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(ACCT2020)[2012](s)quiz~=ogq28^_82471.pdf
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HONG KONG UNIVERSITY OF SCIENCE & TECHNOLOGY DEPARTMENT OF ACCOUNTING ACCT 2020: INTODUCTION TO ACCOUNTING Dr. Charles Hsu Spring 2012 Quiz_3_Key April 18, 2012
Part I: Multiple-Choice Questions (Questions 1 C 8 @ 2 point each, 16 points)
(Enter the answers in CAPITAL LETTERS in the Answer Sheet next page.) ECDD DDCA Part II: Problems Problem 1 (9 points) Required: Prepare Zack Corporation's cash flows from operating activities for 2010 using the indirect method. Zack Corporation Fiscal year end December 31, 2010 Statement of Cash Flows Net Income $38,500 1 pt Adjustments: Increase in accounts receivable (10,000) 1pt Increase in inventory (2,000) 1pt Decrease in prepaid expenses 500 1pt Increase in accounts payable 1,000 1pt Decrease in unearned revenue (5,000) 1pt Decrease in income taxes payable (750) 1pt Depreciation expense 8,500 1pt Bad debt expense 1,500 1pt Total adjustments (6,250) Net cash provided by operating activities $32,250
Problem 2 (7 points) On December 30 of 2011, the ledger of Dice Company included the following accounts and balances:
Allowance for Doubtful Accounts
$ 1,600
credit balance

Bad Debt Expense
0
Balance

Accounts Receivable
100,000
debit balance


There were no sales on December 31, 2011. Sales revenue during 2011 amounted to $400,000, of which 75% was on credit, and it was estimated that 4% of the credit sales made in 2011 would ultimately become uncollectible. On December 31, 2011, Dice prepared entries to write off a $1,200 account determined to be uncollectible, and recorded estimated bad debt expense for 2011. Required: 1) Based on the information above, show the journal entries that write off the bad-debt and that record the estimated bad debt expense on December 31, 2011. (4 points) 2 pts for each journal entries Allowance for doubtful account $1,200 Accounts receivable $1,200 Bad debt expense $12,000 Allowance for doubtful account $12,000 2) After the above entries were posted to the ledger, compute the following account balances (give the amount under the appropriate debit or credit column and show your work): (3 points)
Transaction
Debit
Credit

A.
Allowance for doubtful accounts



B.
Bad debt expense



C.
Accounts receivable




Work: Answer: 1 pts each for three answers below
Transaction
Debit
Credit

A.
Allowance for doubtful accounts 1600 + 12,000 C 1,200

12,400

B.
Bad debt expense 400,000 x .75 x 2%
$ 12,000


C.
Accounts receivable 100,000 C 1,200
$98,800




Problem 3 (8 points) On January 2, 2002, a company purchased a delivery truck for $24,000 cash. The truck initially had an estimated useful life of seven years and an estimated salvage value of $3,000. On January 3, 2005, the comp