Intermediate Accounting Final

For this exam, omit all general journal entry explanations.

Ensure to include correct dollar signs, underlines & double underlines,

when required. Ensure to use proper financial document format details

such as blank lines where required. Unless otherwise noted, all fiscal

years end on December 31.

Question 1: 25%points: Presented below is information related to Woozie Floozy

Company for 2014. (All balances are normal.)

Retained earnings balance, January 1, 2014 $ 980,000

Sales for the year 25,000,000

Cost of goods sold 17,000,000

Interest revenue 70,000

Selling and administrative expenses 4,700,000

Write-off of goodwill (not tax deductible) 820,000

Income taxes for 2014 905,000

Gain on the sale of investments (normal recurring) 110,000

Loss due to flood damage—extraordinary item (net of tax) 390,000

Loss on the disposition of the wholesale division 815,000

Loss on operations of the wholesale division 200,000

Income tax benefit from discontinued wholesale division 285,000

Dividends declared on common stock 250,000

Dividends declared on preferred stock 50,000

Woozie Floozy Company decided to discontinue its entire wholesale operations and

to retain its manufacturing operations. On September 15, Woozie Floozy sold the

wholesale operations to Flippy-Floppy Company. During 2014, there were 200,000

shares of common stock outstanding all year.

Requirement: Prepare a multistep income statement.

Question 2: 20%points:

On June 1, 2014, Flippy-Floppy purchased a manufacturing machine for

$864,000. The machine has an eight-year estimated life and a $44,000 estimated

salvage value. Flippy-Floppy expects to manufacture 1,800,000 units over the life

of the machine.

Required: Complete the required depreciation schedules on the manufacturing

machine for each method listed. (Do not provide any supporting calculations.)

The aditional production information is as follows:

Year Production

2014 110,000

2015 300,000

2016 350,000

2017 350,000

2018 500,000

2019 450,000

2020 375,000

2021 400,000

Schedules for:

a. Straight-line.

Year Depreciation Expense Accumulated Depreciation End of Year Book Value

2014

2015

2016

b. Double-declining balance

Year Depreciation Expense Accumulated Depreciation End of Year Book Value

2014

2015

2016

2017

2018

2019

2020

2021

2022

c. Sum-of-the-years' digits.

Year Depreciation Expense Depreciation End of Year Book Value

2014

2015

2016

2017

2018

2019

2020

2021

2022

d. Units of Production

Year Depreciation Expense Accumulated Depreciation End of Year Book Value

2014

2015

2016

2017

2018

2019

2020

2021

Question 3: 30%points:

Selected accounts included in the property, plant, and equipment section of

Flipper Corporation's balance sheet at December 31, 2014, had the following

balances:

Land $ 400,000

Land improvements 130,000

Buildings 2,000,000

Machinery and

Equipment 800,000

During 2015, the following transactions occurred:

a. A tract of land was acquired for $200,000 as a potential future

building site from Flopper Corp.

b. A plant facility consisting of land and building was acquired from

Flimsy Company in exchange for 20,000 shares of Flipper's common

stock. On the acquisition date, Flipper's stock had a closing market

price of $42 per share on a national stock exchange. The plant facility

was carried on Flimsy's books at $178,000 for land and $520,000 for

the building at the exchange date. Current appraised values for the

land and the building, respectively, are $200,000 and $800,000. The

building has an expected life of forty years with a $20,000 salvage value.

c. Items of machinery and equipment were purchased from

Guess Who Equipment at a total cost of $400,000. Additional

costs were incurred as follows: freight and unloading,

$13,000; installation, $26,000. The equipment has a useful life of ten years with no salvage value.

d. Expenditures totaling $ 120,000 were made for new parking

lots, street, and sidewalks at the corporation's various plant

locations. These expenditures had an estimated useful life of fifteen years.

e. Research and development costs were $110,000 for the year.

Required: Indicate the capitalized cost of each asset

acquired during 2015. Prepare the General Journal entries

for any amortization and depreciation expense recorded for

each of the acquired items in 2015. If no entry is necessary, write "no entry."

Question 4: 25%points:

Selected accounts included in the property, plant, and equipment

section of Faulty Corporation's balance sheet at December 31, 2017,

had the following balances:

Land $ 400,000

Land improvements 130,000

Buildings 2,000,000

Machinery and equipment 800,000

During 2018, the following transactions occurred:

>> A machine costing $18,000 on July 1, 2011, was scrapped on

June 30, 2018. Straight-line depreciation had been recorded on

the basis of a 10-year life with no salvage value.

>> A machine was sold for $38,000 on July 1, 2018. Original cost of

the machine was $74,000 on January 1, 2015, and it was

depreciated on the sum-of-the-years' digits basis over an

estimated useful life of eight years and a salvage value of $2,000.

Required:

a. Calculate the gain or loss on the disposal of each asset. Place your answer in the

appropriate column.

b. Prepare the journal entries for the disposal & sale of the machine

during 2018. Year 2018 depreciation has yet been recorded.

Name:

Question 1: 25% points

Earnings per share::

Answer Sheet Page 1-of-5 Acct310 Final Exam

Question 2: 20% points

Schedules for:

a. Straight-line.

Year	Depreciation Expense	Accumulated Depreciation	End of Year Book Value
2014
2015
2016

b. Double-declining balance.

Year	Depreciation Expense	Accumulated Depreciation	End of Year Book Value
2014
2015
2016
2017
2018
2019
2020
2021
2022

c. sum of the years digits

Year	Depreciation Expense	Accumulated Depreciation	End of Year Book Value
2014
2015
2016
2017
2018
2019
2020
2021
2022

d. Units of production.

Year	Depreciation Expense	Accumulated Depreciation	End of Year Book Value
2014
2015
2016
2017
2018
2019
2020
2021

Question 3: 30% points

Capitalized Cost:

	Capitalized Cost
Land acquired from Flopper Corp.
Land acquired from Flimsy
Building acquired from Flimsy
Machinery and equipment acquired from Guess Who Equipment
Land improvements
Research and development

General Journal Entries:

Date	Account	Debit	Credit

Date	Account	Debit	Credit

Question 4: 25% points

Required:

a. Calculate the gain or loss on the disposal of each asset. Place your answer in the appropriate column.

Item	Amount of gain	Amount of loss
Scrapped machine on 6/30/18
Sale of machine on 7/1/18

b. Prepare the journal entries for the disposal & sale of the machine during 2018. Year 2018 depreciation has yet been recorded.

Date	Account	Debit	Credit

Date	Account	Debit	Credit