"Exam 3 Study Comp"
Financial Accounting Additional Practice Questions for the Comprehensive part of the FINAL EXAM…this is a start, it is not ALL inclusive…please study the entire review sheet provided and use the other review questions provided in the course packet from exams 1 and 2 for more practice on the comprehensive questions. 1. From the list of accounts on the inside of the back cover of the textbook identify the type of account, its closing status, the financial statements on which they are reported and the type of activity…following are randomly selected accounts from the inside of the back cover. Account Type of account Closing status Financial Statement Accumulated depreciation Advertising Buildings Cost of goods sold Dividends Dividends payable Goodwill Sales Sales discounts Treasury stock Use the following to answer questions 2 – 7 SARLO provides delivery services to its customers. At the end of the year, the company reports the following amounts: Cash $8,800 Service revenue $108,400 Delivery truck 47,800 delivery expense 53,800 Accounts payable 9,400 Garage/Office Building 71,000 Maintenance expense 3,900 Supplies 300 Salaries expense 40,000 Salaries payable 4,400 In addition, the company had common stock of $45,000 at the beginning of the year and issued an additional $15,000 during the year. The company also had retained earnings of $45,400 at the beginning of the year and they declared $2,000 of dividends during the year. 2. $_________________ Determine Net Income 3. $_________________Determine ending Common Stock 4. $_________________Determine ending Retained Earnings 5. $_________________ Determine Total Assets 6. $_________________Determine Total Liabilities 7. $_________________ Determined Total Stockholders’ Equity Comprehensive Questions Page 1 Use the following to answer questions 8 - 15 Income Statement Statement of Stockholders’ Equity Revenues Common stock Retained earnings Expenses: Beginning $20,000 $15,000 Salaries 54,100 Issuance Administrative 23,500 Net income 27,500 Utilities 4,450 Dividends Total expenses 82,050 Ending $27,500 $35,000 Net income Balance Sheet Assets Liabilities Cash $7,200 Accounts payable $5,900 Office supplies Total liabilities Prepaid rent 4,400 Stockholders’ Equity Equipment 56,400 Common stock Retained earnings Total stockholders’ equity Total assets Total L and SE 8. $____________Revenue: 12. $__________Office supplies: 9. $____________Net Income: 13. $__________Total Assets: 10. $____________Issuance: 14. $__________Stockholders’ Equity: 11. $____________Dividends: 15. $__________Total L & SE: Use the following to answer questions 16 – 18 Analyze each transaction. Under each category in the accounting equation, indicate whether the transaction: increases, decreases, or has no effect. 16. Pay rent for the current month. 17. Collect cash from customers on account. 18. Purchase land by issuing common stock. Asset Liability Stockholders’ Equity 16. 17. 18. Comprehensive Questions Page 2 Use the following to answer questions 19 – 22 Indicate which of the following accounts should be debited and which should be credited. Cash Accounts Payable Note Payable Service revenue Accounts receivable Common Stock Office supplies Utilities Account Debited Account Credited 19. Issue common stock for cash 20. Provide services to customers on account 21. Paid suppliers for supplies purchased on account Received utility bill at end of month, will pay next 22. month Use the following to answer questions 23 - 34 STE Corporation has provided their trial balance at the end of September. Debits Credits Cash $11,400 A/R 24,000 Supplies 200 Prepaid rent 5,000 Equipment, net 95,100 A/P $16,500 Income tax payable 12,800 Utilities payable 2,100 Unearned revenue 5,500 Notes payable (due in 16 months) 17,500 Common stock 45,000 Retained Earnings 41,200 Dividends 10,000 Service revenue 201,400 Salaries expense 114,000 Insurance expense 11,000 Advertising expense 17,400 Supplies expense 4,200 Depreciation expense 7,100 Legal expense 24,100 Utilities expense 18,500 Totals $342,000 $342,000 Based on the data provided in the trial balance find the following: Comprehensive Questions Page 3 23. $____________Determine Total expenses. 24. $____________Determine Net income 25. $____________Determine Beginning Retained Earnings 26. $____________Determine Ending Retained Earnings 27. $____________Determine Total Stockholders’ Equity 28. $_____________Determine Total Liabilities 29. $____________ Determine the current assets 30. $____________ Determine the current liabilities 31. $_____________Determine Total Assets 32. ____________ Determine the current ratio 33. $_____________At the beginning of September, STE had $35,000 in its common stock account. How much stock was issued during September? 34. Which accounts are closed? 35. Record the adjusting entry at December 31 year-end. No adjusting entries were made during the year. On December 1, 2012, the company pays a local radio station $2,400 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising was debited. The adjusting entry is: Account Debit Credit 36. $__________What is the balance in Prepaid Advertising after the adjusting entry? 37. Explain the effects on the financial statements if the adjusting entry had not been recorded. 38. Record the adjusting entry at December 31 year-end. No adjusting entries were made during the year. On August 31, 2012, Shocker borrows $60,000 from a local bank. A note is signed with principal and 8% interest to be paid on August 31, 2013. The adjusting entry on 12/31 is: Comprehensive Questions Page 4 Account Debit Credit 39. $__________After the adjusting entry, what affect would it have on liabilities on the December 31st Balance sheet? 40. Explain the effects on the financial statements if the adjusting entry had not been recorded. Use the following to answer questions 41 - 45 Following are the transaction of Goldman Inc., which provides consulting services related to mining of precious metals Amount of Transaction Transaction A Cash provided from consulting customers $208,400 B Cash used for purchase of office equipment 20,000 C Cash provided from long-term borrowing 50,000 D Cash used for payment of employee salaries 118,500 E Purchase of company vehicle paying 1/5 cash and borrowing the rest. 30,000 F Cash used for payment of office rent 14,500 G Cash provided from sale of equipment that had been used in operations 25,000 H Cash used to pay the bank for a loan due this month 30,000 I Cash used to pay office utilities 17,000 J Cash used for purchase of office supplies 2,500 41. $___________Refer to transaction E, how much should be included in cash used from investing activities? 42. $___________Determine the cash flows from operating activities 43. $___________Determine the cash flows from investing activities 44. $___________Determine the cash flows from financing activities 45. $___________How much did cash change over the year? Comprehensive Questions Page 5 Use the following to answer questions 46 – 47 The company lent $50,000 on October 1, 20A at 9% interest for 11 months. 46. $______________Determine interest revenue for 20A. 47. $______________ Determine interest revenue for 20B 48. Fill in the missing amounts: Case 1 Case 2 Case 3 Case 4 Beginning inventory $2,140 $3,320 $5,460 Ending inventory 1,430 3,780 2,240 Purchases 258,740 321,500 261,570 Cost of goods sold 260,120 369,510 260,640 Goods available for sale Use the following to answer questions 49 - 57 TTC reports the following amounts in its December 31, 20D income statement: Net sales $790,000 Cost of goods sold 445,560 Interest expense 14,200 Advertising expense 32,400 Salaries expense 245,400 Sales discounts 5,870 Utilities expense 19,800 Effective income tax rate 30% 49. $____________Determine Sales 50. $____________Determine gross profit 51. $____________Determine operating expenses Comprehensive Questions Page 6 52. $____________Determine operating income 53. $____________Determine Income before income taxes (IBT) 54. $____________Determine Income tax expense 55. $____________Determine net income 56. ___ ___.___% Calculate the gross profit ratio (one decimal place). 57. ___.___% Calculate the profit margin (one decimal place). 58. Find the missing amounts: Case 1 Case 2 Case 3 Net Sales $247,500 $165,890 Gross profit 98,500 88,700 Operating income 22,140 Operating expense 73,420 58,410 COGS 88,700 147,500 Gross profit margin % % % Use the following to answer questions 59 – 64 ALM purchased a fleet of new trucks for an acquisition cost of $250,000. The company estimates the trucks will have a residual value of $100,000 when they are done using them at the end of four years or about 90,000 miles. Prepare a depreciation schedule for four years using straight-line depreciation: Year Depreciation Expense Accumulated Depreciation Net Book Value At acquisition 1 2 3 4 59. $___________ Determine the depreciation expense for year 2 Comprehensive Questions Page 7 60. $___________ Determine accumulated depreciation for year 3 61. $_____________Determine book value at the end of year 3 62. $_____________What is the maximum amount the company will depreciate the trucks over the four year life? 63. $_____________ What amount could ALM sell the trucks for at the end of the second year? If the amount cannot be determined, explain why. 64. What is the purpose of depreciating assets? Use the following to answer questions 65 - 70 Sales $875,100 Sales returns & allowances 25,100 Gross profit 280,500 Operating exp 204,100 Gain on sale of equipment 12,500 Net income 62,900 65. $____________Calculate Net sales 66. $____________ Calculate Cost of Goods Sold 67. $____________ Calculate operating income 68. $____________Calculate Income before Income tax (IBT) 69. ___ ___%. Calculate the gross profit margin 70. ___.___%. Calculate the net profit margin (one decimal place) Comprehensive Questions Page 8 Use the following to answer questions 71 – 78 The following balance sheet items, listed in alphabetical order, are available from the records of BBB Corporation at December 31, 20C: Accounts payable $12,400 Inventory $87,500 Accounts receivable 24,300 Land 120,000 Automobiles, net 123,600 Long-term investment 68,400 Bonds payable 300,000 Notes payable, due 7 months 25,000 Buildings, net 357,000 Office supplies 300 Common Stock 175,000 Patents 98,000 Cash 19,500 Prepaid rent 6,500 Income taxes payable 48,500 Retained earnings 318,850 Interest payable 17,850 Payroll taxes payable 7,500 71. $__________ How much are BBB’s current assets? 72. $__________ How much are BBB’s total assets? 73. $__________ How much are BBB’s current liabilities? 74. $__________ How much are BBB’s total liabilities? 75. $__________ How much is BBB’s total stockholders’ equity? 76. ___.___ ___ What is BBB’s current ratio, (round to two decimal places)? 77. $__________ Net income for 20C was $200,000 and dividends declared during the year were $25,000, determine beginning retained earnings for 20C. 78. What does the term “net” in “automobiles, net” mean? Comprehensive Questions Page 9