ACCT 220 Week 8 Final Exam

Problem 1: 15% points:

The account balances appearing on the trial balance (below) were taken from the general ledger of Flap's Copy Shop at September 30, 2012.

Additional information for the month of September which has not yet been recorded in the accounts is as follows:

(a) A physical count of supplies indicates $400 on hand at September 30.

(b) The amount of insurance that expired in the month of September was $300.

(c) Depreciation on equipment for September was $500.

(d) Rent owed on the copy shop for the month of September was $400 but will not be paid until July.

Flap’s Copy Shop

Trial Balance

For the Month Ended September 30, 2012

Account Titles

Debit

Credit

Cash

$1,000

Supplies

1,100

Prepaid Insurance

2,200

Equipment

24,000

Accum. Depreciation— Equipment

$4,500

Accounts Payable

2,400

Notes Payable

4,000

Flap’s Capital

15,300

Flap’s Drawings

2,400

Service Revenue

4,900

Utilities Expense

400

Totals

$31,100

$31,100

Instructions:

Prepare in journal form, without explanations, the end of month adjusting entries for Flap's Copy Shop for the month of September. Prepare a partial adjusted trial balance for the accounts provided. Prepare in journal form, without explanations, the end of month closing entries for Flap's Copy Shop for the month of September.

Acct220 Page 1 of 9

Problem 2: 15% points:

The following information is available for Flip Company:

Beginning inventory 600 units at $5

First purchase 900 units at $6

Second purchase 500 units at $7.25

Assume that Flip uses a periodic inventory system and that there are 700 units left at the end of the month. (Round all final answers to the nearest dollar.)

Instructions:

a. Compute the cost of goods available for sale.

b. Compute the value of ending inventory and Cost of Good Sold under the

(1) LIFO method.

(2) FIFO method.

(3) Average-cost method

Problem 3: 15% points:

The following items were taken from the post adjusted trial balance of Flop Company. (All balances are normal.)

Mortgage payable $ 1,443 Accumulated depreciation 3,655

Prepaid expenses 880 Accounts payable 1,200

Equipment 11,000 Notes payable after 2016 1,444

Long-term investments 1,100 Flop’s capital 10,480

Short-term investments 1,756 Accounts receivable 2,690

Notes payable in 2015 1,000 Inventories 2,100

Cash 1,696 Service Revenue 9,000

Rent Expense 1,000 Wages Expense 5,000

Utilities Expense 1,000

Instructions: Prepare a classified balance sheet in good form as of December 31, 2014.

Acct220 Page 2 of 9

Problem 4: 10% points:

Prepare journal entries to record the following transactions entered into by Flip Company:

2012

June 1 Accepted a $10,000, 12%, 1-year note from Flop as full payment on her account.

Nov. 1 Sold merchandise on account to Flap, Inc. for $12,000, terms 2/10, n/30.

Nov. 5 Flap, Inc. returned merchandise worth $500.

Nov. 9 Received payment in full from Flap, Inc.

Dec. 31 Accrued interest on Flop's note.

2013

June 1 Flop honored her promissory note by sending the face amount plus interest. No interest has been accrued in 2013

Problem 5: 10% points:

Flip Company purchased equipment on July 1, 2011 for $90,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 125,000 units over its 5-year life.

Instructions

Answer the following independent questions.

1. Compute the amount of depreciation expense for the year ended December 31, 2011, using the straight-line method of depreciation.

2. If 14,000 units of product are produced in 2011 and 26,000 units are produced in 2012, what is the book value of the equipment at December 31, 2012? The company uses the units-of-activity depreciation method.