acct 221 final exam
evelyn_0629
accttest1.docxRunning head: DISCUSSION 1
DISCUSSION 2
Directions: This exam tests how well you understood the concepts covered in Weeks 1 - 7.
The first half of the exam features 7 questions with short answers and calculations. For these, omit all general journal entry explanations. Be sure to include correct dollar signs, commas, underlines and double underlines where required. Please use the answer sheet in your LEO assignment folder to complete the problems and upload there before completing and submitting the quiz.
The second half of the exam consists of 20 multiple-choice questions worth 2 points each.
The computer will automatically grade the multiple-choice questions, but grading will not be complete until your instructor manually grades the short-answer questions. Your instructor may grant partial credit on short- answer questions for less than complete answers.
You can take the final exam only once. You can save each question after answering, and you can save the exam before submitting. Once you have submitted the exam and uploaded your answer sheet to your assignment folder, you will receive a score.
Section 1: Calculations
Section 1 Instructions
To submit your answers for questions 1-7 of the exam, fill in the answer sheet and upload it to the LEO assignment folder. The answer sheet can be found in your assignment folder.
Omit all general journal entry explanations. Be sure to include correct dollar signs, commas, underlines, and double-underlines where required.
On January 1, 2020, Bowie Corp. had the following balances (all balances are normal):
|
Accounts |
Amount |
|
Preferred Stock, ($100 par value, 5% noncumulative, 50,000 shares authorized, 5,000 shares issued and outstanding) |
$500,000 |
|
Common Stock ($5 par value, 200,000 shares authorized, 100,000 shares issued and outstanding) |
$500,000 |
|
Paid-in Capital in Excess of par, Common |
200,000 |
|
Retained Earnings |
800,000 |
The following events occurred during 2020:
a. On January 1, Bowie Corp. declared a 10% stock dividend on its common stock when the market value of the common stock was $12 per share. Stock dividends were distributed on January 31 to shareholders as of January 25.
b. On February 15, Bowie Corp. reacquired 2000 shares of common stock for $13.50 each.
c. On March 31, Bowie Corp. reissued 250 shares of treasury stock for $17 each.
d. On July 1, Bowie Corp. reissued 250 shares of treasury stock for $15 each.
e. On October 1, Bowie Corp. declared full year dividends for preferred stock and $2.00 cash dividends for outstanding shares and paid shareholders on October 15.
f. On December 15, Bowie Corp. split common stock 2 shares for 1.
g. Net Income for 2020 was $200,000.
Requirements:
a. Prepare journal entries for the transactions listed above.
b. Prepare a Stockholders' section of a classified balance sheet as of December 31, 2020 (after taking into consideration your journal entries)
Question 2 (4 points)
On January 1, 2020, Dua Company purchased 30,000 shares of the stock of Lipa, Inc. and did obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $240,000, and represents a 35% ownership stake. Lipa made $150,000 of net income in 2020, and paid dividends of $25,000. The price of Lipa's stock increased from $8 per share at the beginning of the year, to $10 per share at the end of the year.
Requirements:
a. Prepare the January 1 and December 31 general journal entries for Dua Company.
b. How much should the Dua Company report on the balance sheet for the investment in Lipa at the end of 2020?
Question 3 (10 points)
Maroon Corporation's comparative balance sheets are presented below.
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|
MAROON CORPORATION |
|||
|
|
Balance Sheets |
|||
|
|
December 31 |
|||
|
|
|
2020 |
|
2019 |
|
|
Cash |
$10,000 |
|
$ 9,000 |
|
|
Accounts receivable |
38,000 |
|
35,000 |
|
|
Inventory |
25,000 |
|
25,500 |
|
|
Land |
10,000 |
|
9,000 |
|
|
Building |
100,000 |
|
90,000 |
|
|
Accumulated depreciation |
(26,000) |
|
(25,000) |
|
|
Total |
$167,000 |
|
$143,500 |
|
|
|
|
|
|
|
|
Accounts payable |
$ 46,000 |
|
$ 50,000 |
|
|
Common stock |
62,000 |
|
60,000 |
|
|
Retained earnings |
59,000 |
|
33,500 |
|
|
Total |
$167,000 |
|
$143,500 |
Maroon's 2020 income statement included net credit sales of $400,000, cost of goods sold of $110,000, and net income of $40,000.
Instructions: Compute the following ratios for 2020. (a) Current ratio. (b) Acid-test ratio. (c) Receivables turnover. (d) Profit margin. (e)Return on assets. (Round ratios to 2 decimal places and percentages to 1 decimal place.)
Question 4 (10 points)
Mercury Corporation had the following bond transactions during the fiscal year 2020:
a. On January 1: issued forty $20,000 bonds at 103. The 5-year bonds are dated January 1, 2020. The contract interest rate is 5%. Straight-line amortization method is used. Interest is payable semi-annual on January 1 and July 1.
b. On July 1: Mercury Corporation issued $500,000 of 5%, 10-year bonds. The bonds dated January 1, 2020 were issued at 95, and pay interest on July 1 and January 1. Straight-line amortization method is used.
c. On October 1: issued 10-year bonds $10,000 face value bonds, for $12,000 cash. The bonds have a stated rate of 3%. Straight-line amortization method is used. Interest is payable on October 1 and April 1.
Requirements: Prepare all general journal entries for the three bonds issued and any interest accruals and payments for the fiscal year 2020. (Round all calculations to nearest whole dollar.)
Question 5 (5 points)
Halsey Company had sales of $20,000 (200 units at $100 per). Manufacturing costs consisted of direct labor $1,600, direct materials $1,200, variable factory overhead $1,000, and fixed factory overhead $500. Selling expenses totaled $1,250 ($250 variable and $1,000 fixed), and administrative expenses totaled $1,600 ($410 variable and $1,190 fixed). Operating income was $12,850. Round all final answers to nearest dollar or whole number.
Requirements:
a. What is the break-even point in sales dollars and in units if the fixed factory overhead increased by $1,000?
b. What is the break-even point in sales dollars and in units if costs remain as originally projected?
c. What would be the operating income if sales units increased by 10%?
d. Question 6 (5 points)
e.
f. Mathers Co. manufactures tote bags. The forecasted income statement for the year before any special orders included sales of $3,200,000 (sales price is $10 per unit.) Manufacturing cost of goods sold is anticipated to be $2,500,000. Selling expenses are expected to be $300,000, and operating income is projected at $400,000. Fixed costs included in these forecasted amounts are $1,300,000 for manufacturing cost of goods sold. ProCo is offering a special order to buy 30,000 tote bags for $6.00 each. There will be no additional selling expenses, and sufficient capacity exists to manufacture the extra tote bags.
g. Requirements: Prepare an incremental analysis schedule to demonstrate what amount operating income would increase or decrease as a result of accepting the special order.
Question 7 (6 points)
Lennon Company manufactures 30,000 units of wheel sets for use in its annual production. Costs are as follows: direct materials are $30,000; direct labor is $45,000; variable overhead is $35,000; and fixed overhead is $60,000. McCartney Company has offered to sell Lennon 30,000 units of wheel sets for $6 per unit. If Lennon accepts the offer, some of the facilities presently used to manufacture wheel sets could be rented to a third party at an annual rental of $20,000. Additionally, $1.50 per unit of the fixed overhead applied to wheel sets would be totally eliminated.
Requirements: Prepare an incremental analysis schedule to demonstrate if Lennon should accept McCartney's offer.
