Accounting 2 question

PART II— MATCHING

Instructions:Designatetheterminology thatbestrepresentsthedefinitionorstatementgiven below by placingtheidentifyingletterinthespaceprovided.Nolettershouldbeusedmorethan once.

A.	Additions and improvements	L.	Periodicinventorysystem
B.	Natural resources	M.	Book value
C.	Allowancemethod	N.	Last-in,first outmethod
D.	Amortization	O.	Closing entries
E.	Comparability	P.	Direct write-offmethod
F.	Permanent accounts	Q.	Economic entityassumption
G.	Consistency	R.	First-in, first-out method
H.	Contra asset	S.	Retail inventorymethod
I.	Cost principle	T.	Going-concern assumption
J.	Depletion	U.	Internal control
K.	Time period assumption

Theperiodicwrite-off ofan intangible asset.

The cost of anasset less its accumulated depreciation.

3. sold.

Aninventorymethodthatrecordstheearliestgoodspurchasedascostofgoods

Useofthesameaccountingprinciplesandmethodsfromperiodtoperiodbythe

same business enterprise.

5. Aninventorycostingmethodwhichassumesthatthelatestunitspurchasedarethe first to be allocated to cost of goods sold.

6. Anassumptionthattheeconomiclifeofabusinesscanbedividedintoartificial time periods.

7. Accumulated depreciation is an exampleof this term.

8. Anassumptionthatrequiresthattheactivitiesofacompanybekeptseparateand distinct from the activities ofits owner.

9. Thismethodofaccountingforuncollectibleaccountsisrequiredwhenbaddebts aresignificant in size.

10. Assets such as timber, oil, coal, and mineral deposits.

PART III — ADJUSTING ENTRIES

ThetrialbalanceofThroneburgCorporationreportedthefollowingbalancesforselectedaccounts on November30, 2010:

PrepaidInsurance	$12,000	Unearned Revenue	$ 4,800
Equipment	60,000	Notes Payable	30,000
Accumulated Depreciation	6,600	Interest Payable	450

Instructions: Using theadditional information givenbelow, preparetheappropriate monthly

adjusting entries at November30. Show computations.

A. Revenueforservicesrenderedtocustomers,butnotyetbilled,totaled$6,000onNovember

30.

Account Title	Debit	Credit

B. Thenote payableis a 9%, 1year noteissued September1, 2010.

Account Title	Debit	Credit

C. The equipment was purchased on January2, 2009, for$60,000.It has anestimated lifeof

10years andan estimated salvagevalue of $6,000. Throneburguses thestraight-linedepreciation method.

Account Title	Debit	Credit

D. An insurancepolicywasacquired on June30, 2010; thepremium paid for2years was

$14,400.

Account Title	Debit	Credit

E. Throneburgreceived $4,800 fees in advancefroma customer on November 1, 2010. Three- fourths of this amountwas earned byNovember 30.

Account Title	Debit	Credit

PART IV — INVENTORY

ElstonCompanyhadabeginninginventoryof200unitsatacostof$12perunitonAugust1. During themonth, the following purchasesand sales weremade.

Purchases Sales

August	4	250 units at $13	August	7	150 units
August	15	350 units at $15	August	11	100 units
August	28	200 units at $14	August	17	250 units
			August	24	200 units

TotalInventory (units)TotalSales–units

TotalInventory (dollars)

Elston uses a periodic inventory system.

Instructions: Determineendinginventoryandcostofgoodssoldunder(a)averagecost,(b) FIFO, and (c)LIFO.(Show calculations in tablesprovided)

(a) Average cost:

Ending inventory=$_

Cost of goods sold =$ _

AverageCost	$	Cost of Goods AvailableforSale	$
÷		Less: EndingInventory	$
		Costof Goods Sold	$

(b) FIFO:

Ending inventory=$_

Cost of goods sold =$__

EndingInventory:		Cost of Goods AvailableforSale	$
x	$	Less: EndingInventory	$
x	$	Cost of Goods Sold	$

Ending inventory=$__ Cost of goods sold =$ _

EndingInventory:		Cost of Goods AvailableforSale	$
x	$	Less: EndingInventory	$
x	$	Cost of Goods Sold	$

PART V — DEPRECIATION

Gilbert Companypurchased equipmentfor$800,000 cashon January1, 2009. Theestimated life is

5years or 1,000,000 units; salvagevalueis estimated at $40,000. Actual activitywas 180,000 units in 2009, and 200,000 units in 2010.

Instructions:Compute theannualdepreciationexpense for 2009and2010,andbookvalueat December31,2010,underthefollowingdepreciationmethods:(a)units-of-activity,(b) straight- line, and (c) double-declining-balance.(usetablesto show calculations)

(a) Units-of-activity

2009 depreciation = $ .

2010 depreciation = $_ .

12/31/10 book value =$ .

(Showyourworkinthis table)

(b) Straight-line

2009 depreciation = $_ .

2010 depreciation = $___.

12/31/10 book value =$ .

(Showyourworkinthis table)

2009 depreciation = $_ .

2010 depreciation = $ .

12/31/10 book value =$_ .

(Showyourworkinthis table)

PART VI — DIVISION OF PARTNERSHIP NET INCOME (LOSS)

Jeff andPaulhaveformedapartnershipandareinterestedinseeingtheresultsofvariousincome andlosssharingarrangementsbeforethey finalizetheirpartnershipagreement.JeffandPaulwill havebeginning capital balances of $150,000 and$300,000, respectively.

Instructions: Prepare aschedule indicatingtheamountstobe debitedor creditedtothe capital accountsineachofthefollowingindependentsituations.(Besuretodesignatedebit(dr) orcredit (cr) inJeff’sandPaul’s totalsforeachsituation(infieldinparenthesis)!)(Remember–thegrand total ineachsituationcannot exceed the total Net Incomefor eachsituation)

(A) Netincomeis$180,000.Paulreceivesasalaryallowanceof$72,000withanyremainder divided equally.

	Jeff	Paul	Total



TOTALS:

(B) Netincomeis$130,000.Eachpartnerisallowed10%interestonbeginningcapitalbalances with anyremainder divided equally.

	Jeff	Paul	Total



TOTALS:

8%interest on beginningcapital balances with anyremainder dividedequally.

	Jeff	Paul	Total








TOTALS:

(D) Net income is $80,000. Usethe sharingarrangement described in (C)above.

	Jeff	Paul	Total








TOTALS:

(E) Preparethejournal entrytorecord thedistributionof income computed in (D) above.

Account Title	Debit	Credit

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