Final Examination
Acct220: Principles of Accounting I – Section 1 of 2
Do not forget, this is only Section 1 of your Final Exam. Section 2 consists of the 25 multiple choice questions located in the Final Exam location. Section 2 is worth 25% (1 point per question). 

USE THE SEPARATE DOCUMENT, Final Exam Answer Sheet to complete and submit your answers.

For this exam, omit all general journal entry explanations. 
Ensure to include correct dollar signs and commas. 
Question 1: 40% points:
Flip Company's December 31, 2014 trial balance is as follows:
Flip Corporation			
Trial Balance			
December 31, 2014			
Account	Debit	Credit	
Cash	$43,500	 	
Accounts Receivable	54,500	 	
Allowance for Doubtful Accounts		500	
Notes Receivable	30,000	 	
Merchandise Inventory	55,000	 	
Land	20,500	 	
Building	150,000	 	
Accumulated Depreciation, Building	 	$15,000	
Equipment	50,000	 	
Accumulated Depreciation, Equipment	 	21,000	
Goodwill	26,000	 	
Accounts Payable	 	24,500	
Long Term Notes Payable	 	75,000	
Common Stock, $10 par, 2,000 shares authorized & 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	
	Flip is a small company and records adjusting entries & closing entries only at fiscal (calendar) year end. Correcting and adjusting entries have not been recorded. 

Additional Information:
	a. Notes Receivable is a 3-months, 6% note accepted on December 1, 2014.
	b. Long Term Notes Payable is a 5-year, 5% note that was signed on July 1, 2014. Interest is payable annually.
	c. Building is depreciated at 3% per year. There is no salvage value.
	d. Equipment is depreciated at 15% year. There is no salvage value.
	e. Flip discovered, on December 30th, 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.
	f. The year-end physical count for Merchandise Inventory reflected a value of $52,500. Any difference in value is treated as shrinkage, and is included as part of Cost of Goods Sold. 
	g. Salaries for the last half of December, payable in January, amount to $6,500.
	h. Flip determined that the balance in the Allowance for Doubtful Accounts should be $2,650 after an aging of A/R schedule was completed. 

Required:
	1a. Prepare in journal form, any required correcting entries for Flip Corporation (There is only one)
	(2 points)
	1b. Prepare in journal form, all end-of-the period adjusting entries for Flip Corporation (There are 7) 
(14 points)
	1c. Prepare a December adjusted trial balance for Flip Corporation (9 points)

NOTE: Students are encouraged to prepare their own T-accounts, on a separate scratch sheet of paper, and track from the beginning balance thru all journal transactions to ending balances for all accounts used in this problem. Do not turn in your separate scratch sheet of paper - those are student personal working papers and not part of any solution required for this exam.

Question 1 (continued) – New Company for Parts d and e
Below is a Correct Adjusted Trial Balance for the year ended December 31, 2014, for Emily’s Dress Shop, Inc.

	1d. Prepare a classified balance sheet in good form, for the year ended December 31, 2014 for Emily’s Dress Shop, Inc. (9 points)
1e. Prepare in journal form, the closing entries for the year ended December 31, 2014 (No Dividends) for Emily’s Dress Shop, Inc. (6 points)

Emily’s Dress Shop, Inc.			
Adjusted Trial Balance			
December 31, 2014			
Account Titles	Debit	Credit	
Cash	81,000		
Accounts Receivable	95,400		
Allowance for Doubtful Accounts		4,770	
Interest Receivable	270		
Notes Receivable (Due in 3 months)	54,000		
Merchandise Inventory	94,500		
Land	36,900		
Building	270,000		
Accumulated Depreciation, Building		35,100	
Equipment	90,000		
Accumulated Depreciation, Equipment		51,300	
Goodwill	46,800	0	
Accounts Payable		44,100	
Salaries Payable		11,700	
Interest Payable		3,375	
Long Term Notes Payable		135,000	
Common Stock		36,000	
Retained Earnings		264,600	
Sales Revenue		1,260,000	
Interest Revenue		270	
Cost of Goods Sold	634,500		
Salaries Expense	281,700		
Utilities Expense	6,300		
Administrative Expenses	99,000		
Sales Expenses	27,000		
Depreciation Expense	21,600		
Interest Expense	3,375		
Bad Debt Expense	3,870		
         Totals	1,846,215	1,846,215	

Question 2: 8 points: Inventory 
Flip uses the periodic 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	7.25	Jan. 7	125	10.00	
Jan. 10	100	7.50	Jan. 12	75	12.00	
Jan. 15	150	7.50	Jan. 17	200	12.00	
Jan. 20	200	7.75	Jan. 24	150	15.00	
Jan. 25	150	8.00				
Jan. 30	75	8.25				
Note: January 1 amount was the beginning inventory and unit value.
(Round all total dollar values to the nearest dollar. Round all unit values to the nearest penny.)

Required: 
a. Calculate cost of goods available for sale.
b. Calculate the dollar value of sales.
c. 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

Question 3: 7 points:

Required: Prepare Flip's Supply Co. general journal entries for the following transactions: 
Jan. 1	Accepted a customer’s (Franks Co) 120 day, 10% note, as settlement of an outstanding $15,000 account receivable for goods sold last year (assume 30 days in January)	
Jan. 15	Purchased $10,000 in equipment from Edwards Equipment, signing a 9 month, 12% note (15 days in January)	
Jan. 25	Loaned Douglas Co. $30,000 cash, accepting a 90 days, 10% note (6 days in January)	
Jan. 31	Prepared accrual adjusting entry for any interest revenue and interest expense. Use the 360-day calendar.	
Apr. 25	Received payment in full from Douglas Co. for outstanding note & interest	
May 1	Received payment in full from Franks Co. for outstanding note & interest	
Oct. 15	Paid Edwards Equipment in full	

Question 4: 9 points:
Flip Company purchased a refrigerated delivery truck for $65,000 on April 1, 2016.  The plan is to use the truck for 4 years and then replace it.  At the end of its useful life the truck is expected to have a salvage value of $10,000.

	a. Prepare the depreciation table for Flip’s truck assuming that the company uses the straight-line method for depreciation.

	b. Prepare the depreciation table for Flip’s truck assuming that the truck was purchased on January 1, 2016 and the company uses the double-declining-balance depreciation method.

	c. Compute the depreciation expense for 2016 for Flip’s truck assuming the truck has an expected life of 200,000 miles and during 2016 the truck was driven 24,540 miles.  Round your depreciation expense per mile to three decimal places.

Question 5: 7 points:
Medina Company received its February bank statement on March 6. The statement showed a balance of $316,500. Included on the statement were memoranda showing collections from Medina customers (A/R), totaling $16,000.

The statement also showed a returned check for a customer who paid the balance on his account, for $2,825. The bank charged a returned check fee of $75 for this NSF check. This $75 charge will be added to the customer’s balance. There were other service charges for the monthly service charge and ATM fees, totaling $200. These are bank service charge expenses. Medina’s accountant looked at her accounting records. At the end of February, the cash balance was $312,300. The statement did not reflect a deposit made late on February 28th, for $14,900. There were also some outstanding checks, totaling $6,200.

Required:
a. Determine the adjusted balance in the cash account after completing a bank reconciliation.
b. Prepare three journal entries needed due to the reconciliation.

Question 6: 4 points:
Flip Company at the end of the fiscal 2014 year has the following information: Credit Sales, $2,500,000 Sales Returns & Allowances $25,000 Accounts Receivable $200,000 and Allowance for Doubtful Accounts with a credit of $1,500.

Required:
a. Prepare the general journal entry to record the end of the year adjusting entry if Flip uses 0.5% of Net Credit Sales as the basis for determining Bad Debt Expense. 
b. Prepare the general journal entry to record the end of the year adjusting entry if Flip uses 5% of Accounts Receivable as the basis for determining Bad Debt Expense. 

Do not forget, this is only Section 1 of your Final Exam. Section 2 consists of the 25 multiple choice questions located in the Final Exam location. Section 2 is worth 25% (1 point per question).