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(ACCT2010)[2012](f)midterm_answer_only~=_irzkjdu^_64489.pdf
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Problem 1 Multiple Choice
Answer for Multiple Choice:

1 2 3 4 5 6 7 8 9 10
d d a a d d a c b b
11 12 13 14 15 16 17 18 19 20
b c b c b a d b b c

Problem 2.
(a) 1. FIFO 600 @ 3.00 = $1,800
1,600 @ 3.04 = 4,864
$6,664

2. Average Cost
Total cost = $10,198* = $3.09 average cost per unit
Total units 3,300

2,200 @ 3.09 = $6,798
*Units Price Total Cost
600 @ $3.00 = $1,800
1,700 @ $3.04 = 5,168
500 @ $3.30 = 1,650
500 @ $3.16 = 1,580
3,300 $10,198

Revenue = 500 * 5 + 1,300 * 5.5 + 400 * 6 = 12,050
Gross profit % = (Revenue C COGS) / Revenue = (12,050 C 6,798) / 12,050 = 43.59%

(b) 1. Same as (a) 1.
2. Average Cost
Purchase Sold Balance
No. of Unit No. of Unit No. of Unit Date units cost units cost units cost Amount June 1 600 $3.00 600 $3.0000 $1,800
3 500 $3.000 100 3.0000 300 4 1,700 $3.04 1,800 3.0378 5,468 9 1,300 3.0378 500 3.0378 1,519 21 500 3.30 1,000 3.169 3,169 27 400 3.169 600 3.169 1,901 29 500 3.16 1,100 3.162 3,481
COGS = 500 * 3 + 1,300 * 3.0378 + 400 * 3.169 = 6,716.74

Problem 3. PP&E
a.
Annual depreciation expense initially: (880,000 - 80,000) / 10 = 80,000 Book value of the machine as of 1/1/2011: 880,000 - 80,000 * 5.5 = 440,000 New depreciation expense: (440,000 + 195,000 - 40,000) / (14 - 5.5) = 70,000 Dr. Depreciation expense 70,000
Cr. Accumulated Depreciation 70,000
Book value of the machine as of end of 2013: 440,000 + 195,000 - 70,000 * 3 = 425,000 Therefore, $4,000 loss.
Dr. Cash 421,000 Accumulated Depreciation 650,000 Loss 4,000
Cr. PP&E 1,075,000
b.
Disposal of assets: 80,500 - (170,500 - accu. depr. ) = -5,000 Accumulated depreciation for the machine is 85,000
Dr. Cash 80,500 Accumulated Depreciation 85,000 Loss 5,000
Cr. PP&E 170,500
Depreciation expense = 275,000 - (250,000 - 85,000) = 110,000 Dr. Depreciation expense 110,000 Cr. Accumulated Depreciation 110,000
Problem 4. Bad debt expense
Dr. Accounts receivables 720,000
Cr. Sales Revenue 720,000
Dr. Cash 700,000
Cr. Accounts Receivables 700,000
Dr. Allowance for Doubtful Accounts 50,000
Cr. Accounts Receivables 50,000
Dr. Accounts Receivables 30,000
Cr. Allowance for Doubtful Accounts 30,000
Dr. Cash 30,000
Cr. Accounts Receivables 30,000
Dr. Bad Debt Expense 39,640
Cr. Allowance for Doubtful Accounts 39,640

Accounts receivables = 600,000 + 720,000 C 700,000 C 50,000 + 30,000 C 30,000 = 570,000
Bad debt expense: Allowance for doubtful accounts @31/12/2012 = 570,000*70%*1%
+ 570,000*25%*10%
+ 570,000*5%* 40%
= 29,640

Beginning Balance + reversal C write-off + bad-debt expense = ending balance
.bad-expense = ending balance - reversal + write-off C beginning balance =$29,640 -$30,000 + $50,000 -$10,000 = $39,640