Uses of Accounting Information I (ACC 230)
Final Exam Review
Balances at the end of the first year of operations:
Cash
10,000
Accounts Receivable 12,000
Cost of Goods Sold 30,000
Land
70,000
Bonds Payable
200,000
Salaries Payable
3,000
Insurance Expense
7,000
Capital Stock
182,000
Sales
70,000
Accounts Payable
8,000
Inventory
16,000
Building
280,000
Salary Expense
12,000
Prepaid Insurance
6,000
Income Tax Expense 3,000
Dividends Paid
11,000
Net income? 18,000
Retained Earnings at end of year? 7,000
Current ratio? 4 to 1
Gross profit ratio? 57.1%
How would the following transactions affect the Accounting (Balance Sheet) equation?
Assets
Provided services on account
+
Collected payment on account
+ -
Liabilities
-
+ Owners Equity
+
+
Received utility bill
Paid utility bill received previously
=
-
-
Cash balance per bank
12,000
Deposits in transit
Interest earned
Service charges
Customer’s NSF check
Outstanding checks
3,000
50
150
100
1,100
Adjusted balance per bank? 13,900
Cash balance per books
8,000
Service charges
Deposits in transit
Outstanding checks
Interest earned
Customer’s NSF check
70
2,500
900
20
130
Adjusted balance per books? 7,820
Buyer Company purchases 1,000 geegaws at $100 each. Supplier Company offers a 5%
quantity discount for purchases of 500 or more and terms 2/10, n/30. If Buyer Company
remits payment on the ninth day after the invoice date, how much should they pay?
93,100
Sales
100
Inventory: Beg
6
End
3
Operating Expenses
21
Purchases
50
Purchases returns
4
Purchases discounts
2
Transportation-in
5
Dividends
8
Calculate the following:
Cost of goods purchased
Cost of goods sold
Gross margin
Date
Aug 1
14
28
Units
30
50
20
Unit Cost
$2
3
4
49
52
48
Total Cost
$ 60
150
80
Aug 31 Ending Inventory – 32 units
Ending Inventory
Cost of Goods Sold
First-in First-out (FIFO)
116
174
Last-in First-out (LIFO)
66
224
Weighted Average
92.80
197.20
An automobile was purchased on January 1, 2006 at a cost of $18,000. Estimated useful
life was 5 years with a residual value of $3,000.
1) Straight-line method
a) Annual depreciation?
2) Double declining balance method
3,000
Depreciation for 2006?
b) Book value on December 31, 2006?
7,200
15,000
Which payroll taxes are imposed on the following?
Employee
Employer
FICA – Social Security
FICA – Both Taxes
(Matching)
FICA - Medicare
FUTA – Federal Unemp
Federal Income Tax
SUTA – State Unemp
State Income Tax
Which taxes are subject to a maximum amount?
FICA – Social Security, FUTA, SUTA
An investment of $10,000 is made at an annual rate of 8% for 6 years.
How would the time value of money tables be used if the compounding of interest was:
Semi-annually
Quarterly
12 periods, 4%
24 periods, 2%
Bonds were issued on a date when the face rate of interest was 6% and the market rate
was 5%.
These bonds will be issued at a Premium to face value.
Leases
Lessor – owns property
Lessee – pays to use property
Operating
Capital
(meets one of four criteria)
Accounting treatment?
Accounting treatment?
Record: Rent or Lease Expense
Record: Asset and
Lease Liability
Amounts received:
Amounts paid:
Salary
Tips
Interest – bank
Maricopa county bonds
Inheritance
Game show winning
Partnership income
Gift from aunt
Illegal income
20,000
15,000
500
1,200
30,000
3,000
6,000
12,000
18,000
Interest – home mortgage
car loan
credit card
Property taxes – home
car
Charitable
Income taxes – federal
state
Tuition paid to GCC
7,200
1,400
600
1,500
300
2,000
5,000
1,000
800
Amount to be included in taxable income?
Total of itemized deductions?
62,500
12,000
Common stock, $10 par
$200,000
Additional paid in capital
90,000
Retained Earnings
150,000
Less: Treasury stock, 2,000 shares
(36,000)
Number of: shares issued? 20,000
shares outstanding? 18,000
What would change if the company split its stock 2 for 1?
Market price per share decreases, par value decreases, number of
shares increases with no change to Stockholders’ Equity dollar amounts.
Sales
Accounts receivable, January 1
Accounts receivable, December 31
$400,000
40,000
70,000
Cash collected from customers? 370,000
Salaries expense
Salaries payable, January 1
Salaries payable, December 31
$100,000
30,000
50,000
Cash paid for salaries? 80,000
Cost of goods sold
Inventory, January 1
Inventory, December 31
Accounts payable, January 1
Accounts payable, December 31
$200,000
20,000
40,000
10,000
50,000
Cash paid for merchandise? 180,000
Accounts receivable
Inventories
Accounts payable
Net income
Depreciation expense
2007
$14
16
12
2008
$10
22
10
80
5
Using the indirect method, this company’s cash flow from operating activities would be?
81