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MGT 5000 Module 8 Midterm Exam
Question 1
Discuss the authoritative organizations that govern the accounting profession.
Question 2
For the year ended December 31, 2007, Jordan Company had expenses of $3,374,000,000 and revenues of $3,486,100,000. The retained earnings balance at the beginning and end of the year were $257,700,000 and $369,400,000, respectively. Compute the net income for Jordan Company for the year ended December 31, 2007 and the amount of cash dividends declared by Jordan Company for the year ended December 31, 2007.
Question 3
For the following accounts, indicate whether or not there is a debit or credit balance:
Interest income                            Accounts payable
Accounts receivable                    Sales
Retained earnings                         Dividends
Royalty expense                          Dividend income
Notes payable                             Computers
Question 4
Prepare journal entries for the following transactions:
a. Acquired computer supplies on account for $800.
b. Paid cash for advertisements of $700
c. Collected commissions of $900 on the sale of a house.
d. Paid $600 for the purchase of computer supplies in a above.
e. Recorded computer supplies used of $300.c.
Question 5
Prepare the annual adjusting entries for the following transactions:
a. On August 1, Johnson paid one year in advance for office space. The Prepaid Rent account and Cash accounts in the amount of $24,000 were used to record the payment.
b. On October, Johnson received payment in advance for services to be performed over the next 12 months. The amount was $12,000 and the Cash and Unearned Fee Revenue accounts were used.
c. As of December 31, Johnson had not recorded unpaid wages of $500.
d. During November and December, Johnson provided services to a client in the amount of $5,400 but had not yet billed the client.
Question 6
Jackson Company had the following income statement amounts for the year ended December 31, 2007:
Sales                       $4,624,274   Cash dividends declared    $    58,986
Income tax expense      405,107  Interest income                          23,088Â
S,G &A expense          684,175  Cost of sales                         2,958,708
Other expense                 6,317   Retained earnings, 12/31/07 3,074,037
Royalty income           279,459   Royalty expense                       111,586
Prepare a combined single-step income statement and retained earnings for the year ended December 31, 2007.
Question 7
Discuss why the Statement of Cash Flows is the most informative of the primary financial statements.
Question 8
Learning, Inc. had the following amounts for the year ended December 31, 2007:
Depreciation and amortization          $109.4 million
Increase in payables                               2.8 million
Decrease in inventories                       30.7 million
Decrease in receivables                      30.6 million
Proceeds from long-term debt            197.1 million
Repayments of long-term debt            324.2 million
Additions to property and equipment   59.3 million
Net loss                                               29.5 million
Prepare the operating activities section of the Statement of Cash Flows for Learning, Inc. for the year ended December 31, 2007
Question 9
Discuss the accounting for uncollectible accounts - assume the allowance method.
Question 10
Surplus, Inc. uses a periodic inventory system and the had the following activity for 2007:
                                       Purchases                     Sales                      Balance
January 1, 2007Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 110 units at $50 or $5,500
2/10/07 purchase     80 units at $60 or $4,800
4/14/07 sale                                                      60 units
5/9/07 purchase      120 units at $70 or $8,400
7/14/07 sale                                                       120 units
10/21/07 purchase 100 units at $80 or $8,000
11/12/07 sale                                                     80 units
Calculate the ending inventory and cost of goods sold using the LIFO and FIFO methods.
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