ACC422 Final Exam Complete Solution

Question Details: #21658
ACC422 Final Exam Complete Solution

ACC422 Final Exam Question 1 Kraft Enterprises owns the following assets at December 31, 2012. Cash in bank–savings account 67,214 Checking account balance 18,149 Cash on hand 10,114 Postdated checks 823 Cash refund due from IRS 31,782 Certificates of deposit (180-day) 92,846 What amount should be reported as cash Question 2 Presented below is information related to Rembrandt Inc.'s inventory. (per unit) Skis Boots Parkas Historical cost $257.07 $143.42 $71.71 Selling price 293.60 196.19 99.78 Cost to distribute 25.71 10.82 3.38 Current replacement cost 274.66 142.07 69.00 Normal profit margin 43.30 39.24 28.75 Determine the following: ACC 422 Final Exam Question 3 Matlock 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 4 Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 250 $16 $4,000 April 15 purchase 400 20 8,000 April 23 purchase 350 21 7,350 1,000 $19,350 Compute the April 30 inventory and the April cost of goods sold using the average cost method. Question 5 Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 250 $14 $3,500 April 15 purchase 400 16 6,400 April 23 purchase 350 18 6,300 1,000 $16,200 Compute 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 Cost January 1, 2012 (beginning inventory) 756 $8.00 Purchases: January 5, 2012 1,512 9.00 January 25, 2012 1,638 10.00 February 16, 2012 1,008 11.00 March 26, 2012 756 12.00 A 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 7 Floyd Corporation has the following four items in its ending inventory. Item Cost Replacement Cost Net Realizable Value (NRV) NRV Less Normal Profit Margin Jokers $2,158 $2,212 $2,266 $1,726 Penguins 5,395 5,503 5,341 4,424 Riddlers 4,748 4,909 4,990 3,992 Scarecrows 3,453 3,226 4,133 3,313 Determine the final lower of cost or market inventory value for each item. Question 8 Kumar 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 9 Boyne 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 11 Previn 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 12 Garcia 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 truck Question 13 Mohave 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 14 Fielder 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 15 Navajo 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 16 Mehta 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 17 Depreciation is normally computed on the basis of the nearest ACC 422 Final Exam Question 18 Fernandez 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 19 Lockhard 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 20 Jurassic 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 loss ACC 422 Final Exam Question 21 Everly 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 depletion Question 22 Francis 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 23 Celine 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 amortization ACC 422 Final Exam Question 24 Karen 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 year Question 25 Jeff 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 26 Roley Corporation uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley
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ACC422 Final Exam Complete Solution

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