Scribd Logo
Upload

Welcome to Scribd!

  • 1K views

    Financial Accounting I Final Practice Exam 1 - Solution

    Uploaded by

    misterwaterr
    This document provides solutions to practice exam questions for an accounting exam. It includes solutions to 41 multiple choice questions covering various accounting topics like financial statements, inventory, depreciation, bonds, goodwill impairment, and asset exchanges. The solutions show the calculations and journal entries required to solve each question.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd

    Financial Accounting I Final Practice Exam 1 - Solution

    Uploaded by

    misterwaterr
    1K views5 pages
    This document provides solutions to practice exam questions for an accounting exam. It includes solutions to 41 multiple choice questions covering various accounting topics like financial statements, inventory, depreciation, bonds, goodwill impairment, and asset exchanges. The solutions show the calculations and journal entries required to solve each question.

    Original Description:

    ACC 3000 Financial Accounting I Final Practice Exam 1 - Solution

    Copyright

    © © All Rights Reserved

    Available Formats

    DOC, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document provides solutions to practice exam questions for an accounting exam. It includes solutions to 41 multiple choice questions covering various accounting topics like financial statements, inventory, depreciation, bonds, goodwill impairment, and asset exchanges. The solutions show the calculations and journal entries required to solve each question.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    1K views5 pages

    Financial Accounting I Final Practice Exam 1 - Solution

    Uploaded by

    misterwaterr
    This document provides solutions to practice exam questions for an accounting exam. It includes solutions to 41 multiple choice questions covering various accounting topics like financial statements, inventory, depreciation, bonds, goodwill impairment, and asset exchanges. The solutions show the calculations and journal entries required to solve each question.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 5

    Practice Exam 3 - Solution

    Accounting 3000
    Practice Final Exam Solutions
    1. B
    $180 million

    4% = $7.2 million

    2. D
    This inventory should be excluded because it had not yet reached its destination, where
    title passes.
    3. C
    4. C
    These treasury bonds would be classified in current assets as short-term investments. If
    purchased within three months of their maturity, they could be classified as cash
    equivalents. The land should be reported in PPE (non-current assets) at $40,000.
    5. D

    6. C
    The insurance premiums of $30,000 were charged in error to insurance expense on the
    2008 income statements. The premiums should have been allocated equally at $10,000
    per year for 2008, 2009, and 2010. Therefore, the beginning retained earnings at 2009 are
    understated by $20,000. The corrected retained earnings would be the beginning balance
    plus correction of the error ($200,000 + 12,000 = $220,000).
    7. B
    2003 depreciation expense: $100,000 x 20% = 20,000 x 9/12 = 15,000
    2004 depreciation expense: $85,000 x 20% = 17,000
    2005 depreciation expense: $68,000 x 20% = 13,600
    Accumulated depreciation at the beginning of 2006: $45,600
    Book value at the beginning of 2006 = $54,400
    Depreciation expense for 2006 = (54,400 10,000) / 4 = 11,100
    Book value at 12/31/06: $43,300.

    Practice Exam 3 - Solution

    8. A
    9. D
    10. A
    Impairment test for Goodwill:
    Step 1: Compare FV and BV of reporting unit. FV = 700 and BV = 580.
    An impairment loss must be recognized if book value of the reporting unit acquired
    exceeds it fair value. In this case, it does not, so no impairment loss is recognized.
    11. D
    12. B
    13. A
    The lump-sum purchase price ($80,000) should be allocated based on the relative
    fair market values of the machines.
    Machine A = (15,000/120,000) x $80,000 = $10,000.
    Machine B = (60,000/120,000) x $80,000 = $40,000.
    14. C

    15. A

    16. B
    17. D

    Practice Exam 3 - Solution

    Sum of the years digits = (8*9)/2 = 36


    3rd year of the assets useful life:
    ($120,000 salvage value) x (6/36) = $18,000 depreciation expense
    Salvage value = $12,000
    18. A
    Goodwill is not amortized.
    19. A
    20. C
    150% declining balance rate = 1.5 x straight-line rate (5%) = 7.5%
    2006 depreciation expense:
    Beg BV x 0.075 x 10/12 = 11,875.
    Beg BV = 190,000 = assets cost.
    21. B
    Depletion in 2009 = ($164,000

    20,000) = $8.20 per ton

    4,000 = $32,800

    22. B
    23. B
    24. A

    Ending inventory is assumed to consist of 700 gallons from beginning inventory:


    700 x $7.20 = $5,040

    25. D
    26. D
    27. B
    COGS is understated by $55,000 and depreciation expense is understated by 10,000, so
    net income is overstated by $65,000.
    28. B

    Practice Exam 3 - Solution

    Retained earnings was understated by $33,000 at the end of 2007. Net income is
    overstated by $65,000 in 2008 (see above), so retained earnings will be overstated by
    $32,000 at the end of 2008.
    29. C
    30. D
    31. B
    Salaries Payable
    40,000
    Cash paid for wages
    (Reduction in liability)

    1/1 Balance

    165,000
    143,000

    Wages expense
    (solve for this)

    18,000

    12/31 Balance

    Salaries expense = $143,000


    32. A
    1/1 Balance
    Purchased
    12/31 Balance

    Prepaid Insurance
    6,000
    $5,000
    2,000

    Insurance used = expense


    (solve for this)

    3,000

    Insurance expense = $5,000.

    33. D
    34. B
    35. B
    36. D
    Total equity increased by $124,000 (178,000 54,000). If capital stock went up by
    $132,000, then retained earnings must have decreased by $8,000. If $26,000 of
    dividends were paid, then net income must have been $18,000.
    37. A
    38. B
    4

    Practice Exam 3 - Solution

    [(6,000,000 20%) 900,000] / 3 = 100,000 puzzles


    100,000 ($3.50 $2.00) = $150,000

    39. A
    Since the exchange does not have commercial substance, Valley should record the new
    equipment at the BOOK value of the equipment given up.
    Journal entry would be:
    Accumulated depreciation (old)
    Equipment (new)
    Equipment (old)

    20,000
    30,000
    50,000

    40. B

    41. B
    42. A
    43. A
    Gain (loss) = FV asset given up BV as asset given up

    You might also like