# Test 2 Fall 2006 Name_ Accounting by fjzhangxiaoquan

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```									Test 2 Fall 2006                                               Name:_____________________________
Accounting 2301                                                Chapters 4-8
Problem

1.The bank statement for Allen Co. indicates a balance of \$8,000.00 on June 30, 2005. After the journals for
June had been posted, the cash account had a balance of \$3,675.00. Prepare a bank reconciliation on
the basis of the following reconciling items:

(a)   Cash sales of \$342 had been erroneously recorded in the cash receipts journal as
\$324.
(b)   Deposits in transit not recorded by bank, \$500.00.
(c)   Bank debit memorandum for service charges, \$25.00.
(d)   Bank credit memorandum for note collected by bank, \$2850, including \$50 interest.
(e)   Bank debit memorandum for \$218.00 NSF (not sufficient funds) check from Alice
Bell, a customer.
(f)   Checks outstanding, \$2,200.00.
2.Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases.
Indicate the ending balance in each case.

(a)   Credit balance of \$400 in the allowance account just prior to adjustment. Analysis
of accounts receivable indicates doubtful accounts of \$8,500.
(b)   Credit balance of \$400 in the allowance account just prior to adjustment.
Uncollectible accounts are estimated at 2% of sales, which totaled \$1,000,000 for
the year.
3.The beginning inventory and purchases of an item for the period were as follows:

Beginning inventory                             6 units at \$73 each
First purchase                                  10 units at \$72 each
Second purchase                                 18 units at \$74 each
Third purchase                                  10 units at \$75 each

The company uses the periodic system, and there were 15 units in the inventory at the end of the
period. Determine the cost of the 15 units in the inventory by each of the following methods,
presenting details of your computations: (a) first-in, first-out; (b) last-in, first-out; (c) average cost.
4.Machinery is purchased on July 1 of the current fiscal year for \$180,000. It is expected to have a useful life of
4 years, or 20,000 operating hours, and a residual value of \$15,000. Compute the depreciation for the
last six months of the current fiscal year ending December 31 by each of the following methods:

(a)   straight-line
(b)   declining-balance at twice the straight-line rate
(c)   units-of-production (used for 1,500 hours during the current year)

(Round the answer to the nearest dollar.)
Test 2 Accounting 2301 Fall 2006 Chapters 4-8

PROBLEM

1. ANS:

Allen Co.
Bank Reconciliation
June 30, 2005

Cash balance according to bank statement                             \$8,000.00
Add deposits in transit not recorded by bank                            500.00
\$8,500.00
Deduct outstanding checks                                             2,200.00
Cash balance according to depositor's records                        \$3,675.00
Add: Note collected by bank, including
\$50 interest                                           \$2,850.00
Error in recording cash sales of
\$342 as \$324                                              18.00     2,868.00
\$6,543.00
Deduct: NSF check from Alice Bell                        \$ 218.00
Bank service charges                                       25.00       243.00

DIF: 3               OBJ: 07-05
2. ANS:

(a)     \$8,100 and \$8,500
(b)     \$20,000 and \$20,400

DIF: 3               OBJ: 08-04
3. ANS:
(a)
10 units @ \$75                                                           \$ 750
5 units @ \$74                                                               370
Total                                                                    \$1,120

(b)
6 units @ \$73                                                            \$ 438
9 units @ \$72                                                               648
Total                                                                    \$1,086

(c)
Average unit cost =                                                  \$    73.64
\$3,240/44
15 units @ \$73.64 =                                                         \$1,104.60

DIF: 3               OBJ: 09-05
4. ANS:

(a)   \$20,625 = (\$180,000 - 15,000) = 165,000 ÷ 4 = 41,250  6/12
(b)   \$45,000 = (\$180,000  .50) = \$90,000  6/12
(c)   \$12,375 = (\$180,000 - 15,000) = (\$165,000 ÷ 20,000 hours) = \$8.25  1,500
hours

DIF: 3                OBJ: 10-02

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