Penn Foster Final Examination 06169300

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Penn Foster Final Examination 06169300

Part A:
The following information was made available from the income statement and balance sheet of Lauren Company:
Item
12/31/10
12/31/09
Accounts Receivable
$53,400
$58,600
Accounts Payable
35,600
32,700
Merchandise Inventory
85,000
79,000
Sales (2010)
243,000

Interest Revenue (2010)
5,600

Dividend Revenue (2010)
1,200

Tax Expense (2010)
12,300


Salaries Expense (2010)
28,000

COGS (2010)
65,000

Interest Expense (2010)
3,600

Operating Expenses
28,500

Complete the cash flow from operating activities section for Lauren Company using the direct method for the year ended December 31, 2010.
2. Given the following balance sheet, complete a horizontal analysis. Compute the percentage to the nearest tenth of a percent.
Jill’s Bikes
Comparative Balance Sheet
For Years Ended December 31, 2011 and 2010
(in thousands
2011
2010
Difference
Percentage
Assets




Current Assets




Cash and Equivalents
$72
$94


Accounts Receivable, net
122
104


Inventory
288
232


Total Current Assets
482
430


Property, plant and Equipment
638
358

Total Assets
$1,120
$ 788


Liabilities

Current Liabilities

Accounts Payable
242
148

Accrued Liabilities
48
66

Total Current Liabilities
290
214

Long-Term Liabilities
346
208

Total Liabilities
636
422


Stockholders’ Equity




Common Stock
70
60

Retained Earnings
414
306


Total Stockholders’ Equity
484
366

Total Liabilities and Stockholders’ Equity
$1,120
$788


Part B:


1. Record the following transactions using the accounting equation.
Example:
Assets = Liabilities + Equity
XXX(cash XXX (accounts payable)
Amanda invests $17,000 cash into her merchandising business.
She buys $6,500 of office equipment and $3,000 of office supplies with cash from Office Depot.
Additional purchases were supplies for $35,000 on account from various suppliers.
2. Journalize the following transactions and omit the explanations.
A. ABC Corporation purchased $15,000 of office furniture by putting $7,000 down in cash and the rest on account on April 8.
B. The corporation paid $60,000 for a two-year lease on April 19.
C. The corporation had sales of $45,000, of which $35,000 were on account on April 20.
D. The corporation borrowed $25,000 by signing a note payable on April 22.
E. The corporation paid $1,250 on one of its accounts payable on April 26.
3. Prepare a trial balance from the following information for Learn a New Language, Inc. for December 31, 2012:
Accounts payable $5,012
Common stock $9.692
Cash $3,928
Notes payable $1,439
Wages expense $ 777
Marketing expense $ 493
Equipment $8,345
Accounts receivable $1,142
Inventory $8,074
Sales $6,616
4. Compute the missing information from this post-closing trial balance:

Cash
$34,689



 

Accounts Receivable
9,467


Prepaid Rent
5,000


Prepaid Insurance
(A)


Supplies
944


Accounts Payable

$5,389

Wages Payable

(B)

Common Stock

37,049

Retained Earnings

8,234


---------
---------

Total
$52,356
$52,356

5. Journalize the following transactions using the perpetual inventory method:
Aug. 6 Purchased $830 of inventory on account fromJohnstonwith terms of 2/10, n/30.
Aug. 8 Purchased $2,611 of inventory of cash from Pillner Company.
Aug. 15 Paid for August 6 purchase fromJohnston.
Aug. 17 Purchased $1,743 of merchandise on account from Luis Company with terms of 3/15, n/45.
6. Given the following information, prepare a balance sheet for Isaiah’s Tool Shed for the year ending December 31, 2012:

Cash
$65,750
Retained Earnings
$179,319


Common Stock
$35,000
Equipment
$27,500


Accounts Receivable
$11,478
Accounts Payable
$29,450


Land
$30,000
Inventory
$78,311


Prepaid Supplies
$7,357
Income TaxesPayable
$4,209


Office Computers
$11,345
Other PPE
$31,446


Accum. Depr. (all)
$23,459
Prepaid Insurance
$8,250

7. Rick Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note: The company uses a perpetual system of inventory.)

Units
Unit Price
Total Cost
January 1-BeginningInventory
18
$24
$432
March 12-Sold
13


April 11-Purchase
45
$29
$1,305
June 20-Sold
33


Aug 16-Purchase
35
$27
$945
Sept 11-Sold
29


Total Cost of Inventory



Ending inventory is 23 units


$2,682
What is the cost of goods sold for Rick Company for 2012 using LIFO?

8. Assume that in year 1, the ending merchandise inventory is overstates by $30,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated for Years 1 and 2.
Item Year 1 Year 2
Ending Inventory
Beginning Inventory
Cost of Goods Sold

9.Below is a list of treatments of accounting topics. Place GAAP on the line if the treatment is GAAP-based and place IFRS on the line if the treatment is IFRS-based.
A. Interest and dividend income are reported in the investing section of the cash flow statement.
B. Interest expense is reported in the financing section of the cash flow statement.
C. The use of LIFO is prohibited.
10. Record the necessary journal entries from the following bank reconciliation information for July 31, 2011:
Bank Balance, July 31,2011
$36,739
Checkbook Balance, July 31,2011
36,444
Bank collection of note receivable
1,200 + 165
Interest
Bank service charge
35
Deposits in transit
2,400
Outstanding checks
1,245
NSF check from customer
330
Correction of book error (check #456 written for $160, recorded at $610)—gas expense


11. Journalize the following transactions for Tammy Company:
Sept. 1 Sold $3,500 of merchandise to Jim on account.
Oct. 1 Exchanged Jim’s account receivable for a four-month, 8% note for $3,500.
Dec. 31 Recorded accrued interest on Jim’s note (round to nearest dollar).
Feb. 1 Jim paid off his note with interest (round to nearest dollar).
12. A truck was purchased on January 2 at a cost of $60,000. It’s expected to be used for five years and to have a residual value of $5,000 after 120,000 miles of service. The truck was driven for 23,000 miles the first year and 25,000 miles the second year. Calculate the depreciation expense to the nearest dollar for the first and second years.
Method Year 1 Year 2
Straight-line
Double-declining balance
Units-of-production

13. Prepare journal entries for the following transactions:
Jan. 2, 2011 Purchased land with a building on it for $750,000. The land is worth $300,000. Paid $150,000 cash down and signed a mortgage payable for the balance.
Dec. 31, 2011 Depreciation is computed using the straight-line method. The estimated salvage value of the building is $75,000 and has an estimated life of 20 years.
July 1, 2012 The building and land are sold for $825,000 cash.

14. Journalize the following treasury stock transactions:
June 3. Reacquired 350 shares of $12 par common stock at $10 per share.
June 7. Sold 180 shares of treasury stock for $16 per share.
June 8. Sold 150 shares of treasury stock for $9 per share.

15. Lowry Landscapes had net income of $50,000 for 2010. Land was sold for $40,000, of which $3,000 was a gain. The beginning cash balance was $53,000, and the ending cash balance was $151,000. Depreciation expenses were $11,000. Prepare a statement of cash flows for the year ended December 31, 2010, for Lowry Landscapes using the indirect method.

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