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Review note for midterm

by: Yulun Ding

Review note for midterm ACCT200

Marketplace > University of Arizona > Accounting > ACCT200 > Review note for midterm
Yulun Ding
GPA 3.833
Introduction to Financial Accounting
Amy Geile

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Introduction to Financial Accounting
Amy Geile
Study Guide
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This 20 page Study Guide was uploaded by Yulun Ding on Saturday March 21, 2015. The Study Guide belongs to ACCT200 at University of Arizona taught by Amy Geile in Fall. Since its upload, it has received 289 views. For similar materials see Introduction to Financial Accounting in Accounting at University of Arizona.


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Date Created: 03/21/15
Chapter 9 Determining the cost of Plant Assets Cost of a Plant Asset Cash Price Freight in fee any other cost that is required to let the asset be prepared to use eg closing fee real estate broker s commission Category Land Land Building Equipment Improvement Things that Purchase Driveways Purchase Purchase Includes Title Fee Parking lots Closing costs Sales tax In Attorney Fences attorney Freight in charges These Real estate Landscaping Title Insurance brokers irrigation during transit commissions cost Closing cost Real estate Expenditure fee required in testing the unit 0 License expenses amp insurances during using is NOT Cost of Plant Assets Example Journal entry Debt increaseComputer 1000 Debit increasePrepaid insurance 500 Credit decreaseCash 1500 0 The normal balance of Cost of Plant Assets is Debt because they are Asset The normal balance of Expense is Debt 0 DEADDividend Expense Assets are Debit Buying or Leasing Please see PPT 9 Page513 Calculation for Depreciation In our class we use Straightline method 0 Depreciation Expense per year Cost of Plant AssetsSalvage Value Useful Life 0 Depreciation Expense per month Depre Exp per year12 0 Calculation for Amortization Depreciation of Intangible Assets is the SAME as above Example Journal entry for Deprecation Debt increaseDepreciation expense 1000 Credit increaseAccumulated Depreciation 1000 Example Journal entry for Amortization Debt increase Amortization expense 1000 Credit increase Patents 1000 We would use the specific name of the intangible assets Six type of intangible assets are Patents Trade name Copyright Trademarks Franchises Goodwill More information see PPT 9 Page532 Plant Assets Disposals 0 When a company dispose a plants assets because retirement sales or exchanges of assets The assets amp Accumulated Depreciation need to become zero This can be done by crediting assets and Debiting Accumulated Depreciation An example of selling is shown in the examples which would help you understand the process Example Question Q Company Ajust bought a car with price 1000 accident insurance during use 50 sales tax 50 motor license 10 and painting 20 What is the cost of the car record in accounting A 100050201070 Q Create Adjusted Journal entry for following situation The account haven t been adjust from Jan01 2014 June12014 Retired a piece of machinery bought on June 1 2004 The machine cost 60000 and had a useful life of 10 years with no salvage value Calculated the Acc Deprec per year600000106000 Calculated the Acc Depreciation per month600012500 Record increase in Deprec Expenseamp Accum Deprecia for this five month 50052500 Answer Dec 31 PWP Uquot Depreciation Expense 2500 Accumulated Depreciation 2500 Sold a delivery truck for 9250 cash The truck cost 24680 when it was purchased on January 1 2011 and was depreciated based on a 5year useful life with a 3310 salvage value Calculated the Acc Deprec per year24680331054274 Record increase in Deprec Expenseamp Accum Deprecia of 4274 When truck is sales record increase in cash of 9250 Calculate amp record the decrease in Accumulate Deprecia Purchase priceSalvage valueuseful lifenumber of year used 2468033105417096 Record the decrease in equipment Record the gain or loss on Disposal of Plant Assets Cash Accum DepreciaequipmentGain or Loss Debit Gain Credit Loss Answer Title Debit Credit Dec312014 Depreciation 4274 Expense Accumulated 4274 Depreciation Equipment Cash 9250 Accumulated Depreciation 17096 Equipment Equipment 24680 Gain on Disposal 1666 of Plant Assets Chapter 6 Analysis of inventory Q ending inventory 155949 beginning inventory 105549 cost of goods sold 355905 sales revenue 767047 Calculate the inventory turnover 35590515594910554905272 Inventory turnover cost of Goods soldaverage inventory Calculate the days in inventory 365272134 Days in inventory 365Inventory turnover Determining Inventory Quantities If you are a seller are these goods still count as your inventory Consignment goods are good that belonging to another party for fee Q a Goods held on consignment for Banal Corp The good held on consignment is NOT includes in inventory because as the definition claim they are belonging to another party Q b Goods shipped on consignment to AAA corp The good shipped on consignment to another company is till belong to your company so it is includes in inventory Q c Goods shipped to a customer FOB destination that are still in transit In include For FOB destination the goods belong to seller after the transporting Q d Goods shipped to a customer FOB shipping point that are still in transit NOT include For FOB shipping point the goods belong to buyer when the public carrier accepts the goods from the seller before transporting goods eGoods purchased FOB destination from a supplier on that are still in transit Not include fGoods purchased FOB shipping point from a supplier that are still in transit Include gOffice supplies on hand at January 31 Not include Office supplies are not inventory at all Inventory costing Question Units Cost per Total Cost unit Beginning inventory 10000 1512 151200 Purchase 2212 15000 1520 228000 Purchase 61512 1560 265200 17000 Purchase 103012 16000 1575 252000 Total available 58000 896400 Less Sold Ending Inventory 20000 units of goods are sold Calculated cost of goods sold using FIFO Firstinfirstout COGS151210000152010000 Calculated cost of goods sold using LIFO Lastinfirstout COGS15171600015604000 Calculated cost of goods sold using Average cost 1 calculate average cost AC89640058001546 2 calculate COGS COGS154620000 COGS ending inventory Total cost Net incomerevenueeXpense expense includes COGS higher the COSG lower the net income If costs per unit are increasing on date like the example above then LIFO cost of goods sold is greater than FIFO cost of goods sold LIFO ending inventory is less than FIFO ending inventory Net Income for a company using LIFO will be less than a company that uses FIFO everything is opposite when the costs are decreasing If ending inventory is understated Use overstated or understated COGS is Overstated Net Income is understated Assets are understated Ending Retained Earnings are understated Stockholder s Equity is understated lull 61M 1 Pan 13 Review Question 1 Kooper and Co buys a copyright on Janua 1 2012 for 300000 cash They estimate the copyright will have a useful life of 5 years Write the journal entry to record amortization of the intangible asset as of 123112 1231 At what amount is the copyright reported on the December 31 2012 Balance Sheet 2 What is the total cost the capitalized cost of equipment recently purchased and based on the following Cash purchase price 95000 Safety testing and installation 12500 Shipping to our factory 2650 Routine maintenance projected for first year of operation 3800 Annual city license to operate 2500 3 Klarence and Sons buy equipment on April 1 2008 for 186000 cash They estimate the equipment will have a salvage value of 16000 and a useful life of 4 years Write the journal entry to record depreciation for 2008 123108 Record the journal entry to record depreciation expense for the second year 123109 What is the book value of this equipment based on the December 31 2009 Balance Sheet 4 Assume equipment with a cost of 98000 has accumulated depreciation on January 1 2007 of 58000 As of March 1St there is 4000 more depreciation If Jojo and Sons sells this equipment on March 1St for 7000 will there be a gain or a loss and how much will it be Write the journal entry for the sale too Write the journal entry for selling the equipment in the space provided 31 5 Identify the financial statement where the following accounts are reported Choose between BS Balance Sheet or IS income statement and NORMAL balances Accumulated Depreciation Unearned Revenue Loss on Sale of Equipment Copyright or Goodwill Depreciation Expense Amortization Expense Land Part 1 During 2012 Jordon amp Co sold 50000 units of its product The following units were on hand or purchased during the year m Cost per Total Cost unit Beginning inventory 10000 1512 151200 Purchase 22 12 15000 1520 228000 Purchase 61512 17000 1560 265200 Purchase 103012 16000 1575 m Total available 58000 896400 Less Sold Ending Inventory 1 If the company used the LIFO method what is the value of ending inventory and cost of goods sold Cost of Goods Sold Ending Inventory 2 If the company used the FIFO method what is the value of ending inventory and cost of goods sold Cost of Goods Sold Ending Inventory 3 If the company used the average cost method what is the value of ending inventory and cost of goods sold Please round your calculated average cost per unit to 2 decimals example 1879 Average Cost per unit Cost of Goods Sold Ending Inventory 4 If the company used the FIFO method and mistakenly reported 9000 units in ending inventory instead of 8000 what dollar amount would they mistakenly report for Cost of Goods Sold Part 2 Furniture Mart may have items for sale which they hold on consignment These items should be considered belonging to no one until they are sold to a final customer as inventory owned by the person who delivered them to Furniture Mart c as inventory included in Furniture Mart s inventory If goods in transit are shipped FOB destination a b c the buyer has legal title to the goods during transit to delivery location the seller has legal title to the goods during transit to delivery location the transportation company has legal title to the goods while the goods are in transit no one has legal title to the goods until they are delivered Part 3 Fill in the blank If costs are rising then LIFO cost of goods sold is FIFO cost of goods sold greater or less than LIFO ending inventory is greater or less than FIFO ending inventory Net Income for a company using LIFO will be greater or less than a company that uses FIFO If ending inventory is understated Use overstated or understated COGS is Net Income is Assets are Ending Retained Earnings are Stockholder s Equity is Gold Pan a large wholesaler of flowers in the South At the end of 2014 the company s controller estimates 2 of 450000 in Accounts Receivable will be uncollectible Write the journal entry to record Bad Debt Expense for the period if the Allowance for Uncollectible Accounts has a credit balance of 4500 before this adjustment entry is posted 123114 How does the posting of this journal entry affect the accounting equation ALSE What is net Accounts Receivable reported in Gold Pan balance sheet as of Dec312014 Assume that during 2015 a total of 1600 Accounts Receivable has to be written off due to customers inability to pay what they owe Gold Pan What is the write off journal entry 123115 After this journal entrv is posted what is the balance that would appear in the Allowance for Uncollectible Accounts before an endoftheyear adjustment is made Include in your answer both the amount and whether that amount is a DEBIT or CREDIT balance Hint You might want to use a Taccount to help you arrive at this answer Using the balance from the previous question suppose Gold Pan assumes at the end of 2015 that 3 of its 486000 Accounts Receivable balance will be uncollectible Determine the Bad Debt Expense that would be recorded at the end of 2015 and enter the journal entry below 12312015 Par t2 On October 1 2012 Johnson Company lends 60000 to Stone Company for 6 months The Note Receivable is established with a 5 annual interest rate and the terms of the note states that the principal and interest will be due and paid on April 1 2013 What adjusting journal entry is needed to accrue interest revenue earned for 2012 before Johnson Company prepares financial statements on December 31 2012 12312012 On April 1 2013 Stone Company pays all principal and interest owed to Johnson Company Write the journal entry from the viewpoint of Johnson Company to record the collection 04012013


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