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                           23,088 

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, 2007                                                                                  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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