Intermediate Accounting – Final Exam
ACCT215 – Intermediate Accounting Final Exam
Directions Part I: Please prepare your responses to the
following ten questions in 1 Excel workbook. Each problem is worth
10 points. 1. Lee Financial Services pays employees monthly.
Payroll information is listed below for January 2011, the first
month of Lee’s fiscal year. Assume that none of the employees
exceeded any relevant wage base. Salaries $ 500,000 Federal income
taxes to be withheld 100,000 Federal unemployment tax rate 0.80%
State unemployment tax rate (after FUTA deduction) 5.40% Social
Security (FICA) tax rate 7.65% Required: Prepare the appropriate
journal entries to record salaries and wages expense and payroll
tax expense for the January 2011pay period. 2. The petty cash fund
of Western Glass Company contained the following items on November
30, 2011: Currency and coins $ 23 Receipts for the following
expenditures Delivery charges $42 Office supplies 50 Restaurant
receipt for entertaining a customer 110 202 An I.O.U. from an
employee 25 Total $250 The petty cash fund was established on
November 1, 2011, with a transfer of $250 from cash to the petty
cash account. Required: Prepare the journal entries to establish
the petty cash account and to replenish the fund at the end of
November. 3. The Fitzgerald Company maintains a checking account at
the Bank of the North. The bank provides a bank statement along
with canceled checks on the last day of each month. The October 31,
2011 bank statement included the following information: Balance,
October 1, 2011 $ 32,690 Deposits 86,000 Checks processed (75,200)
Service charges (350) NSF checks (1,600) Monthly loan payments
deducted directly by bank from account (includes $400 in interest)
(3,400) Balance October 31, 2011 $38,140 The company’s general
ledger cash (checking) account had a balance of $42,544 at the end
of October. Deposits outstanding totaled $4,224 and all checks
written by the company were processed by the bank except for those
totaling $5,620. In addition, a check for $500 for the purchase of
office furniture was incorrectly recorded by the company as a $50
disbursement. The bank correctly processed the check during
October. Required: Prepare a bank reconciliation for the month of
October. Prepare the necessary journal entries at the end of
October to adjust the general ledger cash account. 4. Charleston
Company has elected to use the dollar-value LIFO retail method to
value its inventory. The following data has been accumulated from
the accounting records: Cost Retail Merchandise inventory, January
1, 2011 $320,000 $ 500,000 Net purchases 670,000 1,020,000 Net
markups 14,000 Net markdowns 4,000 Net sales 650,000 Pertinent
retail price indexes January 1, 2011 1.00 December 31, 2011 1.10
Required: Estimate the ending inventory for December 31, 2011. 5.
On January 1, 2011, American Corporation purchased 25% of the
outstanding voting shares of Short Supplies common stock for
$210,000 cash. On that date, Short’s book value and fair value were
both $840,000. The equity method is deemed appropriate for this
investment. Short’s net income reported on December 31, 2011, was
$80,000. During 2011, Short also paid cash dividends in the amount
of $24,000. Required: Prepare the journal entries necessary to
record the above information on American Corporation’s books during
2011. 6. How should bond issue costs be accounted for on the books
of the issuing corporation 7. On January 1, 2011, Field Company
purchased 12% bonds, dated January 1, 2011, with a face amount of
$20 million. The bonds mature in 2020 (10 years). For bonds of
similar risk and maturity, the market yield is 10%. Interest is
paid semiannually on June 30 and December 31. Required: Determine
the price of the bonds at January 1, 2011. Prepare the journal
entry to record the bond purchase by Field on January 1, 2011.
Prepare the journal entry to record interest on June 30, 2011,
using the straight-line method. Prepare the journal entry to record
interest on December 31, 2011, using the straight-line method. 8.
Billingsly Products uses the conventional retail method to estimate
its ending inventories. The following data has been summarized for
the year 2011: Cost Retail Inventory, January 1 $ 53,000 $ 78,000
Purchases 322,360 466,000 Net markups 8,000 Net markdowns 16,700
Net sales 392,000 Required: Estimate the ending inventory as of
December 31, 2011. 9. On March 17, 2011, a flood destroyed the
entire inventory of Beatty Co. The following information is
available from its accounting records: Inventory, January 1, 2011
$208,000 Purchases, Jan 1 – Mar 17 420,000 Sales, Jan 1 – Mar 17
600,000 Normal gross margin 40% Required: Compute the estimated
cost of inventory lost in the flood. 10. Shown below is activity
for one of the products of Denver Office Equipment: January 1
balance, 500 units @ $55 $27,500 Purchases January 10 500 units @
$60 January 20 1,000 units @ $63 Sales January 12 800 units January
28 750 units A: Required: Compute the ending inventory and cost of
goods sold assuming Denver uses LIFO and a perpetual inventory
system. B: Required: Compute the ending inventory and cost of goods
sold assuming Denver uses LIFO and a periodic inventory system.
Other samples, services and questions:
When you use PaperHelp, you save one valuable — TIME
You can spend it for more important things than paper writing.
