 points) NOTE: Students are encouraged to prepare their own T-accounts on a separate scratch sheet of paper and track from the beginning balance thru all journal transactions to ending balances for all accounts used in this problem. Do not turn in your separate scratch sheet of paper – those are student personal working papers and not part of any solution required for this exam. (continued) New Company for Parts d and e Below is a Correct Adjusted Trial Balance for the year ended December 31 2014 for Emilys Dress Shop Inc. 1d. Prepare a classified balance sheet in good form for the year ended December 31 2014 for Emilys Dress Shop Inc. (9 points) 1e. Prepare in journal form the closing entries for the year ended December 31 2014 (No Dividends) for Emilys Dress Shop Inc. (6 points) Emilys Dress Shop Inc. Adjusted Trial Balance December 31 2014 Account Titles Debit Credit Cash 81000 Accounts Receivable 95400 Allowance for Doubtful Accounts 4770 Interest Receivable 270 Notes Receivable (Due in 3 months) 54000 Merchandise Inventory 94500 Land 36900 Building 270000 Accumulated Depreciation Building 35100 Equipment 90000 Accumulated Depreciation Equipment 51300 Goodwill 46800 0 Accounts Payable 44100 Salaries Payable 11700 Interest Payable 3375 Long Term Notes Payable 135000 Common Stock 36000 Retained Earnings 264600 Sales Revenue 1260000 Interest Revenue 270 Cost of Goods Sold 634500 Salaries Expense 281700 Utilities Expense 6300 Administrative Expenses 99000 Sales Expenses 27000 Depreciation Expense 21600 Interest Expense 3375 Bad Debt Expense 3870 Totals 1846215 1846215 Question 2: 8 points: Inventory Flip uses the periodic method and had the following inventory events during January: Date Units Purchased Unit Cost Date Units Sold Unit Sales Price Jan. 1 150 $7.00 Jan. 2 100 $10.00 Jan. 5 225 7.25 Jan. 7 125 10.00 Jan. 10 100 7.50 Jan. 12 75 12.00 Jan. 15 150 7.50 Jan. 17 200 12.00 Jan. 20 200 7.75 Jan. 24 150 15.00 Jan. 25 150 8.00 Jan. 30 75 8.25 Note: January 1 amount was the beginning inventory and unit value. (Round all total dollar values to the nearest dollar. Round all unit values to the nearest penny.) Required: a. Calculate cost of goods available for sale. b. Calculate the dollar value of sales. c. Calculate the value of Ending Inventory and Cost of Goods Sold under the following independent assumptions: 1) LIFO method 2) FIFO method 3) Average-cost method Question 3: 7 points: Required: Prepare Flip’s Supply Co. general journal entries for the following transactions: Jan. 1 Accepted a customers (Franks Co) 120 day 10% note as settlement of an outstanding $15000 account receivable for goods sold last year (assume 30 days in January) Jan. 15 Purchased $10000 in equipment from Edwards Equipment signing a 9 month 12% note (15 days in January) Jan. 25 Loaned Douglas Co. $30000 cash accepting a 90 days 10% note (6 days in January) Jan. 31 Prepared accrual adjusting entry for any interest revenue and interest expense. Use the 360-day calendar. Apr. 25 Received payment in full from Douglas Co. for outstanding note & interest May 1 Received payment in full from Franks Co. for outstanding note & interest Oct. 15 Paid Edwards Equipment in full Question 4: 9 points: Flip Company purchased a refrigerated delivery truck for $65000 on April 1 2016. The plan is to use the truck for 4 years and then replace it. At the end of its useful life the truck is expected to have a salvage value of $10000. a. Prepare the depreciation table for Flips truck assuming that the company uses the straight-line method for depreciation. b. Prepare the depreciation table for Flips truck assuming that the truck was purchased on January 1 2016 and the company uses the double-declining-balance depreciation method. c. Compute the depreciation expense for 2016 for Flips truck assuming the truck has an expected life of 200000 miles and during 2016 the truck was driven 24540 miles. Round your depreciation expense per mile to three decimal places. Question 5: 7 points: Medina Company received its February bank statement on March 6. The statement showed a balance of $316500. Included on the statement were memoranda showing collections from Medina customers (A/R) totaling $16000. The statement also showed a returned check for a customer who paid the balance on his account for $2825. The bank charged a returned check fee of $75 for this NSF check. This $75 charge will be added to the customers balance. There were other service charges for the monthly service charge and ATM fees totaling $200. These are bank service charge expenses. Medinas accountant looked at her accounting records. At the end of February the cash balance was $312300. The statement did not reflect a deposit made late on February 28th for $14900. There were also some outstanding checks totaling $6200. Required: a. Determine the adjusted balance in the cash account after completing a bank reconciliation. b. Prepare three journal entries needed due to the reconciliation. Question 6: 4 points: Flip Company at the end of the fiscal 2014 year has the following information: Credit Sales $2500000 Sales Returns & Allowances $25000 Accounts Receivable $200000 and Allowance for Doubtful Accounts with a credit of $1500. Required: a. Prepare the general journal entry to record the end of the year adjusting entry if Flip uses 0.5% of Net Credit Sales as the basis for determining Bad Debt Expense. b. Prepare the general journal entry to record the end of the year adjusting entry if Flip uses 5% of Accounts Receivable as the basis for determining Bad Debt Expense. Do not forget this is only Section 1 of your Final Exam. Section 2 consists of the 25 multiple choice questions located in the Final Exam location. Section 2 is worth 25% (1 point per question).

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