Basic accounting final exam

final_exam_13su.xls

Problem 1

Principles of Accounting I
Final Exam - Problem Section
The final exam is open book and open notes, however you cannot help other students
on the exam and you cannot ask for help on the exam from anyone except the instructor.
The work on the exam must be your own. Please do not discuss questions and problems
on the exam with other classmates or with a tutor.
Make sure to complete all pages of the exam! See tabs below, Problem 1,
Problem 2, etc.
Problem 1 Ocean Sailboat Company (32 points)
Ocean Sailboat buys sailboats and sells them to the public. During December
Ocean's records showed the following activity:
				Quantity	Price	Amount
	1-Dec	Beg. Inventory of Sailboats		140	$ 75	$ 10,500
	7-Dec	Purchased Sailboats		260	86	22,360
	10-Dec	Sailboat Sales		190
	19-Dec	Purchased Sailboats		180	98	17,640
The manager physically counted the remaining sailboats at the end of December. She
found that 180 of the remaining sailboats were from the December 19 purchase, 110
were from the December 7 purchase, and the remainder were from beginning inventory.
Ocean uses the perpetual inventory system. Determine the cost of goods sold and
ending inventory cost for December using the following inventory valuation methods.
Round amounts to the nearest cent.
			Dollar Amount
			Cost of Goods Sold		Ending Inventory Cost
	FIFO
	LIFO
	Weighted Average
	Specific Identification

Principles of Accounting I
Final Exam
Problem 2: Loud Cellphone Company (12 points)
During March Loud incurred the following activity:
			Units	Cost	Amount
1-Mar	Beginning Inventory		235	$ 17	$ 3,995
16-Mar	Purchases		164	24	3,936
24-Mar	Sales		240
	Ending Inventory		159
		FIFO		$ 24	3,816
		LIFO		17	2,703
	Replacement			16	2,544
At the end of March Loud's supplier notified her that the price of the cellphones had dropped
to $16 each. Loud decided to reduce her sales price from $51 per cellphone to $48 per
cellphone.
a.	Prepare the adjusting entry (if necessary) for the writedown of inventory at the
	end of March using the FIFO inventory valuation method.
Date	Description				Debit	Credit
b.	Prepare the adjusting entry (if necessary) for the writedown of inventory at
	the end of March using the LIFO inventory valuation method.
Date	Description				Debit	Credit

Principles of Accounting I
Final Exam
Problem 3: Clean Soap Shop (12 points)
Near the end of September, Clean Soap Shop burned to the ground. Clean uses the periodic
inventory system, so management needed to come up with an estimate of ending inventory
in order to report the loss to the insurance company. According to Clean's records, the following
activity occurred in September:
		Amount
Beginning Inventory		$ 9,237.00
Purchases		15,638.00
According to accounting records sales revenue for September was $29,870. The normal
gross profit percentage was 36%.
Estimate Clean's cost of goods sold and lost inventory for September using the gross profit
method. Calculate amounts to the nearest cent.
	Cost of Goods Sold
	Cost of Lost Inventory

Principles of Accounting I
Final Exam
Problem 4: Fast Sandwich Shop (18 points)
Record adjusting entries for the following items into the General Journal for
the year ended December 31 (no descriptions required). The company only records
adjusting entries at year-end. Round amounts to the nearest cent.
1.	The unadjusted trial balance shows a $1,890 debit balance for office supplies. The
	year-end inventory found only $632 of office supplies on hand. Record supplies
	used.
2.	On Nov. 1, six months of insurance was prepaid for $4,500. The insurance
	policy started on Nov. 1. Record insurance used.
3.	A truck was purchased on Sep. 1 for $48,000. The truck has an estimated useful
	life of 5 years. At the end of 5 years it will have a salvage value of $3,420. The
	company uses straight-line depreciation. Record depreciation on the truck.
4.	A 90 day 16% $8,700 note receivable was issued to a customer on Dec. 3.
	Record interest earned (round to nearest cent).
5.	On October 1 Fast Sandwich borrowed cash from Wells Fargo and signed a
	nine month 8% $12,900 note payable. Record interest expense (round to the
	nearest cent).
General Journal			Page J1
Date	Description	Debit	Credit

Principles of Accounting I
Final Exam
Problem 5 Blue Water Company (16 points)
Blue Water uses the allowance method to recognize bad debt expense associated with
accounts receivable. Prepare journal entries for the following transactions. No descriptions
are required.
31-Dec	The balance of Allowance for Doubtful Accounts at the end of the year was
	$480 debit. The balance of Accounts Receivable at the end of the year was
	$31,770. Based on a percentage of sales, Blue estimated that $3,210 of
	credit sales would be uncollectible. Prepare the adjusting entry for
	uncollectible accounts expense.
Date	Description	Debit	Credit
8-Jul	Blue wrote off Zip Kohl's account for $930.
Date	Description	Debit	Credit
3-Sep	Zip Kohl showed up and paid $100 cash on his account. No more payments
	can be expected from Zip.
Date	Description	Debit	Credit
31-Dec	At the end of the year an analysis of receivable accounts using the percentage of
	receivables method produced an estimate of $7,431 in uncollectible accounts.
	The balance of Blue's accounts receivable is $41,697. Prepare the adjusting
	entry for uncollectible accounts expense.
Date	Description	Debit	Credit
Calculate the Net Realizable Value of Blue's accounts receivable as of December 31
of the second year.

Principles of Accounting I
Final Exam
Problem 6 White Cloud Company (30 points)
Use the balances below to prepare a Classified Balance Sheet, Statement of Retained
Earnings, and Income Statement for White Cloud Company for the year ended
December 31, 2013. Be sure to properly classify your balance sheet and use proper
dates, dollar signs and underlines. Use the worksheet "Problem 6 continued" to prepare
your financial statements.
Retained Earnings			$ 3,740
Unearned Revenue			3,410
Accounts Payable			4,830
Rent Expense			2,970
Capital Stock			6,100
Short-term Notes Payable			3,450
Supplies Expense			2,110
Sales Discounts			1,120
Accounts Receivable			9,240
Cost of Goods Sold			12,860
Cash			4,270
Accumulated Depreciation			10,320
Allowance for Uncollectible Accounts			3,180
Prepaid Rent			860
Dividends			2,290
Bank Loan *			13,840
Office Supplies			1,920
Income Tax Expense			2,530
Fixtures			34,880
Depreciation Expense			3,790
Bad Debt Expense			840
Sales Returns			1,780
Gift Sales			32,590
* The bank loan is due to be paid in 6 years

Principles of Accounting I

Final Exam

Problem 6 continued

Using the data provided prepare a classified balance sheet, statement of retained

earnings, and income statement for the White Cloud Company.