ACCT 310 ACCT310 Intermediate Accounting I Final Exam Answers (UMUC)
ACCT 310 Intermediate Accounting I Final Exam Answers
Acme purchased a truck on January 1, 2015, for $100,000. Estimated life of the truck was 5 years, and its estimated residual value was $10,000. Acme uses the straight-line method of depreciation. At the beginning of 2017, the company revised the total estimated life of the asset from 5 years to 6 years. The estimated residual value remained the same as estimated earlier. Calculate the depreciation expense for the year 2017. (10 pts)
2. A-1 Co. purchased equipment for $35,000 on January 1, 2015. The company recorded total depreciation of $26,000 on the equipment. On January 1, 2018, A-1 Co. traded in the equipment for new equipment, paying $56,000 cash. The fair market value of the new equipment is $75,000. Journalize the company's exchange of equipment. (10 pts)
3. ABC Inc. had reported the following details for the year ended December 31, 2015:
• Net Sales $24,750,000
• Total Assets $16,000,000
• Total Liabilities $9,500,000
• The company's beginning total assets and liabilities were $14,000,000 and $8,000,000, respectively.
4. What are the criteria to capitalize a replacement part? (5 pts)
5. What are the six qualitative characteristics of GAAP? (5 pts)
6. Good Corporation's annual report is as follows. (10 pts)
7. Mouse Co. had the following transactions in 2015, its first year of operations. (5 pts)
• Issued 5,000 shares of common stock. Stock has par value of $0.01 per share and was issued at $30.00 per share.
• Earned net income of $200,000.
• Paid dividends of $5.00 per share.
At the end of 2015, how much is the total stockholders' equity?
8. Cash Co. uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2014: (10 pts)
1) Long-Term Notes Payable, beginning balance, $80,000
2) Long-Term Notes Payable, ending balance, $76,000
3) Common Stock, beginning balance, $3,000
4) Common Stock, ending balance, $26,000
5) Retained Earnings, beginning balance, $75,000
6) Retained Earnings, ending balance, $115,000
7) Treasury Stock, beginning balance, $6,000
8) Treasury Stock, ending balance, $10,000
9) No stock was retired.
10) No treasury stock was sold.
11) During 2014, the company repaid $36,000 of Long-Term Notes Payable.
12) During 2014, the company borrowed $32,000 on a new Note Payable.
13) Net income for the year was $49,000.
14) Assume all dividends declared during the year were paid.
How much was the net cash flow from financing activities? (Show the steps to arrive at the answer)
9. Sam Inc. had the following account balances at the end of the current accounting period:
10. BBC Company purchased a patent for USD 36,000. The patent is expected to have a finite life of 10 years even though its legal life is 17 years. The amortization for the first year is: (5 pts)
11. A corporation has 10,000 shares of 10%, $100 par noncumulative preferred stock outstanding and 20,000 shares of no-par common stock outstanding. At the end of the current year, the corporation declares a dividend of $120,000. What is the dividend per share for preferred shares and for common shares? (5 pts)
12. The principal amount of a bond is $65,000, its stated rate is 7%, and the term of the bond is 5 years. The bond pays interest semiannually. At the time of issue, the market rate is 8%. Determine the present value of the bonds at issuance. (10 pts)
13. On January 1, 2014, XYZ issued $165,000 of 6-year bonds with a stated rate of 12%. The market rate at time of issue was 11%, so the bonds were issued with a premium and sold for $172,110. XYZ uses the effective-interest method to amortize bond premium. Semiannual interest payments are made on June 30 and December 31 of each year. Which of the following is the correct journal entry to record the first interest payment? (10 pts)
14. Explain the difference between the direct and indirect cash flow methods and what sections those differences show up in. (5 pts)
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