1. Exam #1 - Version A - Spring 2018 PDF

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Past exam for exam#1 version A Spring 2018...

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Name: ___________________________

Accounting 101 - Spring 2018, Version A

Section (circle one): Professor Tian - MW 8 a.m. Professor Anderson - MW 9:30 a.m. Professor Tian - MW 9:30 a.m. Professor Anderson - MW 11 a.m. Professor Tian - MW 11 a.m. Professor Tang – MW 12:30 p.m. Professor Tang – MW 2 p.m. Professor Beck – MW 3:30 p.m. Professor Beck – MW 5 p.m.

On my honor, I did not give or receive any assistance when completing this exam. __________________________________ (sign your name)

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Instructions: 1.

READ CAREFULLY! Failure to follow instructions can result in substantial loss of points.

2.

There are 14 pages in this exam. Make sure you have all of the pages before you begin.

3.

All work is to be done on the attached pages.

4.

For problems requiring computations, work must be shown in order to get credit. Zero points will be given to any correct answer showing no supporting calculations. Showing your work is also necessary for partial credit. Therefore, label all your work and make it as neat as possible.

5.

If journal entries are required, use descriptive account titles (no abbreviations or acronyms) that indicate you know what you are doing. Be sure the journal entry is in the proper form, including the date. Explanations for the entry are not required.

6.

You may use a four function or a business (financial) calculator only. No graphing calculators or cell phones are permitted.

7.

During the exam, the proctors will not answer any questions. If you are unclear and make an assumption when answering a question, state the assumption you made clearly at the beginning of your answer.

8.

Failure to turn in your exam at the end of the exam period will result in a grade of zero on this exam.

9.

GOOD LUCK!

Score: Question 1: ______/4

Question 5: ______/6

Question 9: ______/12

Question 2: ______/10

Question 6: ______/7

Question 10: _____/8

Question 3: ______/10

Question 7: ______/12

Question 11: _____/10

Question 4: ______/5

Question 8: ______/16 Total Score: _____/100

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1. (4 Points; You should budget 3 minutes for this question) Answer each of the following questions. a. On what financial statement would you look to determine how much customers owed a firm? b. What are obligations that are due within one year from the balance sheet date called?

c. What regulatory body ensures that publicly traded firms adhere to Generally Accepted Accounting Principles? Do not use acronyms in your answer.

d. What ratio tells an analyst how efficiently a firm uses its assets to produce revenue?

2. (10 Points; You should budget 5 minutes for this question) Complete the following chart, list all that apply (i.e. there may be more than one).

Account Titles Ex. 1. 2. 3. 4. 5.

Cash Unearned Revenue Common Stock Accumulated Depreciation Cost of Goods Sold Prepaid Rent Expense

Type of Account A = Asset L = Liability SE = Stockholders’ Equity C = Contra R= Revenue E = Expense A

Closing Status C=closed N =not closed N

Typical Balance (to increase it) D = debit C = credit D

Financial Statement on which reported: IS = Income Statement BS = Balance Sheet SE = Statement of Stockholders’ Equity BS

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3. (10 points; You should budget 8 minutes for this question) Tang Corporation plans to prepare its annual financial statements for its shareholders for fiscal year ending December 31, 2017. Record in the chart below whether each transaction for Tang Corporation overstated (O), understated (U) or correctly stated (C) net income, total assets, total liabilities, and stockholders’ equity. a. Tang Corporation failed to record the $10,000 of office supplies that its employees used during the fiscal year ended December 31, 2017. b. Tang Corporation received a utility bill for the month of December of 2017 in the amount of $475 on December 31, 2017. Tang will pay the bill on its due date, January 16, 2018. Tang failed to record this utility bill in its accounting system. c. Tang Corporation paid for a one-year insurance policy on July 1, 2017 in the amount of $12,000. Tang recorded this transaction correctly on July 1. Tang made no further entries related to this policy during fiscal year 2017. d. Tang Corporation’s income before income taxes was $100,000 for the year ended December 31, 2017, and its tax rate is 30%. On December 31, 2017, Tang debited income tax payable for $30,000 and credited income taxes expense for $30,000. e. Tang Corporation purchased equipment on August 1, 2017 by issuing a $100,000 note payable. On August 1, Tang debited accounts receivable for $100,000 and credited notes payable for $100,000.

Transaction a. b. c. d. e.

Net Income

Total Assets

Total Liabilities

Stockholders’ Equity

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4. (5 Points; You should budget 5 minutes for this question) Assume Anderson Company had beginning assets of $28,000, ending assets of $61,000, ending stockholders’ equity of $45,000, and a $4,000 decrease in liabilities during the period. Assuming dividends of $12,000 and common stock issuances of $6,000, calculate net income for the period. Net Income: $______________________

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5. (6 Points; You should budget 9 minutes for this question) In its first year of operations, Beck Company earned $26,000 in service revenue, $4,000 of which was on account and still outstanding at year-end. The remaining sales were made for cash. Beck incurred operating expenses of $14,500. The liabilities for these expenses at year-end amounted to $1,500. In addition, Beck prepaid $2,500 for insurance coverage that would not be used until the second year of operations. a. Calculate the first year’s net income using cash basis accounting. Net Income on a Cash Basis: $____________________

b. Calculate the first year’s net income using accrual basis accounting. Net Income on an Accrual Basis: $__________________

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6. (7 Points; You should budget 7 minutes for this question) On January 1, 2015, Tian Enterprises had $100,000 in its bank account. According to Tian’s bank statement on January 31, 2015, its cash balance was $150,000. During January of 2015 Tian engaged in the following transactions. ● On January 5th Tian borrowed $50,000 cash by signing a one-year note with a 5% interest rate. The $50,000 principal plus accrued interest is due on January 4, 2016. ● On January 9th Tian purchased $27,000 of office supplies on credit. ● On January 15th Tian collected cash from a customer for services that will be provided in February and March of 2015. Tian’s accountant misplaced the receipt so it is unclear how much cash was received from this customer. ● On January 17th Tian paid its February 2015 rent in the amount of $35,000. ● On January 23rd Tian declared dividends in the amount of $1,000 to be paid on February 1, 2015. ● On January 30th Tian issued 100 shares of its $1 par common stock for $25 per share.

How much cash did Tian receive from its customer on January 15th? January 15th Cash Receipt: $__________________________

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7. (12 Points; You should budget 10 minutes for this question) For each of the following transactions that Wolverine Wagon Company engaged in during March of 2017, state the effect on Wolverine’s assets, liabilities, stockholders’ equity, and net income (i.e., show an increase with a “+” and a decrease with a “-“ and state the amount of increase or decrease). If there is no effect, then you should put a “0” in the box. You do not need to consider any adjusting entries that may need to be made after the original transaction is recorded.

Transaction (a) On March 1, 2017, Wolverine sold wagons with a cost of $5,000 for $10,000 cash.

Assets

Liabilities

Stockholders’ Equity

Net Income

(b) On March 3, 2017, Wolverine received an order for wagons. The wagons will be delivered and paid for by the customer in April. The wagons’ selling price is $8,000 and the wagons cost Wolverine $2,500. (c) On March 10, 2017, Wolverine paid its suppliers $12,000 for inventory previously purchased on account. (d) On March 17, 2017, Wolverine issued 5,000 shares of its $0.50 par common stock for $20 per share. (e) On March 31, 2017, Wolverine declared a dividend in the amount of $3,000. The dividend will be paid on April 15, 2017. (f) On March 31, 2017, Wolverine recorded depreciation on its property, plant & equipment of $8,000.

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8. (16 Total Points; You should budget 15 minutes for this question) During September, Tiger Corporation engaged in the following transactions: September 1: Tiger purchased a fleet of trucks for $250,000 cash. September 7: Tiger sold inventory with a cost of $5,000 for $15,000 on account. September 12: Tiger collected $30,000 from a customer for services Tiger will provide in October. September 17: Tiger’s stock price increased from $12 per share to $15 per share on the NYSE. September 21: Tiger purchased $1,300 of supplies for cash. September 23: Tiger paid for a one-year insurance policy in the amount of $8,000. The insurance coverage begins on October 1. September 26: Tiger collected $12,000 from a credit customer. September 30: Tiger received a utilities bill for September for $1,500 which it paid immediately. Record Tiger’s September transactions in its journal on the next page of the exam. If no journal entry is required, then write “No Entry Required” next to the date. You do not need to include any 9/30 adjusting journal entries. Do not use any acronyms for account titles.

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Date

Account Title

Debit

Credit

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9. (12 Points; You should budget 10 minutes for this question) Use the following information about Hawkeye Advertising to make adjusting entries on 12/31/17. Assume that Hawkeye has made no other adjusting entries in 2017 (i.e., Hawkeye only does adjusting entries at the end of the year). i. Hawkeye borrowed $50,000 on July 1, 2017 on a 6% note payable. The principal and interest are due on January 1, 2020. Date

Account

Debit

Credit

ii. During 2017, Hawkeye earned $4,000 of revenue which was previously recorded as unearned revenue. Date

Account

Debit

Credit

iii. On July 1, 2017, Hawkeye purchased a one-year insurance policy for $3,350. On July 1, 2017, Hawkeye debited prepaid insurance and credited cash. Date

Account

Debit

Credit

iv. An inventory revealed art supplies of $3,000 on hand at December 31, 2017. On January 1, 2017, Hawkeye had $1,500 of art supplies on hand. During 2017, Hawkeye purchased $8,000 of art supplies. Date

Account

Debit

Credit

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10. (8 Points Total; You should budget 8 minutes for this question) Shown below are accounts and their balances in alphabetical order (after adjusting entries have been posted) for Buckeye Inc. on December 31, 2016.

Account Title Accounts Payable Accounts Receivable Accumulated Depreciation Additional Paid-in Capital Cash Bonds Payable Common Stock Depreciation Expense Interest Expense Office Equipment Office Supply Inventory Office Supply Expense Prepaid Rent (8 months) Rent Expense Retained Earnings, 1/1/16 Revenue Salary Expense Telephone Expense Unearned Revenue (6 month contract)

Amount ($) 1,200 2,200 500 1,700 1,200 3,000 1,000 500 2,300 25,000 1,000 600 750 2,400 17,300 18,000 6,900 250 400

a. (2 Points) What is the total amount of Buckeye’s current assets on December 31, 2016? Current Assets: $____________________

b. (1 Points) What is Buckeye’s contributed capital on December 31, 2016? Contributed Capital: $_____________________

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c. (5 Points) Prepare the closing entries for Buckeye Inc. on December 31, 2016 in the journal below. Date

Account

Debit

Credit

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11. (10 Points; You should budget 10 points for this question) Use the 2016 McDonald’s financial statements to answer the following questions. Be sure to write the correct number of zeros in your answer. a. (1 Point) Calculate McDonald’s net profit margin for 2016. Net profit margin is net income divided by total revenue. Round your percent to one decimal place.

b. (1 Point) What is the par value of McDonald’s common stock?

c. (1 Point) What was McDonald’s cash flow from operating activities during 2016 (be sure to state whether it was a net outflow or inflow)?

d. (1 Point) What is McDonald’s current ratio on December 31, 2016? The current ratio is current assets divided by current liabilities. Round to two decimal places.

e. (1 Point) What is the total amount of cash dividends that McDonald’s declared during 2016?

f. (2 Points) Did McDonalds’s operating income increase or decrease from 2015 to 2016? By how much?

g. (1 Point) How much does McDonald’s owe for interest on December 31, 2016?

h. (1 Point) How much cash did McDonald’s pay for taxes during 2016?

i. (1 Point) What is McDonald’s basic earnings per share for 2016?

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