Phoenix ACC422 Final Exam

ACC 422 Final ExamQuestion 1Kraft Enterprises owns the following assets at December 31, 2012.Cash in bank–savings account 67,214 Checking account balance 18,149Cash on hand 10,114 Postdated checks 823Cash refund due from IRS 31,782 Certificates of deposit (180-day) 92,846What amount should be reported as cashQuestion 2Presented below is information related to Rembrandt Inc.’s inventory.(per unit) Skis Boots ParkasHistorical cost $257.07 $143.42 $71.71Selling price 293.60 196.19 99.78Cost to distribute 25.71 10.82 3.38Current replacement cost 274.66 142.07 69.00Normal profit margin 43.30 39.24 28.75Determine the following:ACC 422 Final Exam Question 3Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 66 units that cost $40 each. During June, the company purchased 199 units at $40 each, returned 8 units for credit, and sold 166 units at $66 each. Journalize the June transactions.Question 4Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available.Units Unit Cost Total CostApril 1 inventory 250 $16 $4,000April 15 purchase 400 20 8,000April 23 purchase 350 21 7,3501,000 $19,350Compute the April 30 inventory and the April cost of goods sold using the average cost method.Question 5Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available.Units Unit Cost Total CostApril 1 inventory 250 $14 $3,500April 15 purchase 400 16 6,400April 23 purchase 350 18 6,3001,000 $16,200Compute the April 30 inventory and the April cost of goods sold using the FIFO method.ACC 422 Final Exam Question 6(FIFO, LIFO, Average Cost Inventory)Esplanade Company was formed on December 1, 2011. The following information is available from Esplanade’s inventory records for Product BAP.Units Unit CostJanuary 1, 2012 (beginning inventory) 756 $8.00Purchases:January 5, 2012 1,512 9.00January 25, 2012 1,638 10.00February 16, 2012 1,008 11.00March 26, 2012 756 12.00A physical inventory on March 31, 2012, shows 2,016 units on hand.Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods. Assume Esplanade Company uses the periodic inventory method.Question 7Floyd Corporation has the following four items in its ending inventory.Item Cost Replacement Cost Net Realizable Value (NRV) NRV Less Normal Profit MarginJokers $2,158 $2,212 $2,266 $1,726Penguins 5,395 5,503 5,341 4,424Riddlers 4,748 4,909 4,990 3,992Scarecrows 3,453 3,226 4,133 3,313Determine the final lower of cost or market inventory value for each item.Question 8Kumar Inc. uses a perpetual inventory system. At January 1, 2013, inventory was $244,174 at both cost and market value. At December 31, 2013, the inventory was $326,326 at cost and $306,929 at market value. Prepare the necessary December 31 entry under:ACC 422 Final Exam Question 9Boyne Inc. had beginning inventory of $13,680 at cost and $22,800 at retail. Net purchases were $136,800 at cost and $193,800 at retail. Net markups were $11,400; net markdowns were $7,980; and sales were $178,980. Compute ending inventory at cost using the conventional retail method.Question 10(Gross Profit Method)Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.Question 11Previn Brothers Inc. purchased land at a price of $30,430. Closing costs were $3,130. An old building was removed at a cost of $12,380. What amount should be recorded as the cost of the land?ACC 422 Final Exam Question 12Garcia Corporation purchased a truck by issuing an $104,000, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truckQuestion 13Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $434,700. The estimated fair values of the assets are land $82,800, building $303,600, and equipment $110,400. At what amounts should each of the three assets be recorded?Question 14Fielder Company obtained land by issuing 2,000 shares of its $12 par value common stock. The land was recently appraised at $98,600. The common stock is actively traded at $48 per share. Prepare the journal entry to record the acquisition of the land.ACC 422 Final Exam Question 15Navajo Corporation traded a used truck (cost $21,800, accumulated depreciation $19,620) for a small computer worth $4,033. Navajo also paid $1,090 in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)Question 16Mehta Company traded a used welding machine (cost $9,990, accumulated depreciation $3,330) for office equipment with an estimated fair value of $5,550. Mehta also paid $3,330 cash in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)Question 17Depreciation is normally computed on the basis of the nearestACC 422 Final Exam Question 18Fernandez Corporation purchased a truck at the beginning of 2012 for $44,520. The truck is estimated to have a salvage value of $2,120 and a useful life of 169,600 miles. It was driven 24,380 miles in 2012 and 32,860 miles in 2013. Compute depreciation expense for 2012 and 2013.(Round answers to 0 decimal places, i.e. 2,250.)Question 19Lockhard Company purchased machinery on January 1, 2012, for $64,800. The machinery is estimated to have a salvage value of $6,480 after a useful life of 8 years.Question 20Jurassic Company owns machinery that cost $1,101,600 and has accumulated depreciation of $440,640. The expected future net cash flows from the use of the asset are expected to be $612,000. The fair value of the equipment is $489,600. Prepare the journal entry, if any, to record the impairment lossACC 422 Final Exam Question 21Everly Corporation acquires a coal mine at a cost of $438,400. Intangible development costs total $109,600. After extraction has occurred, Everly must restore the property (estimated fair value of the obligation is $87,680), after which it can be sold for $175,360. Everly estimates that 4,384 tons of coal can be extracted. If 767 tons are extracted the first year, prepare the journal entry to record depletionQuestion 22Francis Corporation purchased an asset at a cost of $41,200 on March 1, 2012. The asset has a useful life of 8 years and a salvage value of $4,120. For tax purposes, the MACRS class life is 5 years. Compute tax depreciation for each year 2012–2017.Question 23Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2012, for $56,460. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dion’s journal entries to record the purchase of the patent and 2012 amortizationACC 422 Final Exam Question 24Karen Austin Corporation has capitalized software costs of $835,700, and sales of this product the first year totaled $443,250. Karen Austin anticipates earning $1,034,250 in additional future revenues from this product, which is estimated to have an economic life of 5 years. Compute the amount of software cost amortization for the first yearQuestion 25Jeff Beck is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2012, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Beck had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Beck in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Beck appears inclined to accept the Railroad’s offer. The Railroad’s 2012 financial statements should include the following related to the incident:Question 26Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $64,000 of inventory, terms 2/10, n/30, FOB shipping point. Roley paid freight costs of $1,420. On July 3, Roley returned damaged goods and received credit of $6,400. On July 10, Roley paid for the goods. Prepare all necessary journal entries for Roley.ACC 422 Final Exam Question 27Takemoto Corporation borrowed $82,200 on November 1, 2012, by signing a $84,050, 3-month, zero-interest-bearing note. Prepare Takemoto’s November 1, 2012, entry; the December 31, 2012, annual adjusting entry; and the February 1, 2013, entry.Question 28Whiteside Corporation issues $693,000 of 9% bonds, due in 14 years, with interest payable semiannually. At the time of issue, the annual market rate for such bonds is 10%. Compute the issue price of the bondsQuestion 29Indiana Jones Company enters into a 6-year lease of equipment on January 1, 2012, which requires 6 annual payments of $41,350 each, beginning January 1, 2012. In addition, the lessee guarantees a residual value of $20,000 at lease-end. The equipment has a useful life of 6 years. Assume that for Lost Ark Company, the lessor, collectibility is reasonably predictable, there are no important uncertainties concerning costs, and the carrying amount of the machinery is $204,868. Prepare Lost Ark’s January 1, 2012, journal entries.ACC 422 Final Exam Question 30On January 1, 2012, Irwin Animation sold a truck to Peete Finance for $29,300 and immediately leased it back. The truck was carried on Irwin’s books at $24,100. The term of the lease is 5 years, and title transfers to Irwin at lease-end. The lease requires five equal rental payments of $8,330 at the end of each year. The appropriate rate of interest is 13%, and the truck has a useful life of 5 years with no salvage value. Prepare Irwin’s 2012 journal entries