Final Examination Acct310: Intermediate Accounting

Final Examination
Acct310: Intermediate Accounting I

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 Doozy Woozie
Company for 2016. (All balances are normal.)
Retained earnings balance, January 1, 2016
Sales for the year
Cost of goods sold
Interest revenue
Selling and administrative expenses
Write-off of goodwill (not tax deductible)
Income taxes for 2016
Gain on the sale of investments (normal recurring)

$ 980,000
25,000,000
17,000,000
70,000
4,700,000
820,000
905,000
110,000

Loss on the disposition of the wholesale division
Loss on operations of the wholesale division
Income tax benefit from discontinued wholesale division
Dividends declared on common stock

800,000
250,000
280,000
250,000

Dividends declared on preferred stock

202,500

Doozy Woozie Company decided to discontinue its entire wholesale operations and
to retain its manufacturing operations. On September 15, Doozy Woozie sold the
wholesale operations to Flippy-Floppy Company. During 2016, there were 150,000
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
$830,000. Additionally, FOB Shipping Point was $4,000. Flippy-Floppy
paid $20,000 to modify the production line to accommodate the new
machine. Handy-Dandy charged an installation and testing fee of
$10,000. 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 additional production information is as follows:
Year

Production

Year

Production

2014

110,000

2018

500,000

2015

300,000

2019

450,000

2016

350,000

2020

375,000

350,000

2021

400,000

2017
Schedules for:
a. Straight-line.
Year

Depreciation

Accumulated

End of Year Book

Expense

Depreciation

Value

Depreciation

Accumulated

End of Year Book

Expense

Depreciation

Value

2014
2015
2016
b. Double-declining balance.
Year

2014
2015
2016
2017
2018
2019
2020
2021
2022

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

Depreciation

Accumulated

End of Year Book

Expense

Depreciation

Value

Depreciation

Accumulated

End of Year Book

Expense

Depreciation

Value

2014
2015
2016
2017
2018
2019
2020
2021
2022
d. Units of production.
Year

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
800,000
equipment
During 2015, the following transactions occurred:
a. On January 31 a tract of land was acquired for $220,000 as a potential
future building site from Flopper Corp.
b. On March 1 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 $45 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. One June 1 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. On August 1 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. On September 1 research and development costs of
$110,000 were paid for the year.
Flipper uses the double-declining balance method of depreciation for all
office equipment, fixtures and machinery. Additionally, Flipper uses the straightline method of depreciation for all other fixed assets that require depreciation or
amortization.
Required:
Provide the capitalized cost & depreciation or amortization for 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, 2016, was scrapped on
June 30, 2018. As of January 1, 2018 sum-of-the-years digit
method depreciation had been recorded on the basis of a 5-year
life with no salvage value.
>> A machine was sold for $38,000 on July 1, 2018. Original cost of
the machine was $72,000 on February 28, 2015. It was
depreciated on the double-declining balance 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 to be recorded.