ACCT 220 ACCT:220 ACCT220 Final Exam (Spring 2016)

ACCT 220 ACCT/220 ACCT220 Final 

Exam (Spring 2016) 

BUY HERE⬊ 

htp://www.homeworkmade.com/produc 

ts-20/acct-220-fnal-exam-spring-2016- 

umuc/acct-220-acct-220-acct220-fnalexam-spring-2016/ 

ACCT 220 ACCT/220 ACCT220 Final Exam (Spring 2016) UMUC 

Question 1 (40 points) 

XYZ Company's December 31, 2015 trial balance is as follows: 

XYZ Company 

Trial Balance 

December 31, 2015 

Account Debit Credit 

Cash $ 43,500 

Accounts Receivable 53,500 

Allowance for Doubtful Accounts 1,500 

Notes Receivable 30,000 

Merchandise Inventory 55,000 

Land 20,000 

Building 150,000 

Accumulated Depreciation, Building $ 15,000 

Equipment 50,000 

Accumulated Depreciation, Equipment 21,000 

Goodwill 26,000 

Accounts Payable 25,000 

Long-Term Notes Payable 75,000 

Common Stock, $10 par, 2,000 shares authorized and outstanding 20,000 

Retained Earnings 147,000 

Sales Revenue 700,000 

Salaries Expense 150,000 

Utilities Expense 3,500 

Cost of Goods Sold 350,000 

Administrative Expenses 55,000 

Sales Expenses 15,000 _______ 

Totals $1,003,000 $1,003,000 

XYZ is a small company and records adjusting entries and closing entries only at fiscal (calendar) year end. 

Correcting and adjusting entries have not been recorded. 

Additional Information: 

5. Notes Receivable is a 3-month, 6% note accepted on November 1, 2015.

6. Long-Term Notes Payable is a 5-year, 5% note that was signed on July 1, 2015. Interest is payable 

annually. 

7. Building is depreciated at 3% per year. There is no salvage value. 

8. Equipment is depreciated at 15% per year. There is no salvage value. 

9. XYZ discovered, on December 30, that the inexperienced bookkeeper recorded in the general journal 

and general ledger that day's $1,500 cash sales as a debit to Accounts Receivable and a credit to Sales 

Revenue. 

10. The year-end physical count for Merchandise Inventory reflected a value of $51,500. Any 

difference in value will not be considered theft or loss. 

11. Salaries for the last half of December, payable in January, amount to $5,500. 

12. XYZ estimates that of the Accounts Receivable, 5% will not be collectable. 

Required: 

1. Prepare in journal form, any required correcting entries. 

2. Prepare in journal form, all end-of-the-period adjusting entries. 

3. Prepare a December adjusted trial balance. 

4. Prepare a classified balance sheet for the year ended December 31, 2015. 

5. Prepare in journal form the closing entries for the year ended December 31, 2015. 


XYZ Company uses the periodic inventory method and had the following inventory events during January: 

Date Units Purchased Unit Cost Date Units Sold Unit Sales Price 

Jan. 1 150 $7.00 Jan. 2 100 $10.00 

Jan. 5 225 7.20 Jan. 7 125 10.00 

Jan. 10 100 7.50 Jan. 12 75 12.00 

Jan. 15 150 7.80 Jan. 17 200 12.50 

Jan. 20 200 7.95 Jan. 24 150 15.00 

Jan. 25 150 8.00 

Jan. 30 75 8.20 

Note: The January 1 amounts were the beginning inventory and unit value. 

(Round all total dollar values to the nearest dollar. Round all unit values to the nearest penny.) 

Required: 

1. Calculate the cost of goods available for sale. 

2. Calculate the dollar value of sales. 

3. Calculate the value of Ending Inventory and Cost of Goods Sold under the following independent 

assumptions: 

(1) LIFO method 

(2) FIFO method 

(3) Average-cost method 


Required: Prepare Acme Supply Company's general journal entries for the following transactions: 

Accepted RunTimeCo's 120-day, 10% note as settlement of an outstanding $15,000 account receivable 

Jan. 1 

for goods sold last year. 

Jan. 

15 

Purchased $10,000 Equipment from XYZ, signing a 9-month, 12% note. 

Jan. 

15 

Loaned Warner Co. $30,000 cash, accepting a 90-day, 10% note. 

Jan. 

31 

Prepared accrual adjusting entry for any interest revenue. 

Apr. 

15 

Received payment in full from Warner Co. for outstanding note and interest. 

May 1 Received payment in full from RunTimeCo for the outstanding note and interest. 

Oct. 

15 

Paid XYZ in full. 


XYZ Company purchased a refrigerated delivery truck for $65,000 on January 1, 2015. The plan is to use the 

truck for 5 years and then replace it. At the end of its useful life, the truck is expected to have a salvage value 

of $10,000. The fiscal year ends December 31. 

1. Prepare the depreciation table for XYZ's truck, assuming that the company uses the straight--=] 

2. line method for depreciation.

3. Prepare the depreciation table for XYZ's truck, assuming that the company uses the double-decliningbalance 

depreciation method. 

4. Compute the depreciation expense for 2015 for XYZ's truck, assuming the truck has an expected life 

of 200,000 miles and during 2015 the truck was driven 24,540 miles. Round your depreciation expense 

per mile to three decimal places. 


Acme Company has a January 15 mid-month gross salaries expense of $25,000. All salaries are subject to 

FICA Social Security (6.2%), FICA Medicare (1.45%), state income tax (5%) and federal income tax (15%) 

withholdings. Additionally, all salaries are subject to employer taxes to include FUTA (0.8%) and SUTA (5.4%) 

taxes. (Round all calculations to the nearest penny.) 

Required: 

1. Prepare the general journal entry to record the employer's payroll liability. 

2. Prepare the general journal entry to record the employer's payroll-tax liability. 

3. Prepare the general journal entry to liquidate (pay) the liabilities accrued in parts (a) and (b) on 

January 22. 


At the end of the fiscal 2015 year, Acme Company has the following information: Credit Sales, $2,500,000; 

Sales Returns and Allowances, $25,000; Accounts Receivable, $200,000; and Allowance for Doubtful 

Accounts with a Debit, $1,500. 

Required: 

1. Prepare the general journal entry to record the end-of-the-year adjusting entry if Acme uses 0.5% of 

Net Credit Sales as the basis for determining Bad-Debt Expense. 

2. Prepare the general journal entry to record the end-of-the-year adjusting entry if Acme uses 5% of 

Accounts Receivable as the basis for determining Bad-Debt Expense. 

Bottom of Form 

Question 7 (1 point) 

After the bank reconciliation is prepared, the entry to record bank service charges would have a credit to 

_______________. 

Bank Service Charge Expense 

Cash 

Petty Cash 

Cash Short and Over 

None of the above 


Malloy Company estimates uncollectible accounts using the percentage-of-receivables method and expects 

that 5 percent of outstanding receivables will be uncollectible for 2015. The balance in Accounts Receivable is 

$200,000, and the allowance account has a $3,000 credit balance before adjustment at year end. The 

uncollectible accounts expense for 2015 will be _______________. 

$7,000 

$10,000 

$13,000 

$9,850 



Malloy Company issued its own $10,000, 90-day, non-interest-bearing note to a bank. The only payment 

Malloy will ever make to the bank will be for $10,000 at the maturity date of the loan as the bank discounts the 

note at 10 percent. The proceeds to Malloy are _______________. 

$10,000 

$9,000 

$9,750 

$10,250 



On 2015 July 1, Malloy Company purchased equipment for $400,000, and installation and testing costs totaled 

$40,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $40,000. If 

Malloy uses the double-declining-depreciation method, the depreciation expense for 2015 is 

_______________. 

$88,000 

$72,000 

$36,000 

$44,000 

$40,000 

Question 11 (1 point)

The result of recording a capital expenditure as a revenue expenditure is an _______________. 

overstatement of current year's expense 

understatement of current year's expense 

understatement of subsequent year's net income 

overstatement of current year's net income 



Cole Inc., a new company, purchases a two-year insurance policy for $12,000. Six months later, the correct 

balance in the prepaid insurance account would be _______________. 

$12,000 

$6,000 

$9,000 



Which of the following is not an advantage of the corporate form of organization? 

continuous existence of the entity 

limited liability of stockholders 

government regulation 

easy transfer of ownership 


Treasury stock should be shown on the balance sheet as a(n) _______________. 

reduction of the corporation's stockholders' equity 

current asset 

current liability 

investment asset 


When the stockholders invest cash in the business, what is the effect on the accounting equation? 

Liabilities increase and stockholders' equity increases. 

Both assets and liabilities increase. 

Both assets and stockholders' equity increase. 



The ending balance in retained earnings is shown in the _______________. 

income statement 

statement of retained earnings 

balance sheet 

both (b) and (c) 

both (a) and (c) 

(a), (b), and (c) 


A cash dividend of $500 was declared and paid to stockholders simultaneously. The correct journal entry to 

record the declaration and payment simultaneously is _______________. 

debit Capital Stock 500 and credit Cash 500 

debit Cash 500 and credit Dividends 500 

debit Dividends 500 and credit Cash 500 

debit Cash 500 and credit Capital Stock 500 


If $3,000 has been earned but not yet paid to a company's workers since the last payday within an accounting 

period, the necessary adjusting entry at the end of that accounting period would be _______________. 

debit an expense and credit a liability 

debit an expense and credit an asset 

debit a liability and credit an asset 

debit a liability and credit an expense 


The accrual basis of accounting _______________. 

recognizes revenues only when cash is received 

is used by almost all companies 

recognizes expenses only when cash is paid out 

recognizes revenues when sales are made or services are performed, and recognizes expenses only when 

cash is paid out


The need for adjusting entries is based on _______________. 

the matching principle 

source documents 

the cash basis of accounting 

activity that has already been recorded in the proper accounts 


Which of the following statements is false regarding the closing process? 

The Dividends account is closed to Income Summary. 

The closing of expense accounts results in a debit to Income Summary. 

The closing of revenues results in a credit to Income Summary. 

The Income Summary account is closed to the Retained Earnings account. 


Which of the following statements is true regarding the classified balance sheet? 

Current assets include cash, accounts receivable, and equipment. 

Plant, property, and equipment is one category of long-term assets. 

Current liabilities include accounts payable, salaries payable, and notes receivable. 

Stockholders' equity is subdivided into current and long-term categories. 


The underlying assumptions of accounting include all the following except _______________. 

business entity 

going concern 

matching 

money measurement and periodicity 


Malloy Company began the accounting period with $60,000 of merchandise, and the net cost of purchases was 

$240,000. A physical inventory showed $72,000 of merchandise unsold at the end of the period. The cost of 

goods sold of Malloy Company for the period is _______________. 

$300,000 

$228,000 

$252,000 

$168,000 



A classified income statement consists of all of the following major sections except _______________. 

Operating revenues 

Cost of goods sold 

Operating expenses 

Non-operating revenues and expenses 

Current assets 


A business purchased merchandise for $12,000 on account; terms are 2/10, n/30. If $2,000 of the merchandise 

was returned and the remaining amount due was paid within the discount period, the purchase discount would 

be _______________. 

$240 

$200 

$1,200 

$1,000 

$3,600 


Malloy Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the 

company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic 

inventory procedure. The cost of ending inventory using weighted-average is _______________. 

$114,750 

$157,600 

$122,400 

$109,650 



Malloy Company began the accounting period with inventory of 3,000 units at $30 each. During the period, the 

company purchased an additional 5,000 units at $36 each and sold 4,600 units. Assume the use of periodic 

inventory procedure. The cost of goods sold using weighted-average is _______________. 

$147,200

$160,350 

$155,250 

$114,000 



During a period of rising prices, which inventory method might be expected to give the highest net income? 

Weighted-average 

FIFO 

LIFO 

Specific identification 

Cannot determine 


The following information is related to the bank reconciliation of the Acme Company: 

Balance per bank statement $1,951.20 

Balance per ledger 1,869.60 

Deposits in transit 271.20 

Outstanding checks 427.80 

NSF check 61.20 

Service charges 13.80 

The adjusted/correct cash balance is _______________. 

Question 30 options: 

$1,794.60 

$1,719.60 

$1,638.00 

$1,713.00 

$1,876.20 


In a bank reconciliation, deposits in transit should be _______________. 

Question 31 options: 

deducted from the balance per books 

deducted from the balance per bank statement 

added to the balance per ledger 

added to the balance per bank statement 

disregarded in the bank reconciliation

ACCT 220 ACCT:220 ACCT220 Final Exam (Spring 2016)

Create successful ePaper yourself

Delete template?

Save as template?