INTRO ACCOUNTING ACCT 229
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This 10 page Study Guide was uploaded by Otis Champlin on Wednesday October 21, 2015. The Study Guide belongs to ACCT 229 at Texas A&M University taught by J. Nix in Fall. Since its upload, it has received 51 views. For similar materials see /class/225894/acct-229-texas-a-m-university in Accounting at Texas A&M University.
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Date Created: 10/21/15
FINAL EXAM REVIEW Accounting 229 Ch 111 13 F inal Exam 120 points all objective format multiple choice truefalse etc Bring 882 scantron M Principles Concepts amp Financial Stmts Debits and Credits Classifying Accounts Adjusting amp Closing Entries Accounting environment Cash Accounts Receivables Notes Receivable COGS PerpetualPeriodic FOB ShippingDestination Fixed Assets Intangibles RampD Liabilities amp Time Value of Money Bonds Payable Stockholders Equity Cash Flows Ch 1amp2 Princ amp Concepts Revenue Recognition Matching Materiality Historical Cost Relevance and Reliability The Accounting Eguation amp DebitsCredits A L SHE Beg RE Net Inc Div End RE Classifying Accounts Current Assets Current Liabilities LongTerm Assets LongTerm Debt SHE Remember Accum Depr Reduces Total Assets Adjusting Entries watch your dates I SarbanesOxley accounting regulators guiding principles Cash Bank Reconciliation Accounts Receivable Notes Receivable 2 Allowance Methods for bad debts I Inc Stmt Method of Credit Sales Estimate Bad Debt Expense Theory Matching Concept II Balance Sheet Method ofAR or quotAgingquot Estimate End ABD Always PLUG Bad Debt Exp Accounts Receivable Allowance f r Bad Debts Beg Bal Beg Bal Credit Cash Received write offs reinstate previous writeoff Sales write offs Bad Debt Exp End Bal l End Bal Direct Write Off Method violates the matching concept Notes Receivable Watch your dates in calculating interest or maturity value on notes for less than one year Maturity Value Principle Interest MV Princ Princ x Interest x moslZmos COGS Beg Invt Net Purch including Freight in Ending Invt COGS FOB Shipping PointDestination whoever has legal title should include these goods intransit in their ending inventory Inventories LIFO and FIFO know how to determine End Invt amp COGS Know theory of risingfalling prices and the effect on NT or End Invt Omit Invt Errors Lower of Cost or Market Invt Turnover Ch 10 Face Value Unamortized PremDiscount Fixed Assets amp Intangibles original cost include all costs incurred to bring the asset into its productive capacity Depreciation StraightLine amp Activity Based methods only Omit DDB Depr Exp is what is recorded for the current year on Inc Stmt Accum Depr is all of the depr Exp Taken over the assets life on Balance sheet as contraasset account Book Value BV Cost Accum Depr on that date Sale of Fixed Asset watch your dates for partial years on the sale Cost xx AD xx BV xx xx Cash FMV l l GainLoss on sale Intangibles Amortize over the lesser of Useful Life Legal Life or Max 20 yrs Capitalize only legal fees to acquire successful defense Expense ALL RampD costs immediately Omit Depletion errors in recording the original cost of an asset as expense Capitalrevenue expenditures after the asset is placed into service Current Liabilities amp Time Value of Money Classify Current Liabilities any shortterm debt to be paid in 12 mos or less Include current maturities of longterm debt Omit liquidity ratios like current ratio CACL quick ratio Cash MES AR CL And working capital CA CL to analyze a company39s ability to pay its shortterm debts Time Value of Money Use Present Value tables to determine Present Value of future sums Know difference between 1 lump sum pmt amp annuity series of equal payments Bonds Determine Selling Price using PV tables always use MKT to discount to PV For bonds paying annual interest don39t adjust interest rate or of pay periods For bonds paying semiannual interest cut in half the interest rate and double the of pay periods Interest Expense CV Carrying Value x Mkt Carrying Value Cash to Repurchase l l GainLoss on Retirement Cash to Repurchase Face Value x Call NEW MATERIAL ON FINAL EXAM Ch ll Ch 13 Stockholder39s Eguity Dividend Distribution between Preferred Cumulative and Comm on shareholders Stock Dividends Total Contributed Capital Pref Stock Common Stock APIC from all sources shares issued X Par contributed capital shares issued treasury outstanding Treasury Stock shares X Cost xx reduces total SHE Retained Earnings Beg RE Net Inc Dividends End RE If Treasury Stock is reissued for an amount more than cost the difference between the cash proceeds and reduction to treasury stock cost should be credited to APIC 7 TS and included as new contributed capital WORK QUIZ 9 AGAIN AS A REVIEW ALSO WORK PROBLEMS 9 AND 10 AND MC QUESTIONS 1 7 8 12 13 14 AND 16 FROM SAMPLE EXAM 3 questions over material we didn t include in our exam Cash Flows Operating Activities Indirect Method Net Income Depr Exp GainsLosses all changes in current assets and current liabilities Cash Flow from Operations Investing Activities includes all changes in LongTerm Assets if the change involved a cash inflow or outflow ie purchase or sale of PPampE Financing Activities 7 includes all changes in LongTerm Debt and SHE if the change involved a cash in ow or outflow Look for issued new debt or stock Retired longterm debt paid a cash dividend NonCash Transactions Exchange land for Common Stock or any asset other than cas Exchange LT Debt for fixed asset DeprAm ort Expense GainsLosses on sale of assets Stock dividends WORK QUIZ 10 AGAIN AS A REVIEW EXAMPLE MULTIPLE CHOICE QUESTIONS key at end 1 9 gt Which of the following qualities relates to the requirement that accounting information must be capable of making a difference in a particular decision a Understandability b Relevance c Reliability d Verifiability Given the following information compute stockholders39 equity as of December 31 2000 Assets Dec 31 1999 52000 Expenses 2000 30000 Liabilities Dec 31 1999 31000 Issue Common Stock New Investment owner 9000 Revenues 2000 41000 Dividends 6000 a 30000 b 32000 c 35000 d 21000 On December 26 2000 Taylor Company hired three sales clerks to begin work immediately on an afterChristm as sale Their clerks were paid on January 9 2001 Disregarding amounts what entry should have been made on December 31 2000 a Debit Salary Payable and credit Salary Expense b Debit Salary Expense and credit Cash c Debit Salary Payable and credit cash d Debit Salary Expense and credit Salary Payable Adams rented out his spare bedroom to Jones on September 1 2000 Jones paid Adams 1000 for 5 months of rent Adams credited rent revenue for 1000 on September 1 2000 What would be the adjusting entry December 31 2000 a Cash 200 Rental Income 200 b Rent Expense 200 Unearned Rent 200 c Unearned Rent 200 Rent Revenue 200 d Rent Revenue 200 Unearned Rent 200 V 0 Compute the amount of beginning inventory for A Corporation given the following Sales 100000 Purchases 60000 Purchase returns 1000 Ending Inventory 26000 Sales Returns 1000 Gross Profit 46000 a 20000 b 33000 c 34000 d 53000 Use the following inventory data for the month of May to answer the next question Units Total Cost Beginning Inventory May 1 500 4500 Purchase May 3 400 4000 Purchase May 10 800 8800 Purchase May 21 300 3600 As of May 31 there were 500 units on hand Compute the cost of the ending inventory using the FIFO method a 4500 b 5800 c 14000 d 16400 Use the following information to answer the next two 2 questions gt1 00 Yankee Poodle Company depreciates its building using the straightline method The building cost 125000 and has a salvage value of 15000 The building was purchased on July 1 1998 and has an estimated useful life of 10 years The accumulated depreciation building account on December 31 2000 after adjustment would be a 16500 b 22000 c 27500 d 33000 Ifthe building is sold on October 1 2001 for 80000 cash the journal entry to record the disposition would inclu e Loss on sale of 9250 Loss on sale of 12000 Gain on sale of 5750 Gain on sale of 44250 9 ST O 1 1 1 N E The ABC Corporation is authorized to issue 200000 shares of 10 par value common stock It issues onehalf of the stock for 25 per share earns 40000 during the first three months of operation and declares a cash dividend of 10000 The total stockholder39s equity of the ABC Corp after three months of operation is a 2000000 b 2500000 c 2040000 d 2530000 At the beginning of 2000 Senneth Company had retained earnings of 100000 During the year Senneth reported net income of 50000 reissued treasury stock at an amount in excess of its cost for a gain of 18000 declared a cash dividend of 15000 and declared and issued a stock dividend of 1500 new shares 10 par value when the market value was 20 per share The amount of retained earnings at the end of 2000 was a 90000 b 105000 c 108000 d 123000 A writeoff of a specific accounts receivable against the Allowance for Bad Debts has the following effect on the balance sheet of the firm making the writeoff A decrease in current assets and an equivalent decrease in sales revenue A decrease in current assets and an equivalent decrease inn selling expenses An increase in current assets and an equivalent increase in stockholders equity There is no effect on the current assets or stockholders equity 9 ST The Allstar Company uses an aging of accounts receivable to estimate its uncollectible accounts If the beginning balance in the Allowance for Bad Debts is a debit of 50 and they estimate 500 of accounts to be uncollectible determine Bad Debt Expense for the accounting period a 450 b 500 c 550 d 1400 A company issued a 5year 300000 8 bond on January 1 2004 The bond was issued to yield 10 for proceeds of 277255 Interest is payable annually The company retired the bonds early on December 31 2007 at 97 when the carrying value was 294543 What amount should the company report as a gain or loss from retirement of the bonds a Loss 5293 b Gain 17288 c Gain 3543 d Loss 13745 Use the tables below to answer the following two 2 questions 14 A firm issues 250000 face value fiveyear 12 bonds on January 1 2000 The bonds yield an effective interest rate of 10 Interest is paid annually At what price will the bonds be sold a 231868 b 249891 c 256412 d 268949 15 On January 1 2000 Freeman Inc purchased a new machine and financed this purchase by making a cash down payment of 30000 and issuing a 12 5year note that will be paid in semiannual installment of 45000 each payable on June 30 and December 31 Determine the original cost of the machine a 281280 b 361205 c 418800 d 450000 16 A corporation reported the following information for 2003 and 2004 Salaries payable December 31 2003 1800 Salaries payable December 31 2004 3700 Salaries expense 7 2004 57000 How much cash was paid for salaries during 2004 a 51300 b 55100 c 57000 d 58400 17 Westchester Corporation gathered the following data from its accounting records for the year ended December 31 2004 Decrease in inventory 17000 Decrease in accounts payable 15600 Acquisition of building 218500 Purchase of treasury stock 56000 Issuance of bonds payable 525000 Depreciation Expense 49000 Increase in accounts receivable 47600 Increase in accrued liabilities 24500 Net Income 195000 Decrease in prepaid expenses 8500 Loss on sale of plant assets 7300 Declaration of a stock dividend 50500 What is Cash Flow from Operating Activities for 2004 7 a 238100 b 183400 c 325500 d 223500 Use the following information to answer the next 3 questions Aggie Company Comparative Balance Sheets For the Years Ended 1999 and 2000 m amp Cash 3100 Accounts Receivable 3300 3000 Inventories 8500 8000 Land 27000 22000 Plant and Equipment 55000 40000 JDF I I 191001 190001 Total Assets 77800 Accounts Payable 5200 6000 Interest Payable 1900 Bonds Payable 10000 0 Common Stock 16000 12000 APICC S 12000 8000 Retained Earnings 32 700 29 000 Total Debt amp Equity 77800 Additional Information 1 Net Income was 4000 2 Equipment with a cost of 2000 and a book value of 100 was sold for 400 3 Equipment was purchased for cash 4 Land that cost 3000 was sold for a loss of 200 5 Additional land was acquired through the issuance of 160 additional shares of stock when the market price was 50 per share 6 Dividends were declared and paid 7 Bonds payable maturing in five years were issued at their face value 18 What is the Cash Flow from Operating Activities for 2000 1 a b c d 5700 5900 6000 6200 9 What is the Cash Flow from Investing for 2000 a b c d 13800 14100 16800 21800 20 What was the net change in cash for 2000 a b 1000 increase 1200 increase c 21001ncrease d 2300 increase KEY WSQVHgtWNE O OmQNU U QOOQU QWOU WQQOU
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