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ACC 422 Final Exam Guide 1 Click Here to Buy the Tutorial For more course tutorials visit 1. Kraft Enterprises owns the following assets at December 31, 2012. Cash in bank– 67,516 Checking account balance 26,445 savings account Cash on hand 9,478 Postdated checks 753 Certificates of deposit (180Cash refund due from IRS 40,324 94,754 day) What amount should be reported as cash? Question 2 Presented below is information related to Rembrandt Inc.’s inventory. (per unit) Skis Boots Parkas Historical Cost 273.79 152.75 76.37 Selling Price 312.70 208.95 106.27 Cost to distribute 27.38 11.53 3.60 Current replacement cost 292.52 151.31 73.49 Normal profit margin 46.11 41.79 30.62 Determine the following: Question 3 Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 67 units that cost $40 each. During June, the company purchased 202 units at $40 each, r eturned 8 units for credit, and sold 168 units at $67 each. Journalize the June transactions. Question 4 Amsterdam Company uses a periodic inventory system. For April, when the company sol d 700 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the average cost m ethod. Question 5 Amsterdam Company uses a periodic inventory system. For April, when the company sol d 600 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Question 6 (FIFO, LIFO, Average Cost Inventory) Esplanade Company was formed on December 1, 2011. The following information is ava ilable from Esplanade’s inventory records for Product BAP.

Purchases Units Unit Cost January 1, 2012(beginning inventory) 762 8.00 January 5, 2012 1,524 9.00 January 25, 2012 1,651 10.00 February 16, 2012 1,061 11.00 March 26, 2012 762 12.00 A physical inventory on March 31, 2012, shows 2,032 units on hand. Prepare schedules t o compute the ending inventory at March 31, 2012, under each of the following inventory methods. Assume Esplanade Company uses the periodic inventory method. Question 7 Floyd Corporation has the following four items in its ending inventory. Determine the fin al lower of cost or market inventory value for each item. Question 8 Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $320,7 86 at both cost and market value. At December 31, 2013, the inventory was $428,714 at c ost and $403,231 at market value. Prepare the necessary December 31 entry under: Question 9 Boyne Inc. had beginning inventory of $15,000 at cost and $25,000 at retail. Net purchas es were $150,000 at cost and $212,500 at retail. Net markups were $12,500; net markdow ns were $8,750; and sales were $196,250. Compute ending inventory at cost using the co nventional retail method. Question 10 (Gross Profit Method) Astaire Company uses the gross profit method to estimate inventory for monthly reportin g purposes. Presented below is information for the month of May. Question 11 Previn Brothers Inc. purchased land at a price of $30,400. Closing costs were $1,820. An old building was removed at a cost of $14,850. What amount should be recorded as the c ost of the land? Question 12 Garcia Corporation purchased a truck by issuing an $108,000, 4-year, zero-interestbearing note to Equinox Inc. The market rate of interest for obligations of this nature is 1 0%. Prepare the journal entry to record the purchase of this truck. Question 13 Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cas h payment of $352,800. The estimated fair values of the assets are land $67,200, building $246,400, and equipment $89,600. At what amounts should each of the three assets be re corded? Question 14 Fielder Company obtained land by issuing 2,000 shares of its $12 par value common stoc k. The land was recently appraised at $103,700. The common stock is actively traded at $ 50 per share. Prepare the journal entry to record the acquisition of the land. Question 15

Navajo Corporation traded a used truck (cost $23,600, accumulated depreciation $21,240 ) for a small computer worth $4,366. Navajo also paid $1,180 in the transaction. Prepare t he journal entry to record the exchange. Question 16 Mehta Company traded a used welding machine (cost $10,080, accumulated depreciation $3,360) for office equipment with an estimated fair value of $5,600. Mehta also paid $3, 360 cash in the transaction. Prepare the journal entry to record the exchange. Question 17 Depreciation is normally computed on the basis of the nearest A). full month and to the nearest dollar. B). day and to the nearest cent. C). day and to the nearest dollar. D). full month and to the nearest cent. Question 18 Fernandez Corporation purchased a truck at the beginning of 2012 for $54,180. The truck is estimated to have a salvage value of $2,580 and a useful life of 206,400 miles. It was d riven 29,670 miles in 2012 and 39,990 miles in 2013. Compute depreciation expense for 2012 and 2013. Question 19 Lockhard Company purchased machinery on January 1, 2012, for $79,200. The machiner y is estimated to have a salvage value of $7,920 after a useful life of 8 years. (a) Compute 2012 depreciation expense using the double-declining balance method. (b) Compute 2012 depreciation expense using the doubledeclining balance method assuming the machinery was purchased on October 1, 2012. Question 20 Jurassic Company owns machinery that cost $1,145,700 and has accumulated depreciatio n of $458,280. The expected future net cash flows from the use of the asset are expected t o be $636,500. The fair value of the equipment is $509,200. Prepare the journal entry, if a ny, to record the impairment loss. Question 21 Everly Corporation acquires a coal mine at a cost of $501,600. Intangible development co sts total $125,400. After extraction has occurred, Everly must restore the property (estima ted fair value of the obligation is $100,320), after which it can be sold for $200,640. Ever ly estimates that 5,016 tons of coal can be extracted. If 878 tons are extracted the first yea r, prepare the journal entry to record depletion. Question 22 Francis Corporation purchased an asset at a cost of $58,200 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $5,820. For tax purposes, the MACRS c lass life is 5 years. Compute tax depreciation for each year 2012–2017. Question 23 Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, f or $50,820. The patent has a remaining legal life of 16 years. Celine Dion feels the patent

will be useful for 10 years. Prepare Celine Dion’s journal entries to record the purchase o f the patent and 2012 amortization. Question 24 Karen Austin Corporation has capitalized software costs of $768,500, and sales of this pr oduct the first year totaled $390,630. Karen Austin anticipates earning $911,470 in additi onal future revenues from this product, which is estimated to have an economic life of 4 y ears. Compute the amount of software cost amortization for the first year. (a) Compute the amount of software cost amortization for the first year using the percent of revenue approach. (b) Compute the amount of software cost amortization for the first year using the straightline approach. Question 25 Jeff Beck is a farmer who owns land which borders on the right-ofway of the Northern Railroad. On August 10, 2012, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the Rai lroad for several years concerning the ownership of a small parcel of land. The representa tive of the Railroad has offered to assign any rights which the Railroad may have in the la nd to Beck in exchange for a release of his right to reimbursement for the loss he has sust ained from the fire. Beck appears inclined to accept the Railroad’s offer. The Railroad’s 2 012 financial statements should include the following related to the incident: A). recognition of a loss only. B). creation of a liability only. C). disclosure in note form only. D). recognition of a loss and creation of a liability for the value of the land. Question 26 Roley Corporation uses a periodic inventory system and the gross method of accounting f or purchase discounts. On July 1, Roley purchased $66,000 of inventory, terms 2/10, n/30 , FOB shipping point. Roley paid freight costs of $1,210. On July 3, Roley returned dama ged goods and received credit of $6,600. On July 10, Roley paid for the goods. Prepare al l necessary journal entries for Roley. Question 27 Takemoto Corporation borrowed $93,000 on November 1, 2012, by signing a $95,093, 3month, zero-interestbearing note. Prepare Takemoto’s November 1, 2012, entry; the December 31, 2012, ann ual adjusting entry; and the February 1, 2013, entry. (For multiple debit/credit en tries, lis t amounts from largest to smallest, e.g. 10, 8, 6. Round all answers to 0 decimal places, e. g. 11,150.) Question 28 Whiteside Corporation issues $629,000 of 9% bonds, due in 14 years, with interest payab le semiannually. At the time of issue, the annual market rate for such bonds is 10%. Com pute the issue price of the bonds.(Use the present value tables in the text. Question 29

Indiana Jones Company enters into a 6year lease of equipment on January 1, 2012, which requires 6 annual payments of $37,56 0 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $ 20,870 at leaseend. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the l essor, collectibility is reasonably predictable, there are no important uncertainties concern ing costs, and the carrying amount of the machinery is $191,722. Prepare Lost Ark’s Janu ary 1, 2012, journal entries. Question 30 On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $26,050 and imme diately leased it back. The truck was carried on Irwin’s books at $20,800. The term of the lease is 5 years, and title transfers to Irwin at leaseend. The lease requires five equal rental payments of $7,048 at the end of each year. The appropriate rate of interest is 11%, and the truck has a useful life of 5 years with no salva ge value. Prepare Irwin’s 2012 journal entries.

Acc 422 final exam guide 1  
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