Exams may combine true-false, multiple choice, essay, and problem solving questions.
This is my course syllabus:
Chapter 7Accounting for ReceivablesChapter 8Accounting for Long Term Operational AssetsChapter 9Accounting for Current Liabilities and PayrollChapter 10Accounting for Long Term DebtChapter 11Proprietorships, Partnerships and CorporationsChapter 12Statement of Cash Flows
Acct210
Spring 2013
1. What is meant by a classified balance sheet?
2. Why do we record accounts receivable on the balance sheet at net realizable value?
3. Which is required by GAAP, the direct write-off method or the allowance method for accounting for receivables?
4. Why is it important for the company to focus on improving the accounts receivable turnover ratio (why do they want to collect receivables as quickly as possible)?
5. There are two methods for calculating the allowance account, percent of sales and aging of accounts receivabl
e.
Briefly describe the difference between these two methods.
|
Nassau Auto Parts sells new and used auto parts. Although a majority of its sales are cash sales, it makes a significant amount of credit sales. During 2013, its first year of operations, Dixie Auto Parts experienced the following: |
|
Sales on account |
$ |
275,000 |
||||||||
|
Beginning accounts receivable balance |
|
550,000 |
||||||||
|
Collections of accounts receivable |
368,000 |
|||||||||
|
Uncollectible accounts charged off during the year |
1,200 |
|||||||||
|
Beginning allowance for uncollectible accounts balance |
14,500 |
Assume that Dixie Auto Parts uses the allowance method of accounting for bad debts and estimates that 1% of its sales on account will not be collected
a.
What is the
Accounts Receivable
balance at December 31, 2013?
b.
What is the ending balance of Allowance for Uncollectible Accounts (Allowance for Doubtful Accounts) at December 31, 2013, after all entries and adjusting entries are posted (the adjustment for bad debt expense for 2013)?
c.
What is the amount of bad debts expense recorded for 2013?
d.
What is the net realizable value of accounts receivable at December 31, 2013?
6. Asset purchase price less salvage value = the ____________ base of the asset.
7. What is the difference between a tangible and intangible asset?
9. True or False – It is legal for companies to use one depreciation method for their financial statements and a different form of depreciation for tax purposes.
10. Why do companies depreciate assets (why is the asset not all expensed immediately)?
11. Name the 3 methods companies can use to depreciate assets.
12. Do companies depreciate the following (yes or no)?
Land
Autos
Building
Goodwill
Patent
13.
|
Which of the following items should be classified as long-term operational assets? |
| a. | Accounts Receivable | ||
| b. | |||
| c. |
Office equipment |
||
| d. |
Cash |
||
| e. |
Supplies |
||
|
f. |
Copyright |
||
|
g. |
Delivery van |
||
|
h. |
Computer |
||
|
i. |
Inventory |
||
|
j. |
14.
|
Identify each of the following long-term operational assets as either tangible (T) or intangible (I). |
|
Pizza oven |
|
Goodwill |
|
Filing cabinet |
|
Silver mine |
|
Office building |
|
Drill press |
|
Desk |
15. Pine Logging Co. purchased an electronic saw to cut various types and sizes of logs. The saw had a list price of $160,000. The seller agreed to allow a 5 percent discount because Pine paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $4,200. Pine had to hire an individual to operate the saw. Pine had to build a special platform to mount the saw. The cost of the platform was $2,500. The saw operator was paid an annual salary of $65,000. Additionally, the cost of the company’s theft insurance policy increased by $2,000 per year as a result of the acquisition of the saw. The saw had a four-year useful life and an expected salvage value of $10,000.
Determine the amount to be capitalized in an asset account for the purchase of the saw (what amount should be reported in the saw asset account?).
16.
|
Keenum Company purchased a restaurant building, land, and equipment for $900,000. Keenum paid cash for the purchase. The appraised value of the assets was as follows: |
|
240,000 |
||
|
600,000 |
||
|
Equipment |
360,000 |
|
|
Total |
1,200,000 |
|
Compute the amount to be recorded on the books for each of the assets. |
|
Allocated Cost |
17. What is the difference between capitalization of an asset cost and an ordinary operating and maintenance expense?
18. Southwest Sand and Gravel paid $850,000 to acquire 1,500,000 cubic yards of sand reserves. The following statements model reflects Southwest’s financial condition just prior to purchasing the sand reserves. The company extracted 540,000 cubic yards of sand in year 1 and 480,000 cubic yards in year 2.
a. Compute the depletion charge per unit.
b. Record the acquisition of the sand reserves and the depletion entry for year 1 in journal entry form.
19. The following normal balances appear on the adjusted trial balance
Equipment
$75,000
Accumulated depreciation
$15,000
Depreciation expense
$5,000
The amount recorded on the balance sheet as original asset cost is
a. $75,000
b. $70,000
c. $5,000
d. $60,000
20. Refer to the data in 19. The amount that would be the Net Book Value of the asset is
e. $75,000
f. $70,000
g. $5,000
h. $60,000
21. Refer to the data in 19. The amount that would be expensed on the income statement for the current year is:
i. $75,000
j. $70,000
k. $5,000
l. $60,000
22. Chase Corporation borrowed $90,000 from the bank on November 1, 2012. The note had a 7% annual rate of interest and matured on April 30, 2013. Interest and principal were paid in cash on the maturity date.
a. What amount of interest expense was paid in cash in 2012?
b. What amount of interest expense was reported in the 2012 income statement?
c. What total amount of cash was paid to the bank on April 30, 2013 for principal and interest?
23. What is treasury stock? Why would a company purchase treasury stock?
24. Fowler Corp. has the following stock outstanding:
– Preferred stock , cumulative, 5%, $10 par, 10,000 shares
– Common stock, $10 par, 20,000 shares
Dividends have not been paid in 2 years. In the current year, the board of directors declared dividends of $25,000. How much money in dividends will each class of stock receive?
25. Assume that JB Inc. issues 100 shares of common stock with a par value of
$10 per share at a price of $22 per share. Record the transaction in journal entry format.
26. What are the 3 main dates associated with issuing dividends? What are they and which dates require journal entries?
27. What happens to the number of shares in a 2 for 1 stock split? What happens to the market price? Assume there were 20,000 shares of $100 par value common stock selling for $400 each.
28. Why would a company issue a stock dividend vs. paying a cash dividend?
29. Why are dividends not considered expenses?
30. What is the difference between operating, investing and financing activities of a business? Provide an example for each area.
31. What are the 2 acceptable formats for preparing the statement of cash flows? How do they differ?
32. Tony B’s Pizza purchased a delivery van for $25,000. The useful life is estimated to be 5 years or 100,000 miles. The salvage value is estimated to be $5,000.
a. Compute the annual depreciation amount for the first year using straight line depreciation.
b. Compute the annual depreciation amount for the first year using units of production (assuming the actual miles for year 1 were 17,000).
c. Compute the annual depreciation amount for the first year using double declining balance.
33. If the stated rate of a bond is issued above market rate it is issued at a ______________.
34. If the stated rate of a bond is issued below market rate it is issued at a ______________.
35. Current assets of Next Clothing are $250,000 and current liabilities are $150,000. Compute the current ratio. What does this ratio tell us?
