Acct 220 final exam answers

Acct220: Principles of Accounting I

Problem 1: 15% points:

The account balances appearing on the trial balance (below) were taken from the general ledger of Flip's Copy Shop at June 30, 2012.

Additional information for the month of June which has not yet been recorded in the accounts is as follows:

(a) A physical count of supplies indicates $300 on hand at June 30.

(b) The amount of insurance that expired in the month of June was $200.

(c) Depreciation on equipment for June was $400.

(d) Rent owed on the copy shop for the month of June was $600 but will not be paid until July.

Flip’s Copy Shop

Trial Balance

June 30, 2012

Account Titles

Debit

Credit

Cash

$1,000

Supplies

1,100

Prepaid Insurance

2,200

Equipment

24,000

Accum. Depreciation, Equipment

$4,500

Accounts Payable

2,400

Notes Payable

4,000

Flip’s Capital

15,300

Flip’s Drawings

2,400

Service Revenue

4,900

Utilities Expense

    400

Totals

$31,100

$31,100

Instructions:

a. Prepare in journal form, without explanations, the end of month adjusting entries for Flip's opy Shop for the month of June.

b. Prepare a partial adjusted trial balance for the accounts provided.

c. Prepare in journal form, without explanations, the end of month closing entries for Flip's Copy Shop for the month of June.

Problem 2: 15% points:

The following information is available for Flip Company:

Beginning inventory 600 units at $5

First purchase 900 units at $6

Second purchase 500 units at $7.25

Assume that Flip uses a periodic inventory system and that there are 700 units left at the end of the month. (Round all final answers to the nearest dollar.)

Instructions:

a. Compute the cost of goods available for sale.

b. Compute the value of ending inventory and Cost of Good Sold under the

(1) LIFO method.

(2) FIFO method.

(3) Average-cost method

 Problem 3: 15% points:

The following items were taken from the December 31, 2013 adjusted trial balance of Flip Company. (All balances are normal.)

      Mortgage payable $ 1,443 Accumulated depreciation 3,655

      Prepaid expenses 880 Accounts payable 1,444

      Equipment 11,000 Notes payable after 2015 1,200

      Long-term investments 1,100 Flip’s capital 11,480

      Short-term investments 3,690 Accounts receivable 1,696

      Notes payable in 2014 1,000 Inventories 1,756

      Cash 2,100 Service Revenue 9,000

      Rent Expense 1,000 Wages Expense 5,000

      Utilities Expense 1,000

Instructions: Prepare a classified balance sheet in good form as of December 31, 2013.

Problem 4: 10% points:

Prepare journal entries to record the following transactions entered into by Flip Company:

  2012

June 1 Accepted a $10,000, 12%, 1-year note from Flop as full payment on her account.

Nov. 1 Sold merchandise on account to Flap, Inc. for $12,000, terms 2/10, n/30.

Nov. 5 Flap, Inc. returned merchandise worth $500.

Nov. 9 Received payment in full from Flap, Inc.

Dec. 31 Accrued interest on Flop's note.

  2013

June 1 Flop honored her promissory note by sending the face amount plus interest. No interest has been accrued in 2013

Problem 5: 10% points:

Flip Company purchased equipment on January 1, 2011 for $90,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life

Instructions

Answer the following independent questions.

1. Compute the amount of depreciation expense for the year ended December 31, 2011, using the straight-line method of depreciation.

2. If 16,000 units of product are produced in 2011 and 24,000 units are produced in 2012, what is the book value of the equipment at December 31, 2012? The company uses the units-of-activity depreciation method.

3. If the company uses the double-declining-balance method of depreciation, what is the balance of the Accumulated Depreciation—Equipment account at December 31, 2013?

Problem 6: 10% points:

Flip earns a salary of $7,500 per month during the year. FICA taxes are 8% on the first $100,000 of gross earnings. Federal unemployment insurance taxes are 6.2% of the first $7,000; however, a credit is allowed equal to the state unemployment insurance taxes of 5.4% on the $7,000. During the year, $25,600 was withheld for federal income taxes and $5,700 was withheld for state income taxes.