ACCT 504 Education for Service--tutorialrank.com

1. ACCT 504 Final Exam Guide (2 Set, New 2020) For more course tutorials visit www.tutorialrank.com This Tutorial contains 2 Set of Final Exam Question 1.1. (TCO D) Please describe the purpose of the Income Statement and the interrelationship between the income statement and the other major financial statements that we covered in this class. In your answer, please also address which financial statements should be created before the Income Statement, if any, and which financial statements need to be completed after the Income Statement, if any. (Points : 25) Question 1—Set 2 1. Please describe the purpose of the Balance Sheet and the interrelationship between the balance sheet and the other major financial statements that we covered in this class. In your answer, please also address which financial statements should be created before the Balance Sheet, if any, and which financial statements need to be completed after the Balance Sheet, if any

2. Question 2.2. (TCO E) Your friend, Lisa, plans to open a nail salon. Lisa states that she does not have time to develop and implement a system of internal controls. (a) Explain to Lisa the components of internal control. (10 points) (b) Explain to Lisa at least 5 internal control procedures she must establish to protect herself against fraud. You should state specific internal control procedures from the textbook, and relate your answer to her nail salon business. (15 points) (Points : 25) Q-2-Set 2 2. Your friend, John, plans to open a parking garage business. John states that he does not have time to develop and implement a system of internal controls. (a) Explain to John the objectives of a system of internal control. (b) Explain to John at least 5 internal control procedures that he must establish to protect himself against fraud. You should state specific internal control procedures from the textbook and relate your answer to his parking garage business. solution Question 3. (TCO A) The following items are taken from the financial statements of PQR Company for 2013:

3. Cash $100,000 Instructions: (1) Create a classified balance sheet in good form for the year ended 2013. (30 points) (2) Calculate the current ratio and debt ratio and explain your findings. (6 points) (Points : 36) Question 3—Set 2 (TCO H) Corporations in need of cash can either issue stock or bonds to raise capital. What are the differences between these two activities and why might a company choose one over the other? (Points : 20) Q-3 Set 3 Question 4.4. (TCO A) The following items are taken from the financial statements of BCT Company for 2013: Instructions: (1) Create a classified balance sheet in good form for the year ended 2013. (30 points)

4. (2) Calculate the current ratio and debt ratio and explain your findings. (6 points) (Points : 36) Question 4. (TCO B) The Caldor Company gathered the following condensed data for the year ended December 31, 2014: Instructions: (1) Prepare a multiple-step income statement for the year ended December 31, 2014. (30 points) (2) Compute the gross margin percentage and net profit margin ratio. Caldor Company’s assets at the beginning of the year were $900,000, and the assets were $950,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings. (6 points) (Points : 36) Q-4 Set 2 Question 3.3. (TCO H) Simpson Inc. purchased 5, $4,000, 11% bonds of Hillsdale Corporation when the market rate of interest was 10%. Interest is paid semiannually on the bonds, and the bonds mature in 4 years. Instructions:

5. Compute the total price paid by Simpson Inc. for the bonds showing your calculation for the present value of the principal and the present value of the interest payments. Present value tables (Exhibit 8-14 and Exhibit 8-15) are available on pages 452 and 453 of your Harrison, Horngren, and Thomas textbook. NOTE: Be sure you review the PV Tables completely to ensure you find the correct period and interest rate for the calculation. (Points : 20) Question 5. (TCO C) This is a 2-part question. Part 1) Indicate which section of the statement of cash flows should contain each of the following items, and whether each item would result in an inflow or outflow of cash. The sections are Operating, Investing, and Financing. (30 points) Part 2) Please explain how to calculate free cash flow and the importance of free cash flow to investors. (6 points) (Points : 36) Q-5 Set 2 5. The Alpha Company gathered the following condensed data for the year ended December 31, 2014: Instructions:

6. (1) Prepare a multiple-step income statement for the year ended December 31, 2014. (2) Compute the gross margin percentage and net profit margin ratio. Alpha Company’s assets at the beginning of the year were $1,500,000, and the assets were $1,400,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings. Question 6. (TCO F) This is a 2-part question. Part 1) Journalize the adjusting entries below at year-end December 31, XXXX. Please share your supporting calculations for the adjusting entries requiring computations. (a) The unadjusted balance of the Supplies account is $2,200. The total cost of supplies remaining is $1,000. (b) Accrued Service Revenue of $9,000. (c) Equipment was purchased at the beginning of the year for $45,000. The equipment’s useful life is 5 years, and the residual value is $5,000. Record the depreciation for this year. (d) The weekly payroll is $25,000. Employees are owed for 3 days of a 5-day work week. (e) Beginning unearned service revenue is $7,500, and ending unearned service revenue is $3,500.

7. (f) The business has interest expense of $750 that is due in January. (30 points) Q-7 (TCO G) Please review the following 6 ratios for Langley Company and XYZ Inc. for the year ended 2014, and address the 2 questions below. Instructions: This is a 2-part question. (1) Explain the meaning of each of the Langley Company ratios above. (18 points) (2) State which company performed better for each ratio. (18 points) (Points : 36) Question 7 – Set 2 (TCO F) This is a 2-part question. Part 1) Journalize the adjusting entries below at year-end December 31, XXXX. Please share your supporting calculations for the adjusting entries requiring computations. Beginning prepaid insurance, $500. Payments for insurance during the period are $900. Ending prepaid insurance is $600.

8. (b) Interest revenue of $1,500 has been earned but not yet received. (c) Accrued Service Revenue of $12,000 (d) The weekly payroll is $20,000. Employees are owed for 4 days of a 5-day work week. The unadjusted balance of the Supplies account is $1,200. The total cost of supplies remaining is $300. (f) Equipment was purchased at the beginning of the year for $25,000. The equipment’s useful life is 5 years, and the residual value is $5,000. Record the depreciation for this year. Question 8.8. (TCO G) Please review the following 6 ratios for Johnson Company and Lee Enterprises for the year ended 2014, and address the 2 questions below. Instructions: This is a 2-part question. (1) Explain the meaning of each of the Johnson Company ratios above. (18 points) (2) State which company performed better for each ratio. (18 points) (Points : 36) ==============================================

9. ACCT 504 Midterm Exam (4 Sets, 2020) For more course tutorials visit www.tutorialrank.com This Tutorial contains 4 Set of Midterm Exam 1. Question : (TCOs A and E) Your friend, Ellen, has hired you to evaluate the following internal control procedures. Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls. For the weaknesses, you also need to state a recommendation for improvement. (1) The cashier counts the total receipts and reconciles the receipts with the cash register total. (2) Electronic documents are password-protected.

10. (3) The accountant is completely independent of the sales department. (4) Invoices are not numbered. (5) Large purchase orders must be approved by a manager. TCOs A and E) Your friend, Ellen, has hired you to evaluate the following internal control procedures. Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which internal control procedure relates to each of the internal controls. For the weaknesses, you also need to state a recommendation for improvement. (1) The cashier counts the total receipts and reconciles the receipts with the cash register total. (2) Electronic documents are password-protected. (3) The accountant is completely independent of the sales department. (4) Invoices are not numbered.

11. (5) Large purchase orders must be approved by a manager. (Points : 30) Set 2 1: Invoices are pre-numbered. 2: The controller approves of the purchases and makes the payment since he or she is familiar with the purchases. 3: The office manager is in charge of the petty cash fund. 4: Blank checks are stored in the safe. 5: At the end of the day, the total receipts are counted by the cashier on duty and reconciled to the cash register total. (Points : 30) Set 3 Invoices are pre-numbered. The controller approves of the purchases and makes the payment since he or she is familiar with the purchases. The office manager is in charge of the petty cash fund. Blank checks are stored in the safe. At the end of the day, the total receipts are counted by the cashier on duty and reconciled to the cash register total

12. Set 4 Question 14. Question : (TCO D) Your friend Dean has hired you to evaluate the following internal control procedures. a: Explain to your friend whether each of the numbered items below is an internal control strength or weakness. You must also state which principle relates to each of the internal controls. b: For the weaknesses, you also need to state a recommendation for improvement. 1: Bonding of the cashiers is not required because all of the cashiers have significant experience. 2: The treasurer is the only one allowed to sign checks. 3: All employees may operate cash registers. 4: Blank checks are stored in the safe. 5: Supervisors count cash receipts daily. 12. (TCOs E and F) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit.

13. (1) Investors invest $500,000 in exchange for 50,000 shares of common stock. (2) Company purchased equipment for $25,000 on account. (3) Company paid Rent for $4,000. (4) Company received $15,000 for services not yet performed. (5) Employees work Monday through Friday and are paid on Friday. Salary expense is $10,000 per day and this year, December 31 falls on a Wednesday. (Points : 30) Set 2 Question Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit. (1) Investors invest $300,000 in exchange for 30,000 shares of common stock. (2) Company made payment on account for $500. (3) Employees work Monday through Friday and are paid on Friday. Salary expense is $20,000 per day, and December 31 falls on a Tuesday. (4) Company purchased Supplies for $2,000. (5) The company needs to record Supplies used for $500.

14. Set 3 13. Question : (TCOs D and E) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit. Investors invest $50,000 in exchange for 1,000 shares of common stock. Company purchased equipment for $10,000 on credit. Company received $5,000 for services performed. Company made payment on account for $2,000. Set 4 Question 13. Question : (TCO D and TCO E) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit. a: Investors invest $100,000 in exchange for 10,000 shares of common stock. b: Company paid a utility bill for $600. c: Company received cash of $15,000 for services performed.

15. d: Company made payment on account for $1,000. e: Company received $12,000 for services not yet performed. Set 5 Question 12. Question : (TCOs B and D) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit. (1) Investors invest $300,000 in exchange for 30,000 shares of common stock. (2) Company made payment on account for $500. (3) Employees work Monday through Friday and are paid on Friday. Salary expense is $20,000 per day, and December 31 falls on a Tuesday. (4) Company purchased Supplies for $2,000. (5) The company needs to record Supplies used for $500. Question 3 .The following items are taken from the financial statements of BGS Company for 2012:

16. Cash $500,000 Accounts Receivable 200,000 Supplies 70,000 Accounts Payable 147,300 Unearned Service Revenue 18,000 Equipment, net of accumulated depreciation 212,000 Common Stock 500,000 Retained Earnings 12/31/2011 78,300 Long-term debt 142,400 Service revenue 240,000 Cost of Goods Sold 72,000 Rent expense 36,000 Supplies expense 12,000 Set 2 14. (TCO D) The following items are taken from the financial statements of SRW Company for 2012: Cash $375,000 Accounts Receivable 125,000

17. Prepaid Insurance 100,000 Accounts Payable 88,000 Unearned Service Revenue 15,000 Equipment, net of accumulated depreciation 177,000 Question 4 13. (TCOs B and D) The following items are taken from the financial statements of Lacey Company for 2012: Advertising Expense $14,000 Accounts Receivable 12,000 Cost of Goods Sold 65,000 Accumulated Depreciation—Equipment 20,000 Accounts Payable 21,000 Cash 44,000 Depreciation Expense 17,000 Common Stock 100,000

18. Instructions (a) Calculate the net income. (18 points) (b) Calculate the balance of Retained Earnings that would appear on a balance sheet at December 31, 2012. (7 points) (c) Calculate the gross profit percentage. (5 points) (Points : 30 Lacey Company Income Statement Question 13. Question : (TCOs B and D) The following items are taken from the financial statements of Ashe Company for 2012: Equipment $100,000 Accounts Receivable 12,000 Accounts Payable 9,000 Cost of Goods Sold 72,000 Utilities Expense 11,000 Depreciation Expense 17,000

19. Insurance Expense 9,000 Question 14. Question : (TCO D) The following items are taken from the financial statements of BGS Company for 2012: Cash $500,000 Accounts Receivable 200,000 Supplies 70,000 Accounts Payable 147,300 Unearned Service Revenue 18,000 Equipment, net of accumulated depreciation 212,000 Instructions (a) Please create a classified balance sheet in good form for the year ended 2012. (25 points) (b) Please calculate the current ratio. (5 points)

20. Question 12. Question : (TCOs B and E) The adjusted trial balance of Gertz Company included the following selected accounts. Debit Credit Sales $575,000 Sales returns and allowances $ 50,000 Sales discounts 9,500 Cost of goods sold 347,000 Instructions: 1: Use the above information to prepare a multiple-step income statement for the year ended December 31, 2010. 2: Calculate the profit margin ratio and gross profit rate. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings.

21. Question 11. Question : (TCO D) A classmate is considering dropping his or her accounting class because he or she cannot understand the rules of debits and credits. Explain the rules of debits and credits in a way that will help him or her understand them. Cite examples for each of the major sections of the balance sheet (assets, liabilities and stockholders' equity) and the income statement (revenues and expenses). 11. Question : (TCO D) Describe the process of preparing a trial balance. What is the purpose of preparing a trial balance? If a trial balance does not balance, identify what might be the reasons why it does not balance. If the trial balance does balance, does that ensure that the ledger accounts are correct? Explain. 1. Question : (TCO D) An account is an important accounting record where financial information is stored until needed. Briefly explain (1) the nature of an account, (2) the different types of accounts, and (3) the manner in which an account is increased and decreased, and the normal balance of each type of accounts.

22. Question 1.1. (TCO A) Assets include (Points : 3) prepaid insurance and prepaid rent. dividends paid to shareholders. loans obtained by the company. stockholders’ investment in the business. Question 2.2. (TCO B) For 2014, CAP Corporation reported net income of $96,000; net sales $1,440,000; and weighted average shares outstanding of 9,600. There were no preferred dividends. What was the 2014 earnings per share? (Points : 3) $100.00 $150.00 $10.00 $15.00 Question 3.3. (TCO C) Issuing debt is an example of a(n) (Points : 3) operating activity. investing activity. financing activity.

23. noncash investing and financing activity. Question 4.4. (TCO D) Dividends declared are reported on which of the following statements? (Points : 3) Income Statement Statement of Retained Earnings Balance Sheet Statement of Financial Position Question 5.5. (TCO E) Which of the following describes the normal balance and classification of the Unearned Revenue account? (Points : 3) Credit, liability Debit, liability Debit, stockholders’ equity Credit, stockholders’ equity Question 6.6. (TCO F) The accrual accounting term used to indicate recording an expense before paying cash for the item is (Points : 3) deferral.

24. accrual. depreciation. prepayment. Question 7.7. (TCO A) LBJ Company recorded the following events involving a recent purchase of merchandise. - Received goods for $95,000, terms 2/10, n/30. - Returned $4,500 of the shipment for credit due to damaged goods. - Paid $1,000 for freight in. - Paid the invoice within the discount period. As a result of these events, the company's merchandise inventory (Points : 3) increased by 89,580. increased by $89,690. increased by $89,600. increased by $91,500.

25. = (95000-4500)*0.98+ 1000 Question 8.8. (TCO B) In periods of rising prices, which of the following inventory methods results in the highest gross profit figure? (Points : 3) FIFO LIFO Average cost method Cannot be determined based on the information given Question 9.9. (TCO A) On a classified balance sheet, prepaid expenses are classified as (Points : 3) current liabilities. long-term liabilities. current assets. Prepaid expenses do not belong on the Balance Sheet. Question 10.10. (TCO E) Which of the following is an internal control procedure? (Points : 3)

26. Control environment Comparisons and compliance monitoring Promote operational efficiency Encourage employees to follow company policies Question 1. Question : (TCO A) Which of the following accounts is recorded as part of stockholders’ equity on the Balance Sheet? Question 2. Question : (TCO B) For 2014, CAP Corporation reported net income of $96,000; net sales $1,440,000; and weighted average shares outstanding of 9,600. There were no preferred dividends. What was the 2014 earnings per share? Question 3. Question : (TCO C) Purchasing inventory is an example of a(n) Question 4. Question : (TCO D) Dividends declared are reported on which of the following statements? Question 5. Question : (TCO E) Which of the following describes the normal balance and classification of the Unearned Revenue account?

27. Question 6. Question : (TCO F) The accrual accounting term used to indicate recording an expense before paying cash for the item is Question 7. Question : (TCO A) XYZ Company recorded the following events involving a recent merchandise purchase. Question 8. Question : (TCO B) In periods of rising prices, which of the following inventory methods results in the highest gross profit figure? Question 9. Question : (TCO A) Which of the following is not a current liability? Question 10. Question : (TCO E) Which of the following is an internal control procedure? 1. Question : (TCOs A, B, and C) Which type of corporate information is available to investors? 2. Question : (TCO C) Collecting cash from customers would be an example of which

28. type of activity? 3. Question : (TCO A) Resources owned by a business are referred to as 4. Question : (TCO A) In a classified balance sheet, assets are usually classified as 5. Question : (TCO B) For 2012, LBJ Corporation reported net income of $25,000; net sales $250,000; and weighted average shares outstanding of 5,000. There were no preferred stock dividends. What was the 2012 earnings per share? 6. Question : (TCO D) Which of the following accounts has a normal balance of a credit? 7. Question : (TCO E) The accrual accounting term used to indicate recording an expense before paying cash for the item is _____ : 8. Question : (TCOs A and B) A periodic inventory system would most likely be used by

29. a(n) _____ 9. Question : (TCOs A and B) LBJ Company recorded the following events involving a recent purchase of merchandise. Comments: 10. Question : (TCO A) In a period of declining prices, which of the following inventory methods generally results in the lowest gross profit figure? Question : (TCOs A, B, and C) Shareholders want answers to all of the following questions except: Question 2. Question : (TCO C) Paying cash dividends is an example of a(n) Question 3. Question : (TCO C) Buying a new plant would be an example of which type of activity? Question 4. Question : (TCO A) Which of the following should not be classified as a current liability?

30. Question 5. Question : (TCO B) For 2012, LBJ Corporation reported net income of $75,000; net sales $750,000; and weighted average shares outstanding of 7,500. There were no preferred stock dividends. What was the 2012 earnings per share? Question 6. Question : (TCO D) Which of the following describes the normal balance and classification of the Unearned Revenue account? Question 7. Question : (TCO E) Which of the following statements is correct? Question 8. Question : (TCOs A and B) A periodic inventory system would most likely be used by a(n) Question 9. Question : (TCOs A and B) LBJ Company recorded the following events involving a recent merchandise purchase. - Received goods for $40,000, terms 2/10, n/30 - Returned $1,200 of the shipment for credit due to damaged goods - Paid $1,000 for freight in - Paid the invoice within the discount period

31. Question 10. Question : (TCO A) In a period of declining prices, which of the following inventory methods generally results in the lowest gross profit figure? Question 1. Question : (TCOs A, B, and C) Which of the following statements concerning users of accounting information is incorrect? Question 2. Question : (TCO C) Paying cash dividends is an example of a(n) Question 3. Question : (TCO C) Buying a new plant would be an example of which type of activity? Question 4. Question : (TCO A) On a classified balance sheet, prepaid expenses are classified as Question 5. Question : (TCO B) For 2012, LBJ Corporation reported net income of $75,000; net sales $750,000; and weighted average shares outstanding of 7,500. There were no preferred stock dividends. What was the 2012 earnings per share? Question 6. Question : (TCO D) Which of the following accounts has a normal balance of a credit?

32. Question 7. Question : (TCO E) The accrual accounting term used to indicate recording an expense before paying cash for the item is Question 8. Question : (TCOs A and B) A periodic inventory system would most likely be used by a(n) Question 9. Question : (TCOs A and B) LBJ Company recorded the following events involving a recent merchandise purchase. Question 10. Question : (TCO A) In a period of increasing prices, which of the following inventory methods generally results in the highest gross profit? Question 11. Question : (TCO D) A classmate is considering dropping his or her accounting class because he or she cannot understand the rules of debits and credits. Explain the rules of debits and credits in a way that will help him or her understand them. Cite examples for each of the major sections of the balance sheet (assets, liabilities and stockholders' equity) and the income statement (revenues and expenses).

33. Question 12. Question : (TCOs B and E) The Caltor Company gathered the following condensed data for the Year Ended December 31, 2010. Cost of goods sold $ 710,000 Net sales 1,279,000 Administrative expenses 239,000 Interest expense 68,000 Dividends paid 38,000 Selling expenses 45,000 Instructions: 1: Prepare a multiple-step income statement for the year ended December 31, 2010. 2: Compute the profit margin ratio and gross profit rate. Caltor Company’s assets at the beginning of the year were $770,000 and were $830,000 at the end of the year. To qualify for full credit, you must state the formula you are using, show your computations, and explain your findings.

34. Question 13. Question : (TCO D and E) Please prepare the following journal entries. Indicate which account should be debited and which account should be credited, along with the dollar amount of the debit and credit. a: Investors invest $50,000 in exchange for 1,000 shares of common stock. b: Company purchased equipment for $10,000 on credit. c: Company received $5,000 for services performed. d: Company made payment on account for $2,000. e: Company received $7,000 for services not yet performed. Question 14. Question : (TCO D) Your friend Wendy plans to open a hair salon. Wendy states that she does not have time to develop and implement a system of internal controls. a: Explain to Wendy the objectives of a system of internal control. b: Explain to Wendy at least four key controls she must establish to protect herself against fraud. You should state specific internal control principles and relate your answer to her hair salon business. ==============================================