29 Jan 2. Prepare the following

ACCT212 Financial Accounting

WEEK 8 Final Exam

TCO 3) Closing temporary accounts is necessary at the end of the accounting period. (1) Explain the closing process, include each set of entries required (15 points) and (2) provide an example of closing the Dividend account in the form of a journal entry. (10 points).

Question 2

(TCO 2) Explain how accounts are listed in the trial balance and the importance of the trial balance in preparing financial statements (10 points) and (2) Prepare a trial balance form the following accounts. List the accounts in the proper order.(10 points) Accrued liabilities $10 Revenue $190 Accounts receivable $40 Building $100 Rent expense $140 Wages payable $30 Stockholders’ equity $50

Question 3

(TCO 5) Internal Control Procedures are required to safeguard company assets and to ensure ethical operation of the business. (1) Explain how smart hiring practices can satisfy the purpose of internal control (15 points) and (2) provide an example of how this control could be implemented. (10 points)

Question 4

(TCO 4) A retailer needs to determine the cost of the shoes the company purchased in order to determine the inventory value to report on its balance sheet in a particular period. (1) Discuss the steps involved in determining the cost of shoes inventory as reported on the company’s balance sheet (15 points), and (2) use an example to show the impact of purchase discounts and allowances received by the company on the cost of shoes inventory (10 points).

Question 5

(TCO 1) The Balance Sheet is sometimes referred to as a snap-shot of the financial position of the business on a particular date. Name the three major components of the Balance Sheet (15 points) and provide an example of an account that would be found in each major component (10 points).

Question 6

(TCO 6) BagODonuts Company bought a used delivery truck on January 1, 2010, for $19,200. The van was expected to remain in service 4 years (30,000 miles). BagODonuts’ accountant estimated that the truck’s residual value would be $2,400 at the end of its useful life. The truck traveled 8,000 miles the first year, 8,500 miles the second year, 5,500 miles the third year, and 8,000 miles in the fourth year.

1. Calculate depreciation expense for the truck for each year (2010-2013) using the:

a. Straight-line method.

b. Double-declining balance method.

c. Units of Production method.

(For units-of-production and double-declining balance, round to the nearest two decimals after each step of the calculation.)

2. Which method best tracks the wear and tear on the van?

3. Which method would BagODonuts prefer to use for income tax purposes? Explain in detail why BagODonuts prefers this method.

Question 7

(TCO 7) ABC Inc. was incorporated on 1/15/12. Their corporate charter authorized the following capital stock:

Preferred Stock: 7%, par value $100 per share, 100,000 shares.

Common Stock: $1 par value, 500,000 shares.

The following transactions occurred during the year:

1/19/12 – Issued 100,000 shares of common stock for $17 cash per share.

1/31/12 – Issued 3,000 shares of preferred stock for $115 cash per share.

11/1/12 – Repurchased 30,000 shares of common stock for $22 cash per share.

12/1/12 – Declared and paid a total dividend of $95,000.

Required:

1. Prepare the journal entry for each transaction listed above.

2. In your own words, explain the main differences between common and preferred stock.

Question 8

(TCO 5) Internal Control Procedures are in place to protect the assets of every business as mentioned in the textbook and our discussions. Of the seven internal control procedures, list five of these controls and describe how each procedure is implemented. (5 points each with 2 points for listing and 3 points for a description)

Question 9

(TCO 2) Below are the accounts of Super Pool Service, Inc. The accounts have normal balances on June 30, 2012. The accounts are listed in no particular order.

Account Balance

Common stock $5,100

Accounts payable $4,400

Service revenue $17,100

Land $28,800

Note payable $9,500

Cash $5,200

Dividends $6,100

Utilities expense $2,100

Accounts receivable $10,600

Delivery expense $700

Retained earnings $25,600

Salary expense $8,200

Prepare the company’s trial balance as of June 30, 2012, listing accounts in proper sequence, as illustrated in the chapter. For example, Accounts Receivable comes before Land. List the expense with the largest balance first, the expense with the next largest balance second, and so on.

Question 10

(TCO 4) Linda’s Lampshades started business on Jan. 1, 2001. They had the following inventory transactions:

Journals – Jan. 2001

Purchases

Supplier Date Received Quantity Unit Cost Amount

Donna 01/10/01 110 12.00 1320.00

Thomas 01/15/01 160 14.00 2240.00

Cindy 01/18/01 150 15.00 2250.00

Sales

Customer Date shipped Quantity Sel. Price Amount

Norilene 01/16/01 200 25.00 5000.00

1. Calculate the ending inventory, using the perpetual inventory method:

A. Using FIFO

B. Using LIFO

C. Using Average Cost

2. Prepare the following statement

Using

FIFO LIFO Average Cost

Sales

Cost of Sales

Gross Profit