Devry ACCT550 final exam 2017 (

Question 1.1.(TCO A) Listed below are some information, characteristics, and accounting principles and assumptions. Match the term with the appropriate phrase that states its application.
(Points : 30)

Potential Matches:

1 : Presentation of error-free information with representational faithfulness= Presentation of error-free information with representational faithfulness

2 : Economic activity can be identified with a particular unit of accountability

3 : Implies that a company can divide its economic activities into artificial time periods

4 : Earnings process completed and realized or realizable

5 : Business enterprise assumed to have a long life

6 : Notes as part of necessary information to a fair presentation

7 : Application of the same accounting principles as in the preceding year

8 : Affairs of the business distinguished from those of its owners

9 : Valuing assets at amounts originally paid for them

10 : Money is the common denominator of economic activity and provides an appropriate basis for accounting measurement and analysis

Answer

: Historical cost principle

: Full disclosure principle

: Economic entity assumption

: Periodicity assumption

: Going concern principle

: Reliability characteristic

: Economic entity assumption

: Monetary unit assumption

: Revenue recognition principle

: Consistency characteristic

Retained earnings, December 31, 20X2

$650,000

Sales

1,400,000

Selling and administrative expenses

240,000

Hurricane loss (pre-tax) on plant (extraordinary item)

290,000

Cash dividends declared on common stock

33,600

Cost of goods sold

780,000

Gain resulting from computation error on depreciation charge in 20X1 (pre-tax)

520,000

Other revenue

120,000

Other expenses

100,000

Cash

$ 80,000

Accounts payable

$ 75,000

Accounts receivable (net)

52,200

Long-term liabilities

100,000

Inventories

57,000

Stockholders' equity

218,500

Investments

76,300

Equipment (net)

96,000

Patents

$393,500

$393,500

Question 1.1.(TCO E) Jack Sawyer is presently leasing a copier from John Office Equipment Company. The lease requires 11 annual payments of $3,500 at the end of each year and provides the leaser (John) with an 8% return on its investment. You may use the following 8% interest factors.

Instructions
(a) Assuming the computer has an 11-year life and will have no salvage value at the expiration of the lease, what was the original cost of the copier to John?
(b) What amount would each payment be if the 11 annual payments are to be made at the beginning of each period? (Points : 25)

Question 2.2.(TCO F) Northville Paper and Paint deposits all receipts and makes all payments by check. The following information is available from the cash records.
April 30
BANK RECONCILIATION

Calculate the following amounts.
(1) Deposits in transit on May 31
(2) Outstanding checks on May 31 (Points : 25)

Question 3.3.(TCO G) Tan Company was formed on December 1, 2010. The following information is available from Tan's inventory record for Product Lotion.

A physical inventory on March 31, 2011, shows 2,400 units on hand.
Instructions:
Prepare schedules to compute the ending inventory at March 31, 2011, under each of the following inventory methods.
(a) FIFO
(b) LIFO
(c) Weighted-average
Show supporting computations in good form. (Points : 40)

Question 4.4.(TCO G) In your audit of Garza Company, you find that a physical inventory on December 31, 2010, showed merchandise with a cost $471,000 was on hand at that date. You also discover the following items were all excluded from the inventory count.
•Merchandise of $61,000, which was shipped by Garza as f.o.b. shipping point. The buyer is the Bontemps Company.
•Merchandise costing $33,000, which was on consignment. The consignee is the Proctor Company.
•Merchandise costing $95,000, which was shipped by Garza f.o.b. destination to a customer on December 29, 2010. The customer was scheduled to receive the merchandise on January 2, 2011.
•Merchandise costing $103,000 shipped by a vendor f.o.b. destination on December 30, 2010, and received by Garza on January 4, 2011.
•Merchandise costing $85,000 shipped by a vendor f.o.b. shipping point on December 31, 2010, and received by Garza on January 5, 2011.
Based on the above information, calculate the amount that should appear on Garza’s balance sheet at December 31, 2010, for inventory. (Points : 20)

Answer

Question 5.5.(TCO H) On January 2, Year 1, Logan Co. purchased a manufacturing machine for $864,000. The machine has an 8­year estimated life and a $144,000 estimated salvage value. Logan expects to manufacture 1,800,000 units over the life of the machine. During Year 2, Logan manufactured 300,000 units.

Instructions:
Calculate the Year 2 depreciation expense using (1) straight-line depreciation and (2) double-declining balance depreciation. (Points : 40)