Penn Foster Final Examination

Penn Foster Final Examination 06169300 (August 2013 – WORD file)

Financial Accounting (Business Accounting and You)

Part A:


    The following information was made available from the income statement and balance sheet of Lauren Company:

























































Item   

12/31/10

   

12/31/09

Accounts Receivable   

$53,400

   

$58,600

Accounts Payable   

35,600

   

32,700

Merchandise Inventory   

85,000

   

79,000

Sales (2010)   

243,000

Interest Revenue (2010)   

5,600

Dividend Revenue (2010)   

1,200

Tax Expense (2010)   

12,300


Salaries Expense (2010)   

28,000

COGS (2010)   

65,000

Interest Expense (2010)   

3,600

Operating Expenses   

28,500


Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31, 2010.

2. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.



















































































































Jill’s Bikes

Comparative Balance Sheet

For Years Ended December 31, 2011 and 2010

(in thousands   

2011

   

2010

   

Difference

   

Percentage

Assets
Current Assets
Cash and Equivalents   

$72

   

$94

Accounts Receivable, net   

122

   

104

Inventory   

288

   

232

   


   


Total Current Assets   

482

   

430

Property, plant and Equipment   

638

   

358

   


   


Total Assets   

$1,120

   

$ 788

Liabilities
Current Liabilities
Accounts Payable   

242

   

148

Accrued Liabilities   

48

   

66

   


   


Total Current Liabilities   

290

   

214

Long-Term Liabilities   

346

   

208

   


Total Liabilities   

636

   

422

Stockholders’ Equity
Common Stock   

70

   

60

Retained Earnings   

414

   

306

   


   


Total Stockholders’ Equity   

484

   

366

   


Total Liabilities and Stockholders’ Equity   

$1,120

   

$788


Part B:

1. Record the following transactions using the accounting equation.

Example:

Assets = Liabilities + Equity

XXX(cash XXX (accounts payable)


    Amanda invests $17,000 cash into her merchandising business.

    She buys $6,500 of office equipment and $3,000 of office supplies with cash from Office Depot.

    Additional purchases were supplies for $35,000 on account from various suppliers.


2. Journalize the following transactions and omit the explanations.

A. ABC Corporation purchased $15,000 of office furniture by putting $7,000 down in cash and the rest on account on April 8.

B. The corporation paid $60,000 for a two-year lease on April 19.

C. The corporation had sales of $45,000, of which $35,000 were on account on April 20.

D. The corporation borrowed $25,000 by signing a note payable on April 22.

E. The corporation paid $1,250 on one of its accounts payable on April 26.

3. Prepare a trial balance from the following information for Learn a New Language, Inc. for December 31, 2012:

Accounts payable $5,012

Common stock $9.692

Cash $3,928

Notes payable $1,439

Wages expense $ 777

Marketing expense $ 493

Equipment $8,345

Accounts receivable $1,142

Inventory $8,074

Sales $6,616

4. Compute the missing information from this post-closing trial balance:

















































Cash   

$34,689

Accounts Receivable   

9,467

Prepaid Rent   

5,000

Prepaid Insurance   

(A)

Supplies   

944

Accounts Payable   

$5,389

Wages Payable   

(B)

Common Stock   

37,049

Retained Earnings   

8,234


———

   

———

Total   

$52,356

   

$52,356


 

5. Journalize the following transactions using the perpetual inventory method:

Aug. 6 Purchased $830 of inventory on account fromJohnstonwith terms of 2/10, n/30.

Aug. 8 Purchased $2,611 of inventory of cash from Pillner Company.

Aug. 15 Paid for August 6 purchase fromJohnston.

Aug. 17 Purchased $1,743 of merchandise on account from Luis Company with terms of 3/15, n/45.

6. Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012:














































Cash   

$65,750

    Retained Earnings   

$179,319

Common Stock   

$35,000

    Equipment   

$27,500

Accounts Receivable   

$11,478

    Accounts Payable   

$29,450

Land   

$30,000

    Inventory   

$78,311

Prepaid Supplies   

$7,357

    Income TaxesPayable   

$4,209

Office Computers   

$11,345

    Other PPE   

$31,446

Accum. Depr. (all)   

$23,459

    Prepaid Insurance   

$8,250


7. Rick Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note: The company uses a perpetual system of inventory.)















































Units

   

Unit Price

   

Total Cost

January 1-BeginningInventory   

18

   

$24

   

$432

March 12-Sold   

13

April 11-Purchase   

45

   

$29

   

$1,305

June 20-Sold   

33

Aug 16-Purchase   

35

   

$27

   

$945

Sept 11-Sold   

29

Total Cost of Inventory
Ending inventory is 23 units   

$2,682


What is the cost of goods sold for Rick Company for 2012 using LIFO?

 

8. Assume that in year 1, the ending merchandise inventory is overstates by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for Years 1 and 2.

Item Year 1 Year 2

Ending Inventory

Beginning Inventory

Cost of Goods Sold

 

9.Below is a list of treatments of accounting topics. Place GAAP on the line if the treatment is GAAP-based and place IFRS on the line if the treatment is IFRS-based.

A. Interest and dividend income are reported in the investing section of the cash flow statement.

B. Interest expense is reported in the financing section of the cash flow statement.

C. The use of LIFO is prohibited.

10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:



































Bank Balance, July 31,2011   

$36,739

 

Checkbook Balance, July 31,2011   

36,444

Bank collection of note receivable   

1,200 + 165

Interest

Bank service charge   

35

Deposits in transit   

2,400

Outstanding checks   

1,245

NSF check from customer   

330

Correction of book error (check #456 written for $160, recorded at $610)—gas expense

 

11. Journalize the following transactions for Tammy Company:

Sept. 1 Sold $3,500 of merchandise to Jim on account.

Oct. 1 Exchanged Jim’s account receivable for a four-month, 8% note for $3,500.

Dec. 31 Recorded accrued interest on Jim’s note (round to nearest dollar).

Feb. 1 Jim paid off his note with interest (round to nearest dollar).

12. A truck was purchased on January 2 at a cost of $60,000. It’s expected to be used for five years and to have a residual value of $5,000 after 120,000 miles of service. The truck was driven for 23,000 miles the first year and 25,000 miles the second year. Calculate the depreciation expense to the nearest dollar for the first and second years.

Method Year 1 Year 2

Straight-line

Double-declining balance

Units-of-production

 

13. Prepare journal entries for the following transactions:

Jan. 2, 2011 Purchased land with a building on it for $750,000. The land is worth $300,000. Paid $150,000 cash down and signed a mortgage payable for the balance.

Dec. 31, 2011 Depreciation is computed using the straight-line method. The estimated salvage value of the building is $75,000 and has an estimated life of 20 years.

July 1, 2012 The building and land are sold for $825,000 cash.

 

14. Journalize the following treasury stock transactions:

June 3. Reacquired 350 shares of $12 par common stock at $10 per share.

June 7. Sold 180 shares of treasury stock for $16 per share.

June 8. Sold 150 shares of treasury stock for $9 per share.

15. Lowry Landscapes had net income of $50,000 for 2010. Land was sold for $40,000, of which $3,000 was a gain. The beginning cash balance was $53,000, and the ending cash balance was $151,000. Depreciation expenses were $11,000. Prepare a statement of cash flows for the year ended December 31, 2010, for Lowry Landscapes using the indirect method.