ACC 20364 Accounting for Business Operations Final Examination

ACC 20364 Accounting for Business Operations Final Examination in $31 Only

Accounting for Business Operations

ACC 20364 – Final Examination

  1. Bella’s Beauty Salon’s unadjusted trial balance for the current year follows: Additional information:a. An insurance policy examination showed $1,240 of expired insurance.
    b. An inventory count showed $210 of unused shop supplies still available.
    c. Depreciation expense on shop equipment, $350.
    d. Depreciation expense on the building, $2,220.
    e. A beautician is behind on space rental payments and $200 of accrued revenue was unrecorded at the time the trial balance was prepared.
    f. $800 of the Unearned Rent account balance was earned by year-end.
    g. The one employee, a receptionist, works a five-day workweek at $50 per day. The employee was paid last week but has worked four days this week for which she has not been paid.
    h. Three months’ property taxes, totaling $450, have accrued. This additional amount of property taxes expense has not been recorded.
    i. One month’s interest on the note payable, $600, has accrued but is unrecorded.

Required:

Based on the additional information, prepare the adjusting journal entries for Bella’s Beauty Salon.

  1. The following is the adjusted trial balance for Rapid Car Services for the most recent year:

 

Rapid Car Services, Inc.
Adjusted Trial Balance
For the year ended December 31
Cash$33,000
Accounts receivable14,200
Office supplies1,700
Vehicles100,000
Accumulated depreciation—Vehicles45,000
Accounts payable11,500
Common stock1,000
Retained earnings70,900
Dividends40,000
Fees earned155,000
Rent expense13,000
Office supplies expense2,000
Utilities expense2,500
Depreciation Expense—Vehicles15,000
Salary expense50,000
Fuel expense      12,000                
Totals   $283,400  $283,400

Required:

Prepare the following financial statements for Rapid Car Services, Inc. from the adjusted trial balance.  Assume the stockholders did not make any additional investments in the company during the year.
Income Statement

Statement of Retained Earnings

Balance Sheet

  1. END Company reported the current month purchase and sales data for its only product as follows:
DateActivitiesUnits Acquired at CostUnits Sold at Retail
April 1Beginning Inventory175 units @ $15.00
4Purchase150 units @ $16.00
7Sales160 units @ $30.00
10Purchase200 units @ $17.00
16Sales250 units @ $30.00
25Purchase160 units @ $18.00
28Sales150 units @ $32.00

Required:

Determine the cost assigned to ending inventory and cost of goods sold using LIFO with the perpetual inventory system.

  1. The following information is available for the Edwards Company for its March 31 bank reconciliation:

From the March 31 bank statement:

NSF: A check from a customer, Cook Co. in payment of their account.
IN: Interest earned on the account.
From the Edwards Company’s accounting records:

Required:

Based on the above information, prepare the2-column bank reconciliation for the Edwards Company for March.

  1. Information for JasonMetalworks as of December 31 follows.
Administrative salaries expense$135,000
Depreciation expense—Factory equipment52,400
Depreciation expense—Delivery vehicles36,200
Depreciation expense—Office equipment24,800
Advertising expense22,350
Direct labor268,000
Factory supplies used12,000
Income taxes expense91,500
Indirect labor35,000
Indirect material24,000
Factory insurance15,500
Factory utilities14,000
Factory maintenance7,500
Inventories
   Raw materials inventory, January 132,000
   Raw materials inventory, December 3128,000
   Work in Process inventory, January 133,780
   Work in Process inventory, December 3137,460
   Finished goods inventory, January 156,970
   Finished goods inventory, December 3162,000
Raw materials purchases325,000
Rent expense—Factory50,000
Rent expense—Office space24,000
Rent expense—Selling Space24,000
Sales salaries expense97,500
Sales1,452,000
Sales discounts29,000

Required:

  • Prepare the company’s schedule of cost of goods manufactured for the year ended December 31
  • Prepare the company’s income statement that reports separate categories for selling and general and administrative expenses.
  1. Wagner Company is analyzing two alternative methods of producing its product. The production manager indicates that variable costs can be reduced 40% by installing a machine that automates production, but fixed costs would increase. Alternative 1 shows costs before installing the machine; Alternative 2 shows costs after the machine is installed.
Alternative 1Alternative 2
Variable costs per unit$20?
Fixed costs$200,000$274,400
Selling price per unit$40$40
Income tax rate25%25%

Required: 

(a) Compute the break-even point in units and dollars for both alternatives.

(b) Prepare a forecasted income statement for both alternatives assuming that 30,000 units will be sold. The statements should report sales, total variable costs, contribution margin, fixed costs, income before taxes, income taxes, and net income.

(c) Compute the degree of operating leverage for each alternative. Which alternative would you recommend and why?

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