ACCT/212 Final Exam

ACCT/212 Final ExamPART-1(TCO 6) BagODonuts Company bought a used delivery truck on January 1, 2010, for $19,200. The van was expected to remain in service 4 years (30,000 miles). BagODonuts’ accountant estimated that the truck’s residual value would be $2,400 at the end of its useful life. The truck traveled 8,000 miles the first year, 8,500 miles the second year, 5,500 miles the third year, and 8,000 miles in the fourth year.1. Calculate depreciation expense for the truck for each year (2010-2013) using the:a. Straight-line method.b. Double-declining balance method.c. Units of Production method.(For units-of-production and double-declining balance, round to the nearest two decimals after each step of the calculation.)2. Which method best tracks the wear and tear on the van?3. Which method would BagODonuts prefer to use for income tax purposes? Explain in detail why BagODonuts prefers this method.2. (TCO 7) ABC Inc. was incorporated on 1/15/12. Their corporate charter authorized the following capital stock:Preferred Stock: 7%, par value $100 per share, 100,000 shares.Common Stock: $1 par value, 500,000 shares.The following transactions occurred during the year:1/19/12 – Issued 100,000 shares of common stock for $17 cash per share.1/31/12 – Issued 3,000 shares of preferred stock for $115 cash per share.11/1/12 – Repurchased 30,000 shares of common stock for $22 cash per share.12/1/12 – Declared and paid a total dividend of $95,000.Required:1. Prepare the journal entry for each transaction listed above.2. In your own words, explain the main differences between common and preferred stock.3. (TCO 5) Internal Control Procedures are in place to protect the assets of every business as mentioned in the textbook and our discussions. Of the seven internal control procedures, list five of these controls and describe how each procedure is implemented. (5 points each with 2 points for listing and 3 points for a description)4. (TCO 2) Below are the accounts of Super Pool Service, Inc. The accounts have normal balances on June 30, 2012. The accounts are listed in no particular order.Account BalanceCommon stock $5,100Accounts payable $4,400Service revenue $17,100Land $28,800Note payable $9,500Cash $5,200Dividends $6,100Utilities expense $2,100Accounts receivable $10,600Delivery expense $700Retained earnings $25,600Salary expense $8,200Prepare the company’s trial balance as of June 30, 2012, listing accounts in proper sequence, as illustrated in the chapter. For example, Accounts Receivable comes before Land. List the expense with the largest balance first, the expense with the next largest balance second, and so on.5. (TCO 4) Linda’s Lampshades started business on Jan. 1, 2001. They had the following inventory transactions:Journals – Jan. 2001PurchasesSupplier Date Received Quantity Unit Cost AmountDonna 01/10/01 110 12.00 1320.00Thomas 01/15/01 160 14.00 2240.00Cindy 01/18/01 150 15.00 2250.00SalesCustomer Date shipped Quantity Sel. Price AmountNorilene 01/16/01 200 25.00 5000.001. Calculate the ending inventory, using the perpetual inventory method:A. Using FIFOB. Using LIFOC. Using Average Cost2. Prepare the following statementUsingFIFO LIFO Average CostSalesCost of SalesGross ProfitPART-2(TCO 3) Adjusting entries are required at the end of the period for some accounts. (1) Explain why this process is required and (2) develop the adjusting entry at the end of the period for salary payable to employees $2400(TCO 2) As required to complete Course Project 1, one must follow the cycle that includes 10 steps to complete the accounting cycle. (1) Explain how information from the journal entries get into the ledger accounts and (2) provide an example of information that would be transferred.(TCO 4) The accountant of Bulsara Co. is so busy that the company handles petty cash a bit differently. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash. Internal Control Procedures are required to safeguard company assets and to ensure ethical operation of the business. (1) Explain which internal control procedure has been violated in the Bulsara Co. case and (2) what would you recommend for improvement.(TCO 4) Various methods are used in accounting for inventory in an accounting system. (1) Compare and contrast Perpetual Inventory and Periodic Inventory systems of determining inventory on hand, and (2) provide an example of an inventory item under each method and show how the method is well suited for counting the inventory.(TCO 1) The Balance Sheet is sometimes referred to as a snap-shot of the financial position of the business on a particular date. Name the three major components of the Balance Sheet and provide an example of an account that would be found in each major component.